Founded in 2017 as an investor, developer and operator of science and innovation real estate just as the sector was catching fire in the UK, Mission Street has built a portfolio of over 1.5 million square feet of committed projects in Oxford, Cambridge and Bristol.

Alongside partner BentallGreenOak it has just secured an £180 million senior loan from Tristan Capital Partners, on behalf of the TIPS One Debt Fund and co-investment capital, to fund three of those assets totalling 300,000 square foot in Oxford and Cambridge. And it is considering other funding options for its most ambitious project to date, the 1-million-square-foot Digital East in Cambridge.

CoStar News caught up with founder Artem Korolev to discuss the market, his ambitions and progress. Korolev has a relatively short but highly focused history in real estate. Prior to starting the company he was Head of UK acquisitions and a member of the founding team of GreenOak Real Estate, now BGO, the major international real estate investment and asset management firm. Before that he worked for Morgan Stanley in its UK real estate team.

The idea of developing life sciences real estate caught hold early on as he graduated with First Class Honours for the MA in Land Economy at the University of Cambridge.

Korolev says he had been drawn by the opportunity to combine his interest in science with his skillset in real estate and his passion for building businesses.

"What I saw was that UK universities and government were starting to see the need to blend academic excellence with commercialisation. Specialist real estate platforms to support this were undersupplied and often not reflecting occupier needs from a technical, operational and aesthetic standpoint."

To that end, Korolev had a clear vision as to how Mission Street could stand apart as an early entrant in the burgeoning UK life sciences real estate sector. Critical was building a team of experts across the various fields that are required to develop real estate for life science occupiers.

"We have been an early starter to get to scale. At the beginning there was a lower volume of competition, with other companies in the space being more generalist. What we have built is an awareness of the idiosyncracies of the occupiers and what they want. Our advisory board and our skillsets mean we have deep relationships and deep awareness."

Aside from the real estate team, Mission has enlisted an advisory board chock full of PhDs with expertise in working with and for life sciences companies as well as raising venture capital. The Board includes Peter Finan, the former head of Novartis Research Facility in UK and partner at Epidarex Capital; Jonathan Hepple, the founder and partner at Rosetta Capital, an international secondary venture firm; Tim Funnell, partner at Monograph Capital and founding member of MiroBio having served as Oxford Science Enterprises entrepreneur in residence; and Nick Sturge, Founder of Bristol’s innovation hub Engine Shed and current chair of techSPARK.

Korolev explains: "The real estate must also work from a technical standpoint. We have an executive team who can do all things. They can source opportunities, and then we have a development team that knows how to build labs, and an asset management team that can operate them. Larger organisations work with us to deliver customised space, whereas start-ups want to have buildings that are delivered more quickly. They are busy raising funds and hitting scientific milestones and once they raise, they need to move fast. Speculatively developed space that meets their requirements is therefore critical."

He points out that the real estate is developed not just for life science occupiers but the broader science and research community and is what Korolev terms "innovation" real estate.

He says the UK has a relatively low supply of purpose-built labs and research space despite its huge potential as a global life sciences and innovation hub and that means it is a compelling opportunity particularly around Cambridge, Oxford and London.

He says the highest amount of commercial research stock in the UK is in Cambridgeshire at over 4 million square feet and Oxford, at just over 1 million square feet. He adds that within those cities, a substantial portion of the stock is in dated buildings at traditional out-of-town locations, and that is where Mission Street's opportunity lies.

"Urban innovation is increasingly relevant, creating opportunities for development in amenity-rich, well-connected and ESG-compliant urban locations," he says. "In the global war for talent, science and innovation schemes must offer both a lifestyle and connectivity, either negligible or absent from many of the legacy out-of-town science parks. Examples of this in what we are doing are in the West End of Oxford and in District East in Cambridge."

Korolev says there is only 700,000 square feet of "relevant pipeline" in core locations under construction in Oxford and a similar level in Cambridge. "This is coming off a very low base, where US life science employees have 2.5 times more stock per person than the UK. "

On that note, Korolev plays downs concerns that the recent slowdown in life sciences investment and real estate occupation in the States is being mirrored in the UK. Korolev says there are clear structural differences between the two markets.

"Whilst venture capital investment levels have fallen due to global macroeconomic factors, we are starting to see signs of recovery in both the US and UK. The big difference relates to supply – there is 40 million square feet of existing product in Boston and only 4 million square feet in Cambridge in the UK. The zoning-based planning system in the US meant space was quicker to get to development, with circa 15 million square feet under construction in Boston. There has also been a more aggressive cash burn in the US where businesses have been confident they could raise more money, and aggressively expanded their footprint, resulting in ‘grey space’ from subletting. Neither of these issues are acute in the UK market, and so rents have remained solid even during the correct of 2023 and in a strong position as the funding market recovers."

The biggest of Mission Street's schemes, by some distance, is Digital East. CBRE and DTRE have been appointed on the massive Cambridge scheme which it is bringing forward with BentallGreenOak. Eastdil Secured is understood to now be advising on funding options for the recently consented 1 million-square-foot development, something Korolev declines to discuss.

What he will say is that, as a 23-acre urban science scheme in East Cambridge, it's one of the largest of its kind proposed in the UK.

He says the aim is to cater to all companies from start-ups to multinationals, allowing them to meet their growth ambitions without having to split their operations across locations or to move abroad.

Korolev says that "uniquely" for science and innovation schemes, District East is a pedestrianised and publicly accessible part of the city rather than a business-park-style project. With 1 million square feet of research and innovation space it can accommodate company growth from start-up to large multinationals in a single location. As a city district, the aim is to "blur the line with the rest of the city and activate the spaces between the buildings with a public square and streets with an F&B offering, play space and an active events programme". This approach, together with an active schools engagement programme and a voluntarily mandated living wage aims to help tackle the inequalities prevalent in the city.

Demand in Cambridge sits at 600,000 square feet, according to Korolev, despite a highly constrained pipeline.

In Oxford, the company bought the Botley Road retail park in 2021, which was seeing increasing vacancy but was a nine-minute walk from Oxford station. Earlier this year, the company completed the Inventa building and attracted Nucleome Therapeutics from the Science Park in one of the city’s largest lab leases. Inventa, and the second phase Fabrica, a 180,000-square-foot new build project where demolition has started, are the focus of the majority of the financing package just secured from Tristan Capital Partners. This is the first step in Oxford’s emerging West End urban innovation district which will ultimately include over 2 million square feet of space.

"We have been able to show in Inventa what we can do. It is a very cool, design-led space, not a dated glass box but it has to work technically for the research and operational requirements too."

The other building that Tristan has recently agreed financing on is Cambridge Press is an 100,000-square-foot, part refurbishment, part new build, science and innovation campus in the heart of the Cambridge Southern Cluster.

Meanwhile, outside the Oxford-Cambridge arc, in Bristol Mission Street, is redeveloping the Projekt, the former Evening Post building. "We do both new build and refurbishment. The building was developed by the newspaper [and] was designed like a factory so it had the right slab structure, ceiling heights and accessibility. Here the delivery expertise is to solve whatever technical constraints exist in the building to deliver a prime product. We are able to reuse over 90% of the existing structure."

Korolev says a big focus is design: "What we are interested in is moving away from the legacy stock of glass boxes in slightly soulless business parks outside of cities."

In Stevenage, Mission Street led the development delivery of Sycamore House, on behalf of Kadans Science Partner. The scheme involved the creative repurposing of a former spaghetti factory into a lab and office scheme of 100,000 square feet. The building completed in 2022 and is fully let to UK research companies, focused on cell and gene therapy.

And as always the right location is vital.

"We are focused on building near city centres. Essentially graduates can go and work for anyone and anywhere and the war for talent means we need to supply buildings with amenities. Location near transport, too, is vital – the ease of the city centre within 10 minutes. At the Botley Road site in Oxford there is a close connection through to London for instance. And then you need scale for companies to grow and collocate within the cluster, as well as being able to accommodate the practicalities of operational requirement such as delivering gasses to site. As a company, we are not only focused on serving life sciences businesses, but rather on specialist innovation real estate for companies in the science and technology space. "

And ultimately Korolev says the fundamentals for demand are strong. "There are big societal problems such as an aging population, climate change and defence and security and they will need science and innovation to solve them."