New UKSPA Chairman Dr Glenn Crocker MBE looks at how the Association will need to respond to a rapidly changing landscape…
I’m delighted to be taking over the Chair of UKSPA, albeit daunted by following in the footsteps of David Hardman, who has performed the role so well.
Like many in the sector, I don’t have a traditional property background. I started out as a research scientist with a DPhil in Immunology but quickly realised that the world of bench research probably would probably be better off without me.
However, I still had a strong interest in the burgeoning life sciences field and I felt that there might be a niche for scientists who understand business and business people who understand science. The problem was, I didn’t know much about business so, after a bit of post-doctoral work back in the early nineties, I decided to train as a chartered accountant and build my business skills that way. I chose EY, as the leading life science advisers, and spent many enjoyable years in Palo Alto, CA and Cambridge, UK working with a wide range of biotech companies, from start-up to huge.
Then came a call inviting me to apply for the post of CEO at a new start-up in Nottingham called BioCity. The company was inheriting some redundant former Boots research buildings with the aim of converting them into a bioincubator. It seemed to be an opportunity to do the things I enjoyed most at EY, working with early stage biotechs, as well try out actually building a start-up from scratch. It’s all very well advising on how to run a business but most advisers in professional services firms have never actually done the job- this was a chance to see whether I could walk-the-walk as well as talk-the-talk.
Luckily it worked out and BioCity grew from a 50,000 sq ft incubator in Nottingham to nearly 300,000 sq ft in three locations. However, achieving this was not straightforward. It was apparent early on that we would never fill a 50,000 sq ft building with life science companies in Nottingham if we didn’t become directly involved in supporting their creation and early development. Over time this activity has become more structured and there is now a venture development team that runs accelerator programmes in Nottingham, Glasgow, Alderley Park, Oxford, Newcastle and Aberdeen. Around 100 start-up opportunities are currently being worked with.
Funding is always an issue in the life sciences sector and it became clear we needed to try to do something about that. So we started investing small, pre-seed amounts into the businesses we were working with. This then developed into AstraZeneca providing the capital for a small investment fund we manage and then to BioCity taking third party investment onto its own balance sheet to increase investment capacity further, supplemented by returns from early investments and operating profits.
The model is now refined and working well, with the venture development and incubation teams identifying the businesses with the greatest potential and both working with the investment team to bring about the initial financing the companies need to start. The investments are helping to build strong businesses that are growing and taking on significant space in our various centres as well as providing us with good growth in the value of our investments.
The BioCity model of combining company creation, investment and property used to be quite unusual but I am seeing a growing number of organisations looking to combine provision of space with incubation and investment. This is on the back of a significant increase in interest in the “science property” sector as a whole from commercial investors and developers.
Historically dominated by public sector funding, the economics are changing to give science property the potential to be an attractive new asset class. This is being driven in part by a combination of a significant growth in both the number and level of funding of companies in the sector, which is increasing demand ahead of supply and moving rental levels upwards in many parts of the country. On the other side, traditional “alternative” asset classes such as student housing are maturing, with the result that investors are looking for the next growth area. Science assets may well be it.
This is causing a significant increase in activity, with organisations such as Stanhope and Mitsui announcing the creation of a 500,000 sq ft life sciences building in King’s Cross following on from their development at White City, which is also home to many life science and tech companies. Meanwhile, Dutch science park developer, Kadans, has made a number of UK science building acquisitions this year including significant investment in Stevenage Bioscience Catalyst. The arrival of TUSPark (China) on Cambridge Science Park and also saw the delivery of the new state of the art Biohub on the science park.
Manchester-based Bruntwood also entered into a joint venture with Legal & General with the aim of acquiring and building science real estate in the UK, while Trinity Investment Management and MEPC (amongst others) continue to invest in the sector.
UKSPA will need to respond to this rapidly changing landscape: the ownership of science parks will change, with increasing private sector and fewer public sector owners; there will be more complex relationships between increasing numbers of stakeholders and there will be consolidation in the sector. The number of individual members of the Association may well reduce but alongside this there is the opportunity to attract new members with new perspectives to offer the sector
UKSPA will need to ensure it remains relevant to this new world but while this is a challenge, it is also a huge opportunity for both UKSPA and its membership. The ride is only just beginning.