European life sciences real estate in early recovery

Europe's life sciences real estate market is beginning to stabilise, with cautious optimism returning among investors and occupiers, according to Cushman & Wakefield's September 2025 Life Sciences Update. The report indicates a slow but steady improvement in market conditions across the continent, underpinned by firmer debt markets, renewed venture capital activity, and increased public sector investment.

Rents for lab-enabled space in Europe rose by 2.6% in the year to Q1 2025, slightly behind gains in central business district (CBD) offices at 3.4%, but ahead of decentralised offices, which posted a 2.3% increase. Spain, Sweden and the UK led the way in rental growth for lab space.

Investment yields for lab-enabled offices have also shown signs of stabilisation. After a year of outward movement in 2024, yields in the sector declined slightly in early 2025, falling by 1 basis point year-on-year. This contrasts with CBD and decentralised office yields, which rose by 4 and 11 basis points respectively. Capital values for life science labs increased by 4% in euro terms over the same period.

Cushman & Wakefield noted that while the broader European property market continues to face challenges, life sciences real estate is drawing support from longer-term structural trends. These include the integration of artificial intelligence into research and development workflows, which is influencing both the design and functionality of lab spaces.

However, the report also highlights significant headwinds. Investment activity in R&D property has been limited due to mismatches between buyer and seller expectations on pricing and quality. Other commercial real estate segments, such as retail warehouses, logistics and healthcare-related properties, have attracted stronger investment volumes.

The supply-demand imbalance in key European life sciences hubs remains a pressing issue. Although new developments are underway—particularly in the UK and the Netherlands—the market still suffers from a shortage of modern, sustainable facilities. This has contributed to continued rental growth for the highest quality spaces.

In the UK, the "Golden Triangle" of London, Oxford and Cambridge remains the focal point for life sciences activity, thanks to its access to capital, talent and research institutions. Cushman & Wakefield reported that fitted lab space in Oxford and Cambridge has recently achieved record-high rents, while London is awaiting the completion of several prime deals expected to recalibrate rent benchmarks.

By mid-2025, 3.8 million square feet of lab-enabled space was under construction across the UK, with nearly half of it located in London. A further 5.1 million square feet has received planning consent, although elevated construction and financing costs could delay some projects.

Looking ahead, Cushman & Wakefield forecasts a gradual return of investor confidence over the next 6 to 12 months, supported by stabilising financial conditions and ongoing public sector backing. In the UK, policy initiatives are expected to streamline clinical trial infrastructure and accelerate regulatory approvals. However, the report cautions that short-term venture capital constraints and geopolitical uncertainty may temper the pace of recovery.

Investors, the report concludes, are becoming more discerning, concentrating capital on top-tier developments and prioritising existing projects until broader economic clarity emerges.