Cushman & Wakefield RETHINKING: The Shape Of Real Estate 2040

There was already a significant amount of investment geared towards the sector prior to the pandemic.

However, the pandemic was a catalyst for attracting more capital into the sector along with greater activity from venture capital and retail investors, with funding leading to scientific developments and in turn, real estate demand. Active requirements in the market are considerable with a historic under supply of available space, particularly in the Golden Triangle of Cambridge, Oxford and London. In the short to medium term, the development pipeline is considerable, although schemes that have not yet commenced construction are unlikely to do so for a number of years due to the viability challenges facing development. Looking ahead, the emerging ageing population and health focus, along with the prestige of UK academic institutions and the proliferation of wider life sciences-related challenges such as climate change, all suggest that demand will persist in the UK life sciences real estate market. Additionally, the growth of R&D spending in the UK is expected to continue, which in turn will help to drive life sciences demand. This, as well as the expectation that employment in related industries and the number of enterprises in the sector are all expect to grow – combines to produce our forecast of 53.4% growth in the sector to 2040. This amounts to 8.8 million sq ft in additional stock – over twice the increase seen between 2005 and 2023.

Venture capital activity also underpins a significant portion of demand within the life sciences sector. While this is difficult to forecast, the GDP outlook for the UK and US (where the majority of capital is sourced from) and expectations for lower long-term interest rates suggest that it will be a supporting rather than limiting factor to future demand.

RETHINKING: THE SHAPE OF REAL ESTATE IN THE UK

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CUSHMAN & WAKEFIELD