Science & Technology Report: Golden Triangle - Q2 2024
5 Things You Need to Know About Science & Technology in the Golden Triangle
Laboratory take up across the Golden Triangle reached 140k sq ft
Demand for laboratory space persisted at a combined 2m sq ft
685k sq ft of up-and-built laboratory space was available at the end of June
Rents remained strong across the markets, with a new headline rent achieved in Oxford at 82.50 per sq ft
£710m of VC was raised by life science & biotech firms across the Golden Triangle
Cambridge
Take Up & Demand
Laboratory leasing activity across Cambridge in the opening half of the year reached 52,500 sq ft, falling 40% from the highest H1 recorded in 2023 (87,400 sq ft) but positively remaining 20% above the H1 5-year average (41,600 sq ft).
Take up was led by lettings at Unity Campus as Welbeck Health Partners leased 31,000 sq ft at Orion, and ViaNautis (Soma Serve) secured 10,800 sq ft of fitted space at Cadence, also on the park.
At the close of H1, there was a further 31,000 sq ft under offer which we expect to complete in Q3.
Demand for laboratory space remained robust in Cambridge, with 783,000 sq ft of named demand at the close of H1. Of this, 478,500 sq ft is active demand and 304,500 sq ft is upcoming demand, with the majority temporarily put on hold due to wider macroeconomic uncertainties.
We have seen an increase in 50,000 sq ft + requirements coming live, more than in the rest of the Golden Triangle, now representing 38% of demand. Importantly, we are also still seeing the growing demand for smaller, fully fitted laboratories by occupiers looking to take turnkey space, with requirements of up to 20,000 sq ft representing 20% of demand.
This change in demand profile underscores the importance of providing a variety of fit out specs to appeal to the broadest range of demand/occupiers.
Source: DTRE Research
Supply & Rents
At the end of H1 there was 151,000 sq ft of available up-and-built laboratory space, with the majority located within the southern Cambridge cluster across Granta Park, Babraham Research Campus, The Press, and Unity Campus.
Excluding the southern cluster, there is practically no up-and-built laboratory space available for immediate occupation in Cambridge, maintaining a strong supply-demand imbalance.
In response to this supply-demand imbalance, there is 4.7 million sq ft of laboratory-led space due to be delivered by the end of 2028. Of this, 17% (799,600 sq ft) is currently under construction or being repurposed which will help alleviate the supply restraints in the short term and support leasing activity across the next 12 months. 18% of the pipeline however is still subject to planning.
With demand continuing to outweigh supply, rental growth prospects remain strong, with several schemes providing fitted space quoting over £70.00 per sq ft.
Venture Capital
£119 million was raised by 46 life science and biotech companies based in Cambridge across H1, a 28% decrease on venture capital raised in H1 2023.
Whilst the sluggishness of venture capital funding has persisted into H1 2024, the wake of the election and the improving economic landscape should recover sentiment and motivate investment into these companies. It will also encourage companies that have successfully raised to satisfy their space demands.
Since 2019, Cambridge-based companies have collectively raised £3.6 billion - capital that will be directed into real estate once the climate steadies.
Oxford
Take Up & Demand
Laboratory take up in Oxford throughout H1 2024 reached 77,100 sq ft, 22% above take up across Cambridge and London combined.
At the end of June, there was a further 29,800 sq ft of laboratory space under offer, with 57% having already transacted at the beginning of Q3. If the remainder of this space completes, take up in Q3 looks to be in line with the 5-year average take up across the third quarter (31,500 sq ft).
Take up in H1 was led by the Ellison Institute leasing 27,800 sq ft at Winchester House on The Oxford Science Park, and OrganOx taking 17,700 sq ft of space on an assignment at Building 3500, ARC Oxford.
Further leasing activity in the second half of the year will be driven by the 451,200 sq ft of named demand for laboratory space, of which 332,000 sq ft is active. Of this demand, 48% is for space smaller than 20,000 sq ft, with 38% for space from 20,000-50,000 sq ft, and 13% for space over 50,000 sq ft.
Source: DTRE Research
Supply & Rents
At the end of H1 there was 282,000 sq ft of available up-and-built laboratory space in Oxford, with just 45,400 sq ft of this in the city centre, and the remainder across Milton Park, Abingdon Science Park, The Oxford Science Park, and Begbroke Science Park.
There is 898,600 sq ft of space currently under construction/refurbishment, with 23% (205,000 sq ft) of this space already accounted for.
Of the 4.8 million sq ft we are tracking to be delivered by the end of 2028, 31% (1.5 million sq ft) is to be built in the city centre.
Fitted laboratory rents in Oxford have increased to a new headline rent of £82.50, achieved in Q1 at the Sherard Building on The Oxford Science Park as Oxford Nanopore leased 13,000 sq ft of fully fitted space.
Venture Capital
32 Oxford-based life science and biotech firms raised £263 million through fundraisings and grants in H1 2024, reaching 9% above the pre-covid full-year 5-year average. Overall, Oxford-based venture capital was the most consistent out of the Golden Triangle, falling the least from the total raised in 2023.
Despite this, Oxford-based companies have similarly echoed the theme seen across the wider Golden Triangle in their hesitancy to exercise their capital on real estate, with many choosing to remain in their current space until the macro environment settles before expanding or upgrading.
Since 2019, Oxford-based companies have raised £3.4 billion, which will slowly be released as sentiment improves and several tenants that have previously put expansion plans on hold reactivate their search.
London
Take Up & Demand
London laboratory take up slowed in the first half of 2024 with 10,300 sq ft transacting, 70% below H1 take up last year despite Q1 2024 being 42% above H1 2023 take up (7,300 sq ft). This leasing slowdown can be attributed to the relatively nascent state of the London market and the high quoting rents.
London is the most embryonic of the Golden Triangle markets, so with national and economic unrest and uncertainty over the past year, it has not been able to rely on its deep-rooted and pre-existing markets to the same extent that Cambridge and Oxford have been able to, hence experiencing the impacts of a lack in confidence more heavily.
This was further evidenced in take up by deal size, with all deals occurring for space less than 5,000 sq ft. The largest deal by size occurred at Paper Yard, Canada Water, with Prosemino taking 3,000 sq ft of fully fitted space in Q1.
A further 11,100 sq ft of laboratory space was under offer at the end of June. With additional fitted laboratory space already going under offer early into Q3 we look forward to a positive turn in the second half of the year.
This will further be driven by the 752,200 sq ft of named London laboratory demand, of which 636,200 sq ft is active. Of this demand, 3 requirements are for 50,000 sq ft +, corresponding to 47% of demand, with 28% of demand for space less than 20,000 sq ft, and 26% for space between 20,000–50,000 sq ft.
Source: DTRE Research
Supply & Rents
252,000 sq ft of up-and-built laboratory space was available at the close of H1, with the completion of 5-10 Brandon Road bringing 114,000 sq ft of purpose-built space to market.
There is a potential 7.3 million sq ft of laboratory space to be delivered by the end of 2028, however, this will gradually come to market, with 87% of the pipeline due to be delivered after 2025 and 1.9 million sq ft (26%) still subject to planning.
With much demand to come live again throughout the second half of 2024, we will see fitted laboratory rents in London exceed the current headline rent of £120.00 per sq ft, supported by the likes of Victoria House guiding c.£165.00 per sq ft.
Venture Capital
86 London-based life science and biotech companies received the most venture capital investment across the UK in H1, making up 27% of total UK venture capital investment at £327 million, 175% ahead of Cambridge and 24% ahead of Oxford. Furthermore, it is on track to match the 5-year annual average venture capital raised by London-based life science and biotech companies of £694 million.
Overall, £3.8 billion has been raised by London-based life science and biotech companies since 2019, 6% more than Cambridge-based companies, and 10% more than Oxford-based companies. When considering the maturity of the alternative two markets, these figures exhibit the push led by investors for the growth of the London science and technology markets.
