Life sciences real estate trends for 2024 and beyond

The life sciences industry is constantly evolving. With tight budgets, shifting priorities, and the way we work changing for good, life sciences companies need to keep pace with employee and investor demands — or risk being left behind their competitors.

As the life sciences sector continues to evolve with the rise in digital health, continuous development of preventative and personalised treatments, and to cope with the challenges of ageing populations, its workspace requirements must evolve too. While demand for specialised office and laboratory facilities is soaring to keep pace with this innovation, real estate managers now face a delicate balance between evolving tenant needs, increasing financial and ESG pressures, and planning for the future.

Now in 2024, the life sciences real estate has four key trends to contend with: sustainability, funding, investor consolidation, and looking to the future.

Sustainability

Sustainability has fast become a top priority for every sector — and life sciences are no exception. From January 2024, the Corporate Sustainability Reporting Directive (CSRD) requires large businesses and SMEs that trade in the EU to conduct sustainability reporting to stricter standards. This will affect any life sciences organisation that operates across or trades in Europe — including those based in the UK. This Directive, coupled with societal and investor pressure, will bring a heightened focus on the sustainability of laboratory buildings and the recognition that these buildings are different from standard office spaces.

In 2024, we should see the development of an industry standard for sustainable life sciences developments. Although the UK has largely been at the forefront of building sustainability, the life sciences sector has been somewhat left behind. Closer collaboration between developers and tenants will ensure buildings are designed with the end-user in mind, optimising operational efficiency and reducing the burden on day-to-day operations. For instance, enhancing how laboratory waste is dealt with or the energy efficiency of HVAC systems could result in great sustainability gains and cost reductions.

Tenant confidence

2023 was a hard year financially for businesses of any size. Budgets were squeezed across the board, regardless of sector, with soaring energy prices, inflationary pressures, and cost-of-living challenges hitting all of us. As such, tenants have been scaling back and focusing on optimising how they operate in 2023 — making the leasing market more challenging.

However, there is still significant money for the life sciences and we will continue to see confidence returning to the sector in the year to come. For instance, this year is finishing with significant funding success, such as Quotient Therapeutics, which should act as a springboard for 2024. What’s more, UK biotech fundraising has now achieved its best quarterly total since 2021, rising 48% from earlier this year. As companies can…