According to JLL, the volume of life sciences real estate transactions increased 166 percent in the past three years in the UK alone. Real Estate Capital has reported that investment banks, commercial banks, insurers and debt funds are quoting for loans against life sciences properties and some lenders are making formal allocations in their budgets.
Real Estate Capital helpfully points out some factors for lenders to consider before experimenting in life sciences. Understanding the segmentation in the market, the different types of end-user and their differing needs is key. For example, biotech companies need ‘wet labs’, medical technology companies need ‘dry lab’ space and health tech and pharma tech use artificial intelligence. Successful assets typically have a mix of uses such as office, lab and specialist space and covenant strength of tenants will vary, with the obvious preference for established entities with longer leases as part of that mix. The industry tends to cluster by sector and geography for example in the golden triangle of Oxford, Cambridge and London.
Covid has certainly put the life sciences sector in the spotlight, proving its resilience during the pandemic, and it will be exciting to see how the sector grows over the coming months and beyond.
...the number of lenders willing to provide quotes for loans against such properties is growing, and includes investment banks, commercial banks, insurers and debt funds…some mainstream lenders are now making formal lending allocations to the sector within their annual budgets