The rapid growth of the life sciences industry is now drawing its firms out of their sleepy suburban locations and into the city in search of what they need to keep expanding: talent.
Given its roots in academia, this industry has long been anchored in out-of-town labs and research centres, where proximity to prestigious universities was key. But post-Covid-19, with the job market tightening, the past two years have seen a shift.
Major cities such as Stockholm, Amsterdam, Paris, Düsseldorf and London now boast a thriving life sciences sector. Around 100 companies have invested in headquarters in Düsseldorf, while the area around Paris-Saclay university continues to expand.
The UK has three Life Science Opportunity Zones. For one of these, Kadans Science Partner is working with the Canary Wharf Group to develop Europe’s largest commercial lab building, housing a mix of start-ups, academics, clinicians and established pharmaceutical companies.
The desire to be close to highly skilled, like-minded personnel and universities is vital to capturing the potential for growth. In the competition for the best talent, many life sciences firms are moving to city centres to be nearer to potential recruits and to be able to offer staff the kind of lifestyle they want.
Talent shortage is a serious issue for the sector. According to a recent survey, 86% of firms state staff retention is a significant issue, well above the national average across all industries. But relocating brings its own challenges for a sector used to working in tailored campus settings with plenty of space. Specific lab requirements are hard to cater for in real estate markets known for being expensive with limited land.
For example, lab-based science generally means higher floor-to-ceiling heights and science computing requires greater energy use to power state-of-the-art equipment, something not possible in most traditional offices. It also takes time to re-engineer the hubs and clusters – the research institutes, universities and hospitals – that have allowed the sector to thrive in the past decade.
Such a seismic shift for the life sciences industry presents a logistical challenge but, for investors, it’s an opportunity to repurpose city centre space into labs. Yet if they are to benefit from life sciences’ move to the city, investors must ensure that their sites reflect the sector’s specific needs and desires.
By committing early, retrofitting offices to meet the specifications of the sector and using expertise to help reform those clusters with partners, there is a chance to help drive a growing industry and be part of its future success.
It is an opportunity for patient capital. Rebuilding life sciences ecosystems in a new, more urban environment will take time, but will pay off in the long term as new hubs form and thrive, supported by local and national governments that recognise the importance of this sector to the wider economy.
Alex Nuyken is head of life sciences markets for EMEA at JLL