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The life sciences sector is attracting more and more attention from real estate investors. This sector is expected to grow rapidly in the coming years, driven by advances in medical technology and an ageing population. However, that does not mean that every life sciences location makes a worthwhile investment or is even investable. It is important to be selective when seeking those life sciences locations (clusters, science parks and others) that have the potential to provide the most attractive risk-adjusted returns.
‌So, what drives success in a life sciences cluster? Let’s start by defining the term “cluster”. Then we can group clusters into three broad categories, giving examples of each type, before listing the principal drivers of success.

‌What is a cluster?

‌A business cluster is a geographical location where the critical mass of resources and expertise combines to give that location a key position in a particular industry sector that engenders sustainable competitive advantage.

‌A science or innovation cluster is an agglomeration of complementary (and competing) businesses engaged in all aspects of science-based research and development, commercialisation of products, manufacturing, and sales. Occupiers will cover a broad spectrum, including academia, hospitals, science and tech start-ups, scale-ups, small and medium enterprises (SMEs), and major corporates. While having similar occupiers and objectives to a science park, science-based clusters, with a multiple-ownership structure, will tend to grow organically at scale, rather than in a more curated fashion associated with single-ownership purpose-built science parks. They will likely cover a broad geography, sometimes crossing international borders and will contain a comprehensive mix of office, R&D, lab, and manufacturing premises.

‌Clusters, through their wide geographical spread, will have access to several universities, higher education establishments, and university teaching hospitals. However, the ultimate goal is the same – academic and business collaboration, nurturing the growth of spinouts, start-ups and SMEs, cross-pollination of ideas and research, innovation of new product, and acceleration to market. The importance of strong digital infrastructure and international connectivity should not be underestimated in the success of large clusters.

Science parks

The development and growth of purpose-built science parks, campuses, and clusters can be traced to the period of the 1960s and 1970s, with examples such as Utrecht Science Park (1961), Cambridge Science Park (1973), and Kendall Square in Boston (1978).

The critical factor in the establishment and evolution of these and other clusters is proximity to academia and “knowledge centres”: science and medical centres of excellence at universities and teaching hospitals. This provides the talent pool and research innovation to drive growth.

‌Clusters are one of three types. First, purpose-built science parks located within proximity of the academic and medical facilities. Second, clusters that develop and evolve around academic or medical centres of excellence making use of a mix of new, existing and repurposed buildings and redevelopment of obsolete commercial space. Third, what might be termed “city or cities clusters” where several science parks or other “areas of innovation” form part of a citywide or even regional cluster network.

1. Purpose-built parks

‌UK examples of purpose-built science parks would be Oxford Science Park and Granta Park, Cambridge. Potsdam Science Park inGermany and Leiden Bio Science Park in the Netherlands are examples from the continent. While not applicable to all, purpose-built parks tend to be held under single ownership. This allows curation of tenants and active asset management to drive real estate performance. There are many examples of parks developed on greenfield or brownfield sites, which are typically low-rise in landscaped environments with a range of on-site amenities and services.

Purpose-built science or innovation parks can also be found in urban settings. In these cases, where land supply tends to be limited, mid-size tower blocks allow scale and critical mass of tenants and can be designed in a way to facilitate collaboration. Two good examples are the recently developed White City Place in West London, located adjacent to the new Imperial College White City Campus, and Amsterdam Science Park located in the eastern part of Amsterdam.

2. Clusters that develop and evolve

‌At an urban scale, London King’s Cross Knowledge Quarter (KQ) is a unique example of an urban cluster within a global city. KQ covers 260 ha (642 acres) around King’s Cross, Bloomsbury and Euston Road and is anchored by the Francis Crick Institute, a partnership between six leading biomedical organisations. The KQ captures a broad mix of science, tech, art, history and culture, and the combined effect has been to create a vibrant and thriving ecosystem which is so critical in attracting and retaining talent.

‌3. Single-city or multi-city clusters

‌A third category is the city or cities cluster. Paris and London can be described as single city clusters. In each case, the cluster is polycentric. For example, in London you find well-established locations and, in addition, a number of new science and innovation hubs in the development pipeline that will add critical mass (such as Whitechapel and Canary Wharf).

Some industry commentators refer to the Oxford–Cambridge-London life sciences parks as the Golden Triangle because they are located across three UK geographic regions. The Danish-Swedish life science cluster Medicon Valley spans the island of Zealand in Eastern Denmark and the Skåne-region of Southern Sweden.

The drivers of success

‌In terms of the drivers of success, life science clusters have much in common with clusters in other parts of the knowledge economy such as the tech sector, which are:

1. A deep talent pool
2. Openness to people and ideas
3. The presence of local risk capital

‌The support of government (both local and national) and business leaders is the fourth driver. The fifth is availability of alternative work if a start-up fails. Clusters, science parks and innovation districts that score highly on at least four of these five drivers are well positioned to succeed in the life sciences sector in the years ahead. Now that we have identified the drivers, the challenge is to quantify them and that will be the subject of my next article.

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