New models for R&D real estate and communities
Panel at Newnham Cambridge discussing measures to create new housing to support Oxford and Cambridge's world leading life sciences clusters (L to R: CBRE's Chris Williams, Jo Cowen of Jo Cowen Architects, Cllr Bridget Smith - Leader of South Cambridgeshire Council - and Dr Jason Matthews, Matthews & Sadler Estates for Oxford North)
As the Chancellor announces a firm road map for government funding of science R&D for the UK (increasing to £22 billion by 2026 / 7), Future Cities Forum asks the question about how to develop enough built R&D space and laboratories in and around our over-heating science cities?
At Future Cities Forum's 'Science Cities' event at Cambridge University in October, we discussed not only the development of the OxCam Arc but also the future design of science parks, where real estate is at a premium and how younger start-ups can be included. CBRE, BioMed Realty and Oxford North (Thomas White Oxford / Matthews & Sadler Estates) all spoke of the reputation of the academic prowess of Cambridge and Oxford, that was a major attractor behind the demand for lab, office and housing space.
BioMed Realty's Head of Leasing, Matt Smith, described how post pandemic there is now increasing amounts of venture capital funding being directed at the life sciences and technology sectors.
BioMed (which is a portfolio company of US investor Blackstone) recently announced plans to double the size of of its UK life sciences portfolio. It has acquired the 15-acre Cambridge International Technology Park and 27-acre plot at Granta Park in Cambridge. This estimated £850 million investment is expected to deliver approximately 800,000 square feet of in-demand Grade A purpose-built lab and office space in Cambridge, creating up to 2,700 jobs. The acquisitions mark a vote of confidence from Blackstone in the UK and the growth of the nation’s life sciences sector, and are supported by BioMed’s 870,000 square feet UK portfolio which is currently 100% fully leased. The proposed two new sites are still subject to planning consent.
Matt said:
'You can't replace running a drug discovery place from your bedroom. Some clients are re-purposing existing buildings into valuable lab space, but there is a backlog of tenants that want to get into science hubs but there is nowhere to go. It is a traffic jam that's ultimately slowing drug discovery down.
'We have mentioned the superclusters around the world - such as Boston and Mission Bay in San Francisco - which share common problems, but you can't forget that Cambridge is in the top three academic centres in world and so as I say there are really active VCs looking to fund. There is no indication that the rate of money is going to slow down, demand will keep stacking up and we need to get building space that touches on that important move towards combining live, work and place, increasing the possibility of serendipity and chance ideas. In terms of housing, Cambridge is a challenging place to buy and housing needs to follow the skills rather than the other way round.
'Should we be creating new or re-designing our current buildings? Outer city developments of scale are all successful because they have that scale which is so difficult to create in city centres. Cambridge also has many listed buildings so it is challenging to build at scale in the centre. Companies can expand and contract, so we also need flexibility. Cambridge Science Park was built in the 1970s and construction has moved on, so we could re-fresh - but ultimately I think we need to build more.'
'Designing R&D campuses' panel at Newnham Cambridge: (L to R) Matt Smith of BioMed Realty, Professor Lynette Ryals of MK:U / Cranfield, Laurel Powers-Freeling of Cambridge Biomedical Campus Heather Fearfield of Future Cities Forum, Ed Hayden of Scott Brownrigg and Martin Dougherty of Wellcome Genome Campus
Designing around people and creating 24/7 destinations is key to successful science cities, explained Chris Williams, Senior Director, Occupier Transactions at CBRE (UK):
'It is about more accessibility and community. We are now talking with major companies who now want an environment with shops, cafes etc and involvement with the community. Historically they would have said they needed to be insular but not anymore. They need the supporting and broader local community and tell me they want their employees to use all the community facilities. They want the right kind of place where they can attract and retain talent.
'The University of Birmingham as well as Manchester represent significant new hubs but against the golden triangle they are very much in their infancy. Companies are still looking to invest in Oxford and Cambridge. London will come on I think but there is currently a lack of incubator, scale-up space and that is a major barrier. The lack of real estate in Oxford and Cambridge can also be a problem but the decisions being taken are sub-optimal here. There is a track record of spin-outs in Oxford and Cambridge and these cities are seen as being a fertile place for them, and it is driving a perspective that international companies are looking for.'
'It is fair to say that the remit has changed, even from 2/3 years ago' explained Dr Jason Matthews, Director at Matthews & Sadler Estates, who is advising on the new Oxford North development for St John's College, Oxford:
'We have been reviewing closely where the market is at. For St John's College, Oxford North has to become a destination as the market is changing really quickly. It will be a million square feet, operating at both ends of start up space and growing space. The housing point is 390 units which is quite expensive housing but we need to stay flexible in our master plan and we can do this with land on the east side. We could go into build to rent - that's an option - but we need to see what the community needs.
'This development will be good for Oxford, and good for key workers. We are trying to create flexibility. Oxford University has Begbroke Science Park but we will be different. When I was Director of Estates at Cambridge University working on the first phase of Eddington, it worked OK, but phase 2 will be different and likewise our development will grow and we will put in the necessary infrastructure along the way. It is a small part of a great city but we are trying to do something different. St John's College is not concerned about making a strong return but focused on creating quality.'
Oxford North is being created as a new life sciences district over 23 acres with three new parks, and 87,000 square metres of lab and office space. It will also have 480 new homes (constructed by Hill Group) close to the Oxford Canal and will provide for 4,500 new jobs.
Oxford North, looking south towards Oxford's centre (Thomas White Oxford) with new housing by Hill Group on right
David Ingham, Senior Director at CBRE reviewed development activity around Cambridge, earlier this year - before the recent Blackstone investment in the Cambridge Technology Park and Granta Park:. He noted that life sciences has been brought in to focus through the pandemic but it has played a vital part in the UK and in particular Cambridge’s economies over many decades,
'Planning consent has been granted for 103,000 sq ft at Cambridge Biomedical Campus and will be known as 1000 Discovery Drive, this will be delivered on a speculative basis. Cambridge Biomedical Campus is where Astra Zeneca are developing their new Global Headquarters, which will extend to circa 850,000 sq ft.
Abstract Securities owns 15 acres of development land south-east of Cambridge City Centre where they are seeking planning consent for c.500,000 sq ft of laboratory and office accommodation. They have named the scheme Cambridge International Technology Park and this will be situated adjacent to the already existing Peterhouse Technology Park, owned by University of Cambridge’s Peterhouse College, which is home to Arm Holdings. The first building on site is anticipated to complete in 2023.
Brookgate, in addition to their City Centre holdings, have One Cambridge Square, which will sit within the Cambridge North site, occupying 40 acres adjacent to Cambridge North station. The development will comprise of offices, hotels, shops, leisure and residential.
The Wellcome Genome Campus in Hinxton, Saffron Walden saw outline planning consent granted in 2019 for the development of 1.6million sq ft of commercial space as well as 1,500 homes.
Investment market – out-of-town
There has been significant investor interest in the out of town Cambridge market, driven by the focus on Life Sciences the pandemic has shone and the underlying property fundamentals which create an exciting story about this sector and location.
Brockton Everlast have acquired seven buildings in two transactions on Cambridge Science Park. We estimate £1.8billion was circling the L&G Investment Management sale of 214 to 240 Cambridge Science Park, which drove pricing at least 50% above the asking price, and close to £100m. This second Brockton Everlast acquisition is very interesting as it provides a mix of opportunities – solid long-term income, shorter/medium term leases with reversionary potential and two redevelopment/refurbishment prospects.
Melbourn Science Park was acquired by Bruntwood Sci-tech for circa £46m, providing a foothold in the Cambridge market for the Joint Venture and offers an income play with an exciting redevelopment or repositioning opportunity in the medium term. Melbourn was acquired from The Technology Partnership (TTP), in a sale & part leaseback, TTP are building their new campus on adjacent land, providing additional cluster and knowledge sharing opportunities.'
Future Cities Forum will be returning to Cambridge in March 2022 to debate the development of the OxCam Arc further, and to report on the public consultation response to the Greater Cambridge Local Plan and its allocation for new housing.
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