Operational expertise Investors often seek strategic partnerships with successful operators to maximise opportunity. Such partnerships are critical to the planning, design, development and operation of new operational assets. CapEx spend Life sciences real estate assets require a higher CapEx spend on their fit out as specialist space and upfront costs are often higher than a standard office fit out. These can be offset by: factoring in greater re-usability for the space generating higher rents from more sophisticated fit out and lower renewal costs ensuring strong retention rates. Risk profile The sector involves venture capital and private equity-backed tenants and makes the most from flexible leasing arrangements. This presents a different profile to traditional real estate investment. Investors will likely need to look beyond covenant strength, recognising that the sector offers an entirely new business model. Critical mass Designing and constructing the right buildings in the right locations is key to creating successful real estate clusters for life sciences. With an expected increase to £22 billion in UK public funding for R&D by 2025, and an additional £300 million immediate investment in facilities and lab equipment, we expect to see increased sophistication in life sciences real estate build. Challenges in the sector 12 Real Estate Investment 2022