CASE STUDY, CAMBRIDGE: VELOCITY OF DEMAND KEEPS LANDLORDS ON THEIR TOES

Cambridge remains the market where growth and scarcity are most acute. Record take up in early 2024 with lab transactions significantly above the historical average, demonstrates continuous absorption of new capacity and rapid churn of space between scale ups and new entrants. The upshot, developers can still charge premiums for “plug and play” lab space close to university and clinical clusters.

CASE STUDY, berlin & germany: cluster diversification and municipal buy in

Berlin Brandenburg has become a major life sciences magnet, with municipal and regional bodies promoting technology parks and incubators. Germany’s cluster approach, pairing universities, specialised engineering firms and long term investors, is expanding capacity, but even here, developers report rising rents and high specifications standards for lab ready space (HVAC, power resilience, waste and biocontainment). The trend is, when a strong research ecosystem exists, developers respond, but the cost and technical complexity of delivering lab grade stock remains non trivial.

money and markets: rents, pipelineand investor appetite (5-10 year project projection)

Baseline today (2024-mid 2025).

Prime fitted lab rents in core UK submarkets have jumper materially over the past 3 years (Cheffins recorded fitted prime rents rising toward c.£68/sq ft in prime Cambridge stock in 2023). Many landlords now price in not only shell space but fully serviced benches and containment.

Investment appetite is strong: institutional capital (pension funds, life funds, sovereign investors) has been reallocating into specialised life science real estate, treating it increasingly as infrastructure rather than cyclical office exposure. Large, long dated leases and high barriers to entry (technical complexity) make it attractive for risk averse buyers.

5 year view (2026-2030).

Rents: Expect continuation of a two speed rental market. Premium city edge and university proximate labs will hold and likely increase rents modestly (CAGR in high demand nodes of low-single to mid-single digits) as scarcity persists for the very best locations. In markets where large pipelines complete (parts of the Golden Triangle), transient softening is possible followed by re-tightening once pre-leased space is absorbed. Outlying markets that add capacity will see more moderate rents and faster stabilisation.

Pipeline size: A substantial delivery pipeline is already underway in the UK and major EMEA hubs, Oxford’s ~450,000 sq ft, multiple Cambridge schemes and Paris/Ile-de-France campus expansions. Over five years the cumulative new supply will materially increase absolute stock, but it will not equalise access, congestion will move to second tier nodes as companies search for affordability.

Investor appetite: Robust. Large investors will continue to favour longer leases and campus assets that offer diversification (mixed lab/office/amenity). However, investors will be choosier about operational delivery, they prefer assets with experienced life science operators or “lab management” partners because the technical and regulatory oversights (waste streams, decontamination, MHRA readiness) are ongoing cash flow considerations.

10 year view (2030-2035).

The market could bifurcate into: (a) high-density premium corridors (Golden Triangle, select European hubs) with elevated rents and low vacancy, and (b) regional manufacturing/scale up corridors offering lower cost but requiring more travel for talent. Government policy (planning, tax incentives) and national strategies on medicines/biomanufacturing capacity will influence the balance. If governments treat lab capacity as strategic infrastructure (as some have signalled), we may see public private pipelines that reduce acute shortages in critical areas but at the cost of a more managed, less purely market driven allocation.

1. Risks that could upend the thesis
2. Regulatory or taxation shocks. Changes in business rates or lab operating costs (recent UK business rates debates how policy can materially affect operating economics) could deter smaller operators and constrain demand if costs rise rapidly.
3. Overbuilding in a few nodes. Where a wave of completions coincides with a cyclical slowdown in VC or biotech hiring, landlords could face long lease up periods and downward pressure on effective rents. Evidence of growing completions in some Gloden Triangle submarkets already suggests this risk.
4. Operational complexity. Delivering MHRA ready manufacturing or high containment clean rooms is hard, mis-specification or delivery delays can saddle owners with stranded, hard to let space. This amplifies the premium for developers with life science delivery expertise.

what design and build firms must do next

Specialise. Build teams that understand bio-waste management, containment classification, controlled HVAC and validation documentation. Generic office delivery will no longer suffice.

Offer services beyond bricks. Tenants increasingly want “lab as a service”, managed benches, consumables logistics, waste handling and compliance reporting. These recurring revenue streams will separate winners from the rest.

Adopt modularity. Factory-built modules and standardised M&E risers reduce time to market and give landlords flexibility to reconfigure space between tenants.

Factor ESG in. Energy intensity is a reputational and cost issue for labs, designs that cut energy per sample and demonstrate lifecycle savings will command price premiums.