According to Savills, take-up of science related real estate across the golden triangle of London, Oxford and Cambridge reached 1.3 million sq ft in 2023, 14% above the five-year average. However, this figure fell 6% when compared to 2022, reflecting the more challenging venture capital (VC) funding market seen last year as a result of ongoing economic uncertainty.
Despite this fall, Savills notes that the take-up of laboratory space hit record levels in Cambridge at 346,000 sq ft and 300,000 sq ft in Oxford. Respectively, these totals were 61% and 20% above the previous high in each market, signifying the considerable growth of the sector. Total take-up in these markets, including offices, was 638,000 sq ft in Cambridge and 472,000 sq ft in Oxford.
Notable transactions for the year included Biomed leasing the whole of Building 960, totalling 38,000 sq ft, at Babraham Research Campus, Cambridge. Three lettings at Unity Campus, Cambridge to Insmed Xap Therapeutics, Mosaic Therapeutics and Domainex totalling 24,000 sq ft, and Moderna pre-letting a 145,000 sq ft research and development facility at Harwell Campus in Oxford.
As a result of strong activity, there remains limited supply of Grade A office space, notably in both Oxford and Cambridge city centres, which is continuing to hamper take-up in these locations. As a result, Savills research shows that Grade A office take-up was down by 57% and 13% when compared with 2022.
In London, which remains relatively nascent when compared to Oxford and Cambridge, the market is predominantly characterised by VC backed start-ups seeking smaller quantities of fully fitted lab space. This was evident in 2023 with just one lab deal over 15,000 sq ft with hVIVO acquiring 39,000 sq ft at 40 Bank Street Canary Wharf. In contrast, there were seven deals over this threshold in Cambridge. In total, 97,000 sq ft of lab space was transacted in the capital in 2023, although this figure is expected to increase significantly in 2024 when the first larger purpose built lab spaces are delivered in the capital. Total science related take-up including labs and offices in London reached 194,000 sq ft.
From a VC perspective, Savills found that money raised by companies headquartered in the golden triangle was lower in 2023 at £1.42 billion. However, this 9% decrease on the 2022 figure was better than the 25% reduction recorded globally. Although take-up in London was down, overall VC grew by 23% in 2023, with the average deal size also growing substantially to £8 million. This is 73% higher than the 2022 average and 97% above the five-year average. This suggest further real estate activity will take place in 2024 as these businesses continue to expand.
Tom Mellows, head of UK science at Savills, comments: “Overall 2023 has been a positive year for the sector, despite ongoing economic headwinds. Looking ahead, the final quarter of 2023 saw a flurry of announcements, including the Autumn Statement, that looked favourable for investment by corporates already in the UK and those looking to enter the market. Looking ahead, in 2024 we will see the delivery of the first larger purpose-built lab space in London, which should help to accelerate take-up in the capital. With all this in mind, we continue to see positive levels of demand and expect to see an uptick in activity once key developments complete in all three locations next year and into 2025.”
