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In the rapidly advancing realm of biotechnology and pharmaceuticals, life sciences real estate is more than bricks and mortar – it’s the enabler of innovation. Investors venturing into this specialized asset class are essentially betting on ecosystems that need real estate to grow. Think of it as the skeleton that keeps the muscles in place and the body as a whole standing. There are certain strategic parameters that can be used to select the right European cities for life sciences real estate investments. This must then be woven in with external push and pull factors that are forcing companies in the life sciences sector to adjust when it comes to their real estate footprint.

At the heart of life sciences innovation lies a robust, interdisciplinary talent pool with access to financing supported by company leadership. Cities with a high concentration of graduates in biotechnology, medicine, data science, and engineering give life sciences companies the human capital needed to thrive.

Universities’ role in life sciences goes far beyond teaching; they serve as catalysts for collaboration, driving industry-academia partnerships, and facilitating technology transfer. Cities renowned for their academic institutions, such as Paris or Cambridge, are uniquely positioned to foster a dynamic and sustainable innovation ecosystem.

Higher education institutions also provide vital research infrastructure. They offer laboratories, collaborative research centers, and incubators that attract venture capital, public funding, and international academia-industry partnerships. For instance, universities known for their research in molecular biology and personalized medicine often work closely with established pharmaceutical companies, accelerating everything from early-stage R&D to clinical trial execution. The University of Oxford works with Novo Nordisk, Freie Universität Berlin works with Bayer and Pfizer.^1,2

Many other academia-industry partnerships exist, they are the standard rather than not. Companies seek this out as well. As companies respond to demand forces for their products, they look for the educated staff that has the knowledge needed to develop said products. Working with and providing leadership to research institutions and universities is a crucial funnel which directs the brainpower of an educated workforces into the right direction.

Companies also have the balance sheets and the network needed to access vast amount of financing across the capital stack, ranging from venture capital funding to private equity to debt.

Combine these three factors – an educated workforce from top-level universities, access to financing and companies providing leadership – and you create the cluster effects that support the life sciences ecosystem that a real estate investor wants to build the skeleton for.

In the realm of life sciences, ‘location, location, location’ goes beyond traditional real estate value – it extends to the creation and enlargement of clusters that rise around the aforementioned nexus. The cluster effect occurs when companies, research institutions, and support services are co-located, creating a self-reinforcing ecosystem that amplifies innovation and efficiency. Cities like Oxford, Cambridge, London, Paris or Berlin exemplify this phenomenon, where the presence of long-established pharmaceutical giants has spurred the development of research parks, specialized industrial units, and top-tier laboratories.

Investing in cities that already have established life sciences real estate assets provides several strategic advantages. These locations offer a proven track record of collaborative success, reduced developmental delays, and a supportive and established supply chain ecosystem. Existing facilities mean that companies facing the imminent expiration of key patents can quickly repurpose or scale operations without the prolonged lead times required to construct new, compliant spaces. As a result, investors can leverage historical performance data and an established network – all of which reduce risk and enhance the likelihood of resilient leasing demand for labs and related real estate space.

Furthermore, the presence of mature clusters attracts additional investment. Ancillary businesses – from logistics and specialized consultancy firms to regulatory compliance experts – gravitate toward these hubs. This self-reinforcing network effect means that a city’s attractiveness as a life-sciences innovation center continues to grow over time, making it a veritable magnet for both public and private capital. 

Recent shifts in global trade dynamics – most notably, the imposition of tariffs – will likely reshape the strategies of multinational life sciences companies.

How the trade environment will change remains unclear despite some progress, such as the UK-US trade agreement. If US companies face higher tariffs when exporting finished products to Europe, many are likely to opt for establishing production and R&D facilities within the target market – i.e. Europe – instead of exporting from the US. This would allow the investing company to access, tariff-free, an economic bloc that is on par with that of the US: the EU’s GDP in purchasing power parity terms was USD 26.4 trillion in 2023, compared to USD 27.7 trillion for the US.

Likewise, EU pharmaceutical companies may choose to move production capabilities to the US if tariffs on imports are high. According to Eurostat, the key market in Europe that is exposed to this risk is Ireland. In 2024, the EU exported EUR 120 billion worth of medicinal and pharmaceutical products to the US. More than a third, EUR 44 billion, came from Ireland alone, while Germany, which ranked second, exported less than two thirds (EUR 28 billion) of Ireland’s volume. Indeed, the growth of Ireland’s exports of these goods to the US has averaged around 25% p.a. over the last decade, compared to ca. 14% p.a. for the EU as a whole. This is one of the key reasons Dublin ranks so highly in Figure 1, but it’s also a risk investors must be aware of: rankings can change as markets shift.

If tariffs become a serious issue for the US-EU pharmaceutical trade, cities with adaptable, state-of the-art life sciences real estate assets stand to gain from this erection of trade barriers – see Figure 1. For these urban centers, the expectation would be that a number of US companies would choose to set up wholly owned subsidiaries or joint ventures, further reinforcing local clusters and accelerating innovation. Ireland, however, is likely to bear the brunt of the damage in the case of Europe’s access to the US market. 

¹ University of Oxford, (2025), “Key Partnerships”. Accessed 4 April 2025.
² Freie Universität Berlin (2025), “”. Accessed 4 April 2025.