Life Sciences

January 2025 Forecast

Increase in demand

Venture Capital funding is forecast to increase in 2025. This is expected to drive demand for lab and office spaces as companies seek growth opportunities across the UK.

Mid-year review

• Venture Capital activity remained resilient in the first half of 2025, with Q1 delivering £1.3bn in total investment, the largest quarterly capital deployment since Q3 2021. Q2 followed with a more measured performance of £700m, bringing the H1 total to £2bn, surpassing the equivalent periods of 2022, 2023, and 2024.
• Life sciences leasing volumes reached 237,000 sq ft in H1 2025, a 65% increase on H1 2024. However, while funding and leasing volumes have improved, there is not always a direct correlation between companies receiving venture funding and requiring immediate expansion of space.

January 2025 Forecast

Renewed life in capital markets

The UK life sciences real estate investment market is expected to gain momentum in 2025, supported by the anticipated delivery of new development schemes. These completions are projected to create entry points for capital, particularly as assets transition from speculative construction to income-generating phase.

Mid-year review

• Capital markets activity in the UK life sciences real estate sector remained muted in the first half of the year, with no major transactions completing. Notably, Unity Campus was brought to market but has yet to transact. A persistent bid-ask spread continues to weigh on deal flow, with pricing expectations between buyers and sellers remaining misaligned. Investors are seeking repricing to reflect current market risk, while vendors have largely been unwilling to adjust valuations accordingly.
• It is expected that there will be a marginal improvement in transaction volumes in H2, relative to H1. However reduced occupier demand matched with existing (high) valuations are likely to continue to drag on investor sentiment for the remainder of the year.

January 2025 Forecast

Government to play a key role

Government engagement is expected to play a defining role in shaping the UK life sciences sector in 2025. Following the General Election, the new administration has an opportunity to signal its long-term commitment to the sector and its role in driving economic growth.

Mid-year review

• The UK Government reaffirmed its commitment to the Life Sciences sector In July, positioning it as a core pillar of the National Industrial Strategy. The new Life Sciences Sector Plan sets out a ten-year mission aimed at positioning the UK as Europe’s leading life sciences economy by 2030 and third in the world, only behind China and the U.S. The sector is also seen to be a crucial and integral part of the newly announced ten-year plan to transform the NHS.
• However, challenges remain around the UK’s business environment. In particular, the current drug rebate scheme (VPAG) for branded medicines is still imposing rebates on drug sales far in excess of other peer countries in Europe and regulatory hurdles still delay clinical trials and new product launches.

Figure 15: Life sciences laboratory take-up, Golden Triangle (sq ft)

Figure 16: UK life sciences development pipeline (million sq ft)