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Warehouse-to-Wet-Lab: How Converting Obsolete Sheds in Oxford Can Add 20 % to Your GDV

Picture a battered 1970s distribution shed just beyond Oxford’s ring road. The concrete is tired, the rents are limp, and the next‐door biotech spin-out is desperate for space.
Now imagine you spend nine months and a carefully budgeted £230 per square foot to transform that shell into sleek, EPC-A wet-lab suites with 15 air-changes an hour, ducted fume hoods and a sparkling BSL-2 sign-off. Before you even finish painting the doors, a life-science REIT offers to acquire the building at £550 per square foot—roughly 25 percent above all-in cost.

That, in a nutshell, is the most interesting risk-adjusted play in the UK real-estate market right now.

Oxford’s “lab desert”

Oxford’s lab vacancy rate has been stuck below two percent for the last three years. Savills says companies will need 1.2 million sq ft of extra space by 2029, yet only 210,000 sq ft is actually under construction. The maths is brutal: even if every shovel-ready scheme completes on time, the city still runs out of labs in little more than a year.

No wonder AstraZeneca, Vaccitech and half a dozen well-funded spin-outs are paying headline rents above £60 per sq ft—and still queuing.

Why old sheds are the short-cut

Ground-up life-science developments on the big science parks cost £550–£600 per sq ft and take three to four years from land exchange to practical completion. By contrast, buying a light-industrial box at £180–£190 per sq ft and retro-fitting it into wet labs costs you roughly £230 per sq ft in cap-ex and 10–12 months on site.

Put those numbers together: total cost around £415 per sq ft for something that trades, once stabilised, for well north of £500. That is a baked-in GDV uplift of about 20-25 percent—and investors love that you are recycling brownfield stock rather than bulldozing green belt.

Where to hunt

• Botley Road / Osney Mead – University-backed innovation district, five-minute cycle to the railway station, and the council actively fast-tracking change-of-use applications.
• Cowley Motor Works fringe – MINI’s electric-vehicle campus is bringing grid upgrades and a young engineering workforce; obsolete logistics bays are trading at a chunky discount to the science parks.
• Kidlington “Airport Belt” – Cheap power, swift A34 access, and 75 acres earmarked in the 2024 Local Plan for science use.

In each of those pockets, secondary sheds still change hands for £140–£195 per sq ft—a full third below the cost of new labs.

But do the rents stack up?

Let’s keep it conservative: a cluster or small suite lets today at £62-£63 per sq ft with lease terms that push most of the utilities to the tenant. After ops costs—call it £14 per sq ft all-in—you are clearing a 6 percent net yield on cost. If, as many consultants expect, rents edge to £70 by 2026, that yield moves into the mid-six-percent range without you lifting a finger.

A live example

Equinox advised on a 35,000 sq ft shed on Botley Road earlier this year. We paid £6.5 million (about £185 per sq ft). The cap-ex budget, fixed-price JCT, is £8.05 million for the full M&E heavy-lift, new façade and rooftop PV. Total cost: £14.55 million.
We pre-let 55 percent of the space to a university spin-out at £65 per sq ft while the roof works were still underway. Two weeks later a continental life-science fund offered £18.2 million—a paper uplift of 25 percent and a levered IRR north of 19 percent if we exit on completion.

Key risks (and how we blunt them)

• VC funding freeze? We pre-let to entities backed by Oxford Science Enterprises or IP Group, not to seed-stage hopefuls.
• Cap-ex creep? Fixed-price contract with a 12 percent contingency and liquidated damages for delays.
• Power constraints? Kidlington and Cowley sites already have spare capacity; anywhere else we add rooftop PV sized for at least 30 percent of load.

Exit in two flavours

1. Stabilised forward sale to BioMed Realty, Kadans, L&G or any of the other hunger-struck long-income players; they’re underwriting at five-to-five-and-a-quarter caps.
2. Refi and hold—private credit will do 55 percent LTV at SONIA + 210 once the rents are bedded in. Cash-on-cash above eight percent is common.

Bottom line

London offices are wobbling, resi developers are wrestling with build-cost inflation, but tired sheds ringing Oxford are quietly mutating into some of the most profitable assets in Britain. If you can buy the dirt cheaply, understand air-change rates, and have the lender relationships to fund the M&E, you can still clear a 20-plus-percent GDV gain—and, crucially, hand the keys to an eager core fund the moment the ink dries on your first lease.