Space: the final frontier

Niall Martin, COO of Mission Therapeutics, is stumped. This comes as little surprise given his company’s business is “developing small molecule drugs to target deubiquitinating enzymes involved in the DNA damage response, with the aim of inducing synthetic lethality”. But that’s not the problem. It’s space. “We’ve got 35 people and we could expand. We’re looking to get finance, we’re looking at grants and deals with other companies, and all of those are bringing in headcount. We could go to 45 within the next few months but we just don’t have the space to do that.”
This is the challenge facing many SME firms in the UK life sciences industry, the subject of this special report for Estates Gazette. The government wants the UK to become the global hub for life sciences, a sprawling £868bn mega-sector spanning pharmaceuticals, medical technology and biotechnology and encompassing everything from hospital equipment and prosthetic limbs to drug development and gene therapy. But SMEs are the lifeblood of the industry, and if they can’t find suitable lab space, they can’t grow. The fundamental problem seems to be reconciling biotech’s dynamism with property investors’ craving for certainty. Laboratories are expensive to build and highly specialised for different fields, but corporate life cycles are short and unpredictable. Firms may swell exponentially when their eureka moment arrives, or disband overnight if it turns into a dead end. So what’s the answer? I spoke to people across the property and life sciences sectors trying to make a breakthrough.

Estates Gazette Life Sciences report

Cars, jewellery, Black Sabbath… prosthetic limbs

The Midlands is renowned for its metal exports in many forms. What is less well known is that it’s the UK’s medical technology heartland, which means it produces quite a lot of hospital equipment and orthopaedic devices too. Medtech is an £18bn subsector of the UK’s life sciences industry, and together, the West and East Midlands are home to 30% of companies. In this piece for Estates Gazette, I interviewed Sir Albert Bore, leader of Birmingham city council, about his mission to raise the region’s medtech profile and the £800m property portfolio he’s identified to do it.

Crossrail: 40 years young

Last year marked an important milestone for Crossrail: its 40th birthday. London’s new east-west link was first proposed in the 1974 London Rail Study, even if it only broke ground 35 years later, after decades of reports, failed legislation and repeated balking at the high costs of the scheme. This is a tediously familiar tale in the recent history of the UK’s transport infrastructure. There has been a consistent lack of political will to push through major projects, leaving strategically important schemes mired in the planning system or dropped abruptly with a change of government. As a result, the UK lags behind other developed nations – ranked ninth overall in the World Economic Forum’s Global Competitiveness Index, but only 27th for the quality of its transport network.

Transport is essential to the UK economy, and there is an urgent need for investment in roads, rail and airport capacity to ease congestion, support growth and accommodate 10m additional citizens by 2035. It is a critical juncture for key projects including HS2, Crossrail 2, much-needed rail improvements in the North and airport expansion in the South-East, and if the UK is not to grind to a halt in 20 years’ time, we have to start now. Political consensus and stability will be essential to delivering these aims – but unfortunately, we are a month away from the least predictable general election in decades. In this article on the next government’s transport policy for Estates Gazette, I assessed the prospects for a very uncertain future.

When God closes a Methodist hall, He opens a megachurch

Picture a church. If you’re thinking of steeples and stained glass, you’re behind the times. Today places of worship are just as likely to look like cinemas, bingo halls, state-of-the-art conference centres or even industrial sheds. In this special report for Estates Gazette, I investigated how changing patterns of worship are altering the property landscape, as Britain’s older religions shed buildings that are increasingly surplus to requirements while newer ones struggle to find venues large enough to house their booming congregations. As well as a fascinating area for social historians and psychogeographers, religious property is increasingly big business. I spoke to property professionals involved in a vast range of deals, from convents and cathedrals to Methodist halls, mosques and megachurches, as well as the man responsible for London’s 36 (but probably falling) Quaker meeting houses and the head of the London Kabbalah centre, where a major extension is on the cards.

And for a different take on religious property, I also interviewed the Church of England’s Church Commissioners about how they manage an investment fund that is on very much the opposite trajectory to its congregation numbers, growing almost 16% during 2013.

Special report on religious buildings for Estates Gazette

BRICs and mortars

How worried should investors be about the apparent resurgence of the Cold War between Russia and the west? Was the dramatic slowdown in Brazil’s economy really just a blip? Is China about to suffer its own subprime crash, and how might a make-or-break general election in India affect its real estate market?

It’s now 13 years since the “BRIC” countries were grouped together by Goldman Sachs economist Jim O’Neill. Since his 2001 report, these emerging economies have indeed taken their place among the world’s powerhouses. Their combined GDP has grown more than five-fold and their share of the world’s wealth has increased from 8% to nearly 20%. Even a tiny blip in any one of them sends shockwaves through global markets. With 40% of the world’s population living on more than a quarter of the world’s land area, the BRICs’ growing prosperity made for an apparently unstoppable real-estate boom, barely checked by the global financial crisis. Their demographic momentum and structural undersupply still present undeniable opportunities, but are the rewards high enough to make the risks worthwhile? In this report for Estates Gazette, I examined the prospects for investors in Russia, India and China. (The Brazil section is by EG features editor Emily Wright.)

Spring in the countryside (part I)

Scarlett O’Hara’s dad knew what he was about. When he told his sceptical daughter that land was the only thing worth having because it’s the only thing that lasts, it took her more than three hours, a civil war and several husbands to come round to his way of thinking. But were he investing in the UK today, O’Hara senior would have no doubt felt vindicated. Land has weathered the recession better than anything else, not only holding its value but increasing it almost three-fold over the last ten years, as investors of every kind have piled into the market. In this special report for Estates Gazette, I investigated the extraordinary success of rural land, and what could check its progress, from the abolition of inheritance tax relief to Scottish independence.

Also included: an interview with James Townshend, CEO of Velcourt, one of Britain’s biggest farming businesses, who said that advances in biotechnology should increase productivity by 25% within the next ten years.

Meet your future landlords

When international investors go in search of real estate, the question is not if but when they’ll come to London. The UK capital’s stability, transparency and liquidity have made it a magnet for money – private, institutional or sovereign – from every continent. In 2013, foreign buyers were responsible for more than two thirds of commercial property investment, with established sources of capital competing with newer ones, predominantly from the Far and Middle East.

So where will the next wave come from? Ultra-high-net-worth individuals may hail from anywhere, but the greatest concentrations of wealth tend to be where there’s either a lot of resources, as with the oil riches of the Middle East and Central Asia, or a lot of people – the pension savings of the growing middle classes in China, Malaysia and Korea. In this feature for Estates Gazette’s MIPIM issue, I identified five countries set to be the most significant new entrants over the coming decade – a world tour that took in Taiwan, Kazakhstan, Nigeria, Brazil and, still some way off, Iran…

So that’s what goes on in the East Midlands

Does the word “eaches” mean anything to you? Do you know your omnichannel from your multichannel, your NDCs from your LATs, your dark stores from your cross-docks? In short, do you speak retail logistics? It’s a language that is fast evolving as a growing proportion of sales are made online, and retailers’ distribution networks are re-engineered to serve a much more dynamic market. In this special report for Estates Gazette, I investigated what this means for the traditionally unglamorous world of sheds – and found that what goes on behind the scenes is a lot more interesting than you might expect… Also in this issue: I interviewed Dino Rocos, operations director at John Lewis, on being a market-leader in omnichannel distribution and how it’s planning to stay ahead of the competition, and the customer.

Ghost town

For years, London’s dominance as the world’s leading financial centre was matched by the dominance of financial services in the capital’s property market. But while the financial crisis doesn’t seem to have challenged the City’s position as the favourite destination for global capital, lettings to the sector dropped like a stone – and still haven’t recovered. Where financial services companies once took one in three lettings in the City, they are now lagging behind both TMT and professional services. In this nine-page special report for Estates Gazette, I spoke to property experts and financial services firms themselves to find out whether the change is permanent, and interviewed RBS’ head of property strategy about his plans to streamline its vast office portfolio in readiness for re-privatisation.