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From tiny acorns to mighty oaks: how the property community can satisfy the spinouts’ needs

Posted: 18/11/2019

Funding of more than £700 million has been delivered to 24 Oxford University startups in the last year. This remarkable investment is over £100 million more than Cambridge and £150 million more than King’s College London.

Many of the companies are tackling issues the human race needs to confront in order to survive and they’re attracting talent from around the globe.

The Oxford brand is already a magnet for talent of the highest order. But are we building infrastructure to accommodate, not just start-ups, but also unicorns – the emerging £1 billion-plus companies?

If innovation begins where research takes place, then in Oxford that generally means in the city - where the scientists live and study. The university provides initial research space but when new companies want to join the eco-system, where do they go?

Laura Gorman, senior associate in the real estate division at Penningtons Manches Cooper, has advised Osler Diagnostics, a health tech company developing innovative biosensor technology and products, since 2017. Osler was spun out from the university in 2016 and has continued to expand.

It grew from starter premises before eventually securing 15,000 sq ft office and lab space in King Charles House in the city centre this year.

Osler’s rapid growth illustrates the need for flexible real estate solutions for new science and tech companies. The firm cannot risk being tied into standard five or 10-year lease terms until it has at least been through its Series A funding round.

Incubators, such as the recently-opened OSI site in Woodstock Road, are an excellent way to secure space in the early days, offering not just office and lab space, but opportunities to meet other innovators.

But, as Jim Wilkinson, CFO of OSI points out: “For Oxford University’s world leading science to achieve its global impact, the right space is desperately needed. A big blockage at the moment is the lack of wet lab space in Oxford, where it’s caveman times compared to the leading US ecosystems. This has to be rectified in short order at all levels including incubator and grow-on space.”

It’s hoped Mr Wilkinson isn’t yelling into the void; it’s thought the proposed schemes at the Oxpens, Osney Mead, Oxford North, Jam Factory and Island sites will incorporate facilities (including labs and offices) the new spinouts need. The question is when.

And when the birds are ready to fly the nest? Penningtons Manches Cooper partner Richard Smith is reassuring: “Even though the growing companies will need to travel a little further afield, there are options. Business parks such as Milton Park, Harwell, the soon-to-be-expanded Begbroke and Oxford science parks and Culham will all be keen to oblige.”

Mr Smith advised Oxford Nanopore Technology, a world class manufacturer of portable DNA sequencing devices, on real estate and construction at its state-of-the-art MinION manufacturing facility at its 34,500 sq ft pre-let at Harwell in 2018. The firm used Penningtons Manches Cooper from the start.

All in a day’s work for the firm, as Mr Smith adds: “We acted for over 60 per cent of all Oxford spin-outs and worked on 90 VC and spin-out transactions in 2018.”

Rivalry among the real estate community to attract unicorns is inevitable. But all providers agree the need for connectivity, infrastructure and placemaking to rival the clusters in Cambridge and Boston. The property community will be key to rising to the challenge and realising the ambition.

This article was published in The Oxford Report in November 2019.

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Penningtons Manches Cooper LLP

Penningtons Manches Cooper LLP is a limited liability partnership registered in England and Wales with registered number OC311575 and is authorised and regulated by the Solicitors Regulation Authority.

Penningtons Manches Cooper LLP