Oxford invests in Cambridge
Oxford Properties Group (Oxford), a global real estate investor, asset manager and business builder, has extended its global life sciences platform with the acquisition of 310 Cambridge Science Park, United Kingdom, its first investment in the sector in Europe.
Since its first investment in the sector in 2017, building a substantial and dedicated life sciences business has been one of Oxford’s highest conviction investment strategies. This £45 million off-market transaction from the Local Authorities’ Property Fund represents the seventh life sciences asset Oxford has acquired since the start of 2021 that, when accounting for new development opportunities at these properties, accounts for over USD1.3 billion in deployed capital.
The transaction comes as part of an acceleration of Oxford’s established life sciences strategy. Oxford currently has a USD1.1 billion (GBP0.8 billion) life sciences portfolio in North America, representing over one million sq ft of high-quality, existing properties, in addition to a development pipeline in excess of two million sq ft Oxford intends to deploy approximately GBP1.2 billion in European life sciences over the next five years, as part of its goal to build an USD10-15 billion (GBP7-11 billion) global life sciences business over time. Oxford’s initial European focus will be on opportunities within the UK, with eventual expansion into other core territories across Europe.
In line with its broader investment strategy, Oxford can access life sciences focused real estate through multiple entry points including direct property acquisitions and developments, investments in platforms and via debt, having previously lent to private equity investors including mezzanine financing for the US$8 billion privatisation of a life sciences real estate firm.
310 Cambridge Science Park provides approximately 59,000 sq ft of fully fitted laboratory space and ancillary office accommodation, with around half fitted out as high specification wet labs. The asset is fully let to Astra Zeneca until November 2023, who are then relocating to a new headquarters.
Founded in 1970, Cambridge Science Park is a 152-acre campus located at the northern edge of the City of Cambridge and provides approximately 1.9 million sq ft of office, lab and R&D space to 130 occupiers spanning life sciences, pharmaceuticals, technology and engineering. Demonstrating the attractiveness and strength of the demand for the campus, it is currently 100 per cent let. The science park benefits from strong road connections provided by the A14 and public transport including the guided busway, a light transport system that connects the campus with the city centre, Cambridge North train station and surrounding villages.
Recent Oxford life sciences deals include last month’s USD173 million acquisition of Foundry31 in the San Francisco Bay Area and the USD119 million acquisition of Boren Lofts in Seattle.
Jo McNamara, Executive Vice President, Europe and Asia-Pacific at Oxford Properties, says: “Since our first life sciences investment in 2017 this sector has been one of Oxford’s key global conviction calls. The sector is supported by several structural tailwinds including demographic changes and the convergence of science and technology. Advances in data analytics and AI are accelerating life-changing innovations across biotech, pharmaceuticals, nutrition and medical devices. As a result, both private and governmental funding for promising products and companies has markedly increased in recent years. As this capital is deployed, occupier requirements increase, leading to the availability of little to no space in key global hubs such as the Cambridge Science Park or Kendall Square in Boston, which provide tenants with highly desirable networking and talent pooling ecosystems.”
“As we have grown our platform in North America over the past few years, we have seen the sector evolve and mature and we are now beginning to see the same pattern emerging in Europe. We intend to use the learnings and expertise we have built up in the US to fulfil our ambition to replicate that success in Europe.”
Abby Shapiro, Senior Vice President, Head of Office, Retail & Life Sciences at Oxford Properties, adds: “Cambridge Science Park is the most established life sciences campus in the UK and is the perfect location for Oxford to expand its platform into Europe. The Cambridge market demonstrates strong demand fundamentals yet suffers from a lack of good quality supply. Unit 310 is of an incredibly high quality and provides a near-term opportunity to crystalize reversionary income on high-standard lab specifications and bring rents up to market levels. This ability to tap into the significant demand for laboratory space in the area will enable us to create extra value.”
“Oxford’s initial European focus will be on the UK, where we are actively seeking opportunities in the ‘Golden Triangle’ and the Greater London area. The momentum driving the life sciences sector in the UK is supported by the research and start-ups emanating from some of the world’s most prestigious medical universities, the focused funding of the UK government and increased levels of venture capital activity. Given the relative low levels of existing supply, Oxford will look to utilise our world-class development expertise to help provide the critically needed lab infrastructure required to allow innovative biotech firms to deliver the life-saving therapeutics of tomorrow.”
Oxford Properties was advised by Creative Places and CCLA was advised by Cluttons.