{"id":98342,"date":"2021-08-26T08:38:28","date_gmt":"2021-08-26T07:38:28","guid":{"rendered":"https:\/\/www.pbctoday.co.uk\/news\/?p=98342"},"modified":"2021-08-26T08:38:28","modified_gmt":"2021-08-26T07:38:28","slug":"life-sciences-construction","status":"publish","type":"post","link":"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/life-sciences-construction\/98342\/","title":{"rendered":"Construction crisis risks clipping wings of Life Sciences boom"},"content":{"rendered":"

The life sciences sector is the subject of huge investor and developer interest. The risk of disruption to projects, therefore, is an acute one. Simon Harbour, building consultancy partner at Rapleys<\/a>, looks at how the current building materials crisis<\/a> is impacting the industry<\/h2>\n

Investor appetite in the Life Sciences has surged in recent years. Unlike in other sectors, the pandemic has been a catalyst for significant investment including real estate and infrastructure, such as labs and research hubs as well as logistics and back-office facilities.<\/p>\n

Continued growth is expected, with the government launching its Life Sciences Vision<\/a>, which proposes to invest 2.4% of GDP into research and development by 2027.<\/p>\n

The Life Sciences opportunity<\/h3>\n

Investors and landlords are increasingly looking at Life Sciences as they seek to diversify their portfolios and hedge against the volatility seen, and expected to continue, in more mainstream sectors such as retail and offices \u2013 hard hit by periodic lockdowns, insolvencies and the move towards hybrid working. Retail assets, for example, are adaptable \u2013 with inbuilt delivery access, deep floor plates, few windows, and, often, existing storage units which make them potentially ideal laboratory facilities \u2013 while also bringing footfall and employment to locations over-saturated by traditional retail.<\/p>\n

Office spaces<\/a> meanwhile have generally lower rental values than purpose-built laboratories and can be repurposed to accommodate collaborative working and cross-fertilisation of disciplines. Refurbished lab spaces also have strong eco-credentials and good speed-to-market rates.<\/p>\n

The infrastructure required for the ongoing battle against Covid-19 has, of course, played a huge role in accelerating these trends. However, a combination of other long-term factors is driving investors towards Life Sciences. The sector as a whole is comparatively less dependent on typical economic cycles and therefore more capable of weathering economic storms and recessions. Income is generally stable.<\/p>\n

In 2020 venture capital investment into the Life Sciences in the US soared to $26.1bn, and lucrative and well-resourced science \u2018clusters\u2019 have been developed at scale in cities like Boston, San Francisco and San Diego. These trends provide a good template for what a Life Science boom in the UK might look like going forward, particularly around core locations centred on high-performing academic institutions and innovation centres, not least including the \u2018Golden Triangle\u2019 (Oxford: Cambridge: London).<\/p>\n

Nevertheless, in the UK, the sector is still nascent, and significant infrastructure and development will be required to meet demand. Prior to the pandemic, there was already a shortfall of built space to accommodate the sector, and this has only become more acute as Life Sciences have grown in prominence during the last 18 months.<\/p>\n

Continued expansion in the UK, though, risks being stymied by the well-trailed global supply chain challenges seen across industries.<\/p>\n

The global supply chain challenge<\/h3>\n

To keep up with demand, Life Sciences new build and fit-out projects \u2013 particularly those serving the Covid-19 supply chain \u2013 are required to be delivered at pace.<\/p>\n

The ongoing effects of Brexit and the pandemic have combined to create a perfect storm of factors which are pushing up prices and extending lead times, as supply fails to keep up with rising demand, posing a significant threat to effective project delivery.<\/p>\n

While activity in the construction industry picked up at the end of H1 2021 (The ONS recorded<\/a> that output grew by 6.3% in the three months to May 2021 compared with the previous three-months), there remains a shortage of both workers and materials to match demand.<\/p>\n

The \u2018pingdemic\u2019 has slowed the rate of recovery as many industries suffer disruption to their available workforce. For example, swathes of lorry drivers have been forced to periodically self-isolate leaving a shortage of 100,000 drivers<\/a>, according to the Road Haulage Associaton (RHA). This has caused supply chain backlogs as well as subsequent inflation to the associated costs of transportation.<\/p>\n

Meanwhile, shortages of key building materials such as timber and steel, partly driven by the demands of large publicly funded projects such as HS2, have been compounded by new customs rules on imports.<\/p>\n

A shortage of sand, required for everything from concrete, tarmac, and windows to the glass used in scientific equipment, has been an ongoing concern since 2015, and has worsened significantly alongside the vaccine rollout. These shortages are expected to rise over the course of the next two years, as demand for vaccination vials creeps up to the 2 billion mark.<\/p>\n

Alongside building materials, plant and equipment availability is an acute challenge.<\/p>\n

Life Sciences projects often require a higher proportion of bespoke mechanical and electrical plant, which have been significantly affected by the global semi-conductor shortage. To take one example, according to the ONS, in May manufacturing output of transport equipment suffered its largest fall since April 2020 due to microchip shortages<\/a>. While June saw a slight recovery, the expectation is that this disruption will continue well into 2022 and perhaps beyond.<\/p>\n

Life Sciences projects are therefore increasingly having to turn to using standard plant and equipment which, while often a more expensive solution in the long term, provides better availability.<\/p>\n

Counting the cost<\/h3>\n

Before the pandemic, the main concern for Life Sciences developers when placing an order with a contractor for a new build or refurbishment project was cost. Now, developers are prioritising transparency and surety from contractors regarding their subcontractor network, equipment availability, and material supply.\u00a0 A contractor demonstrating that they can successfully complete a project within a desired timescale may be chosen over a cheaper alternative.<\/p>\n

At the same time, though, the fluctuating cost of equipment and materials driven by shortages places a strain on contractors who need to hedge against price rises and protect their cash flow, pushing up the cost of delivery. Investors and developers will therefore need to be increasingly careful to not become exposed by projects over-valued by contractors.<\/p>\n

These challenges are unlikely to disappear any time soon. Developers must therefore be cognisant of the need to be adaptable when negotiating with contractors<\/a>. A careful balance must be struck to ensure project feasibility, requiring robust project management processes to deliver on time and cost-effectively.<\/p>\n

 <\/p>\n

 <\/p>\n

Simon Harbour<\/strong><\/a><\/p>\n

Building Consultancy partner<\/p>\n

Rapleys<\/p>\n

Twitter: @RapleysLLP<\/a><\/p>\n

LinkedIn: Rapleys<\/a><\/p>\n

\n<\/div>","protected":false},"excerpt":{"rendered":"

Simon Harbour, building consultancy partner at Rapleys, looks at how the current building materials crisis is impacting the life sciences sector.<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[304],"tags":[583,997,908],"stakeholder_rel_tag":[],"contributor_rel_tag":[],"class_list":{"0":"post-98342","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-planning-construction-news","7":"tag-construction-products","8":"tag-development","9":"tag-economy"},"acf":[],"yoast_head":"\nConstruction crisis risks clipping wings of Life Sciences boom<\/title>\n<meta name=\"description\" content=\"Simon Harbour, building consultancy partner at Rapleys, looks 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