The SectorScope examines the growth of the UK’s science and technology industry and what opportunities that is creating for the construction sector.
The UK government has set its sights on the UK achieving huge growth from its science and technology sector. And The SectorScope has covered many news stories about developments in the lab and technology buildings sectors, including our report on the trend to convert office space into science-friendly spaces.
There are some robust drivers pushing growth across this sector. There is an ongoing strong demand for laboratory spaces across key regions, particularly in the Golden Triangle (London, Cambridge, and Oxford).
Vacancy rates for prime fitted laboratory spaces are low, often below 3%, reflecting pent-up demand. This demand is driven by the growth of life sciences companies, particularly those in the initial stages of development, backed by venture capital, and larger pharmaceutical companies seeking to expand their research and development (R&D) activities.
In addition, the convergence of technology and life sciences, particularly the rise of AI-driven research, is creating new types of demand for space that can accommodate both computational and experimental work. This trend is accelerating the need for specialised laboratory environments, often integrated with office spaces, to foster collaboration and innovation.
Investment is also pouring into the UK’s science businesses. Globally, larger pharmaceutical companies are increasing their investment in R&D, particularly in cities with rich talent pools and technology sectors. This is driving demand for commercial real estate in these areas. In the UK, particularly in the Golden Triangle, there is significant investment from both public and private sectors aimed at expanding science and innovation clusters.
Supply constraints and the development pipeline
All buildings take time to plan, construct and deliver. Complex laboratories serving the science and technology sectors are no exception. As a result, the current supply of laboratory and office space in key life sciences hubs is constrained.
In Cambridge, for example, the vacancy rate for laboratory space is around 2.5%, and in London, it is similarly low. This has led to high rental rates, with premiums being paid for well-fitted lab spaces.
Despite the high demand, there is a lag in the development pipeline. Much of the new laboratory space scheduled for completion is not expected until after 2026. In Oxford, for instance, 76% of the new lab space will only be available post-2026, indicating a sustained period of supply constraint and potential rental growth.
The investor viewpoint
The result of a constrained supply is that premium rents are being achieved across the Golden Triangle, particularly for well-located and fully fitted laboratory spaces. For example, rents in London are expected to exceed £130 per sq ft for prime fitted lab spaces. In Cambridge and Oxford, similar trends are observed, with rents for fitted labs outpacing those for standard office spaces.
However, investment in life sciences real estate has been subdued recently due to mismatched pricing expectations and economic uncertainties. But the underlying drivers for investment remain strong, ensuring sustained interest in the sector. Prime yields for laboratory assets in the Golden Triangle are currently around 5%, which is attractive compared to other asset classes.
Engaging with the science and technology building sector
Stakeholders in the property and construction sectors should consider the unique requirements of life sciences companies, particularly the need for spaces that facilitate the convergence of digital and laboratory research. Offering flexible, well-situated spaces could attract high-value tenants in this evolving market.
In addition, as sustainability becomes a non-negotiable aspect of new developments, property developers and investors should prioritise projects that minimise environmental impact. This not only aligns with regulatory trends but also appeals to increasingly eco-conscious tenants.
Developers are increasingly integrating sustainability into new life sciences real estate projects. This includes reducing embodied and operational carbon in buildings and using modular construction techniques that can be easily adapted or repurposed. These efforts are crucial as both regulatory pressures and tenant expectations around sustainability grow.
Also, collaboration between the public and private sectors is crucial to accelerate the development of life sciences real estate. Engaging in such partnerships can help unlock new opportunities, attract anchor tenants, and drive growth in key innovation clusters.
Regional growth areas for science and tech buildings
Several regions outside of the "Golden Triangle" are emerging as growing hubs for science buildings and life sciences real estate. A few notable areas are:
1. Scotland (Edinburgh and Glasgow)
- Edinburgh BioQuarter: This is one of the UK’s largest life sciences clusters outside the Golden Triangle. It’s a joint venture between public and private entities and houses a mix of healthcare, academic, and commercial life sciences organisations. The ongoing expansion plans include significant new lab and office spaces aimed at attracting more companies to the region.
- Glasgow: Known for its strong universities and a growing focus on life sciences, particularly in precision medicine and pharmaceutical manufacturing, Glasgow is seeing increased demand for specialised facilities. The University of Glasgow’s expansion and the development of innovation districts are driving this growth.
2. Manchester
- Manchester Science Park: Part of the Oxford Road Corridor, Manchester Science Park is one of the UK’s most established science and technology parks. The region benefits from strong links to the local universities and the NHS, with a focus on digital health, med-tech, and biotech. There are ongoing developments to expand the park, including new lab spaces and mixed-use facilities.
- CityLabs: Located on the Manchester University NHS Foundation Trust campus, CityLabs is a growing hub for precision medicine and health innovation. Recent expansions are adding more lab and office spaces tailored to the needs of life sciences companies.
3. Bristol and Bath
- Bristol & Bath Science Park: This region is developing as a centre for advanced engineering, biotech, and digital innovation. The park offers a mix of office and lab spaces and is part of a broader regional strategy to boost the West of England's position as a leading science and innovation hub.
- Temple Quarter in Bristol: An emerging area of focus for innovation and knowledge-intensive industries, with future developments expected to include lab and office spaces for life sciences and tech companies.
4. Midlands (Birmingham and Nottingham)
- Birmingham: The city is increasingly recognised for its life sciences capabilities, particularly around healthcare and med-tech. The Birmingham Health Innovation Campus is a key development, providing lab spaces and research facilities that aim to link academic research with clinical application.
- BioCity Nottingham: BioCity is one of the largest bioscience incubators in the UK, offering lab and office spaces to early-stage companies. The success of BioCity has led to expansion projects aimed at accommodating the growing demand from life sciences startups and scaling companies.
5. Northern Ireland (Belfast)
- Belfast’s Life Sciences Hub: With a focus on health tech, diagnostics, and pharmaceutical development, Belfast is growing its life sciences sector. The region benefits from close collaboration between local universities, healthcare providers, and industry. New developments include purpose-built facilities for life sciences research and commercialisation.
6. North East England (Newcastle)
- Newcastle Helix: This is a prominent urban development project focused on science and technology. It combines academic research, commercial labs, and office spaces, with a strong emphasis on digital health, biotech, and data sciences. The Helix is part of a broader strategy to make Newcastle a key player in the UK’s life sciences sector.
These regions are positioning themselves as significant players in the UK's life sciences landscape, driven by investments in infrastructure, strategic partnerships, and the growing demand for specialised facilities outside the traditional Golden Triangle area.
Drivers for success
Despite the challenges that could hamper growth in the science and tech building sector, there are several compelling reasons to view this market as potentially robust and resilient for the construction and related sectors.
The life sciences and technology sectors are among the fastest-growing industries globally, driven by increasing demand for healthcare innovations, biotechnology advancements, and digital transformation. As these sectors expand, the need for specialised real estate — such as laboratories, research facilities, and tech hubs — continues to rise. This creates a sustained pipeline of projects for the construction industry.
Much of the existing life sciences and tech infrastructure in the UK is outdated and no longer meets modern standards. The need to upgrade or replace these facilities with state-of-the-art, future-proofed buildings ensures a continuous demand for construction services.
The UK government has identified life sciences and technology as critical sectors for future economic growth. Initiatives like the UK Life Sciences Vision and various innovation funding programs aim to stimulate investment in these areas. Government support often translates into funding for new infrastructure projects, creating opportunities for construction companies.
Both national and local governments are offering incentives to attract life sciences and tech companies to specific regions. This includes tax breaks, grants, and funding for infrastructure, which can help mitigate some of the risks associated with developing specialised facilities and encourage more projects.
The highly specialised nature of life sciences and tech buildings creates barriers to entry for less experienced construction firms. Companies with the expertise to build complex facilities — such as those with clean rooms, controlled environments, and specialised utilities — are likely to face less competition and can command premium pricing for their services.
The life sciences sector is often seen as recession-resistant due to its critical role in healthcare and its reliance on long-term research and development. This resilience can translate into more stable demand for construction projects even during economic downturns.
The convergence of technology with life sciences offers construction firms opportunities to diversify their portfolios. Engaging in projects that span both tech and life sciences can provide a buffer against sector-specific downturns.
The rapid pace of innovation, such as developments in AI, genomics, and personalised medicine, is leading to the creation of new sub-sectors within life sciences and tech. Each of these sub-sectors may require highly specialised facilities, from AI research centres to biomanufacturing plants, providing a continuous stream of opportunities for the construction industry.
The increasing integration of smart technologies in buildings, such as IoT devices, automation, and advanced data systems, is driving demand for new construction projects. Buildings that are “smart” and digitally connected are highly sought after in the tech and life sciences sectors, offering another area of growth.
The UK remains an attractive destination for global life sciences and tech companies, due to its strong academic institutions, regulatory environment, and talent pool. As international companies establish or expand their presence in the UK, they will require new or upgraded facilities, providing opportunities for construction firms.
UK-based construction firms with expertise in life sciences and tech buildings are well-positioned to export their services to other countries where similar sectors are growing. This can help mitigate domestic market fluctuations and open new revenue streams.
While the Golden Triangle remains a key area, there is growing focus on developing life sciences and tech hubs in other regions, such as the North West, Midlands, and Scotland. Urban regeneration projects in these areas often include significant life sciences and tech components, providing opportunities for construction firms to participate in large-scale developments.
The push towards more sustainable urban environments is leading to the development of green buildings and eco-friendly campuses. Construction firms that can deliver sustainable, low-carbon buildings are well-positioned to benefit from these trends.
What science and technology clients want from their buildings
There are several key requirements that clients in the science and technology sectors are looking for in the buildings they want to occupy.
1. Flexibility and Future-Proofing
Clients in the science and technology sectors increasingly require flexible spaces that can adapt to changing needs. This includes modular lab and office spaces that can be reconfigured as companies grow or pivot their focus. Construction firms should emphasise the ability to deliver adaptable buildings that can evolve alongside their occupants' needs.
Scalability is also an important factor. Buildings that allow for easy expansion or reconfiguration are highly desirable. Clients may start with smaller footprints but want the ability to scale up their operations without relocating. Offering scalable solutions will be a key selling point.
2. Sustainability and Environmental Standards
Sustainability is not just a preference but a critical requirement for many clients, particularly those in life sciences who are under pressure to reduce their carbon footprint. Construction companies must prioritise sustainable practices, from the choice of materials to energy-efficient designs, and be able to demonstrate how their buildings meet or exceed environmental standards.
Buildings that are designed to meet net-zero carbon targets will be more attractive to tenants who are committed to sustainability goals. This includes features like renewable energy systems, low-carbon materials, and efficient waste management systems.
3. High-Quality Infrastructure
Life sciences and tech companies require highly specialised infrastructure, such as clean rooms, wet and dry labs, and spaces with specific power, water, and ventilation requirements. Construction firms need to be well-versed in the technical specifications required for these facilities and capable of delivering to exacting standards.
Advanced digital infrastructure is critical. Buildings must be equipped with robust, high-speed internet, reliable data centres, and smart building technologies. Ensuring that buildings are digitally ready can be a key differentiator in attracting tech-savvy tenants.
4. Speed of Delivery
The fast pace of innovation in the life sciences and tech sectors means that companies often need to move into new spaces quickly, so rapid fit-out is highly desirable. Modular construction techniques and efficient project management can reduce build times, making your projects more attractive to clients who need to get up and running swiftly.
Clients are increasingly looking for turnkey solutions — spaces that are ready to occupy with minimal additional work required. Offering fully fitted, ready-to-use spaces can meet the needs of companies that want to avoid the time and expense of additional fit-outs.
5. Location and Accessibility
Clients prioritise locations that offer access to skilled talent, particularly near universities, research institutions, and other innovation hubs. Ensuring that your developments are situated in or near these clusters can make them more appealing to potential tenants.
Good transport links, both locally and internationally, are essential. Clients want to be able to attract talent from a wide area, and easy access to airports, train stations, and major road networks is a significant factor. Nearby housing is also a key factor.
6. Cost Efficiency and Value for Money
While quality and sustainability are crucial, clients are also sensitive to costs, especially in the current economic climate. Offering cost-effective solutions that do not compromise on quality or sustainability will be key. This includes innovative approaches to construction that can reduce costs without sacrificing the quality of the final product.
Clients are looking for buildings that offer operational cost savings over time. This includes energy-efficient designs that reduce utility bills, as well as buildings that are easy to maintain and manage.
7. Partnerships and Collaboration
Clients value construction partners who are willing to collaborate closely with them throughout the project, from initial design through to completion and beyond. Building long-term relationships based on trust and understanding of the specific needs of the life sciences and tech sectors can lead to repeat business and referrals.
Clients are looking for developments that integrate well with local ecosystems, such as science parks, innovation districts, and clusters. Construction firms that can demonstrate a deep understanding of these ecosystems and how to best position their developments within them will be more successful.
Construction firms must focus on delivering flexible, sustainable, and highly specialised buildings that meet the fast-evolving needs of the science and technology sectors.
Speed, cost-efficiency, and a collaborative approach are critical to winning and retaining clients in this competitive market. Emphasising the ability to provide turnkey, scalable solutions in prime locations with robust infrastructure will position construction firms as valuable partners in the growth of the life sciences and tech sectors.
Conclusions: A robust market with opportunities for growth
The science and tech building sector in the UK presents a robust market with numerous opportunities for growth, despite potential challenges.
The combination of strong demand, government support, high barriers to entry, and resilience to economic fluctuations makes this a promising sector for construction and related industries. Firms that can offer specialised, sustainable, and innovative solutions are particularly well-positioned to capitalise on the ongoing expansion of the life sciences and tech sectors.
This outlook should encourage construction firms to invest in the skills, technologies, and partnerships necessary to succeed in this dynamic and growing market.
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