Life Sciences Innovators Make Inventive Actual Property Strikes

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By the time the COVID-19 pandemic hit, years of rising research and development funding had resulted in new breakthroughs in the life sciences, while funding from Operation Warp Speed ​​and rising investor interest continued to fuel epic growth. Today, life science companies have an insatiable need for real estate, from side offices to research facilities to production facilities. The question is, where will you find it?

New trends are emerging as to where and why life sciences choose their locations and how landlords and real estate investors react according to the latest life sciences real estate research from JLL. In some markets, new urban developments are creating lively life sciences centers. In others, suburban locations are attracting new activity.

New hotspots are emerging that offer many of the benefits of the top life sciences clusters, with similar access to talent and skilled labor, but lower rents. Although locations near leading research facilities in Boston and San Francisco will always have a highly touted place in the life sciences pantheon, the incredible dynamism of the life sciences industry opens up new location opportunities.

Wherever the industry is going – literally

Traditionally, pharmaceutical companies preferred locations near chemical companies – their suppliers – in suburbs or smaller markets. The advent of biological drugs and gene therapies has spurred the growth of life science clusters near top research universities in more urban settings as companies recognized the importance of being close to top research.

Clustering offers all life science organizations a competitive advantage in terms of cooperation, the search for investors, the recruitment of talent or the shared use of expensive laboratory equipment. The design of the square also plays a role – young talents prefer lively environments with restaurants and retail outlets that traditional pharmaceutical suburban campuses do not offer.

While working in a leading edge cluster offers many advantages, including being close to potential cooperation partners, the disadvantage is that laboratory space is becoming increasingly scarce and expensive. According to JLL research, the average vacancy rate in laboratories in the USA is below 2%, and rents in the top clusters are exploding. In Boston – the global epicenter for life sciences investment and talent – laboratory rents in the East Cambridge submarket now exceed $ 100 per square foot. Laboratory rents have hit $ 70 per square foot in San Francisco’s Mission Bay.

Room to grow in the suburbs

Today’s biotechnological innovations require laboratory-based production environments, a highly skilled workforce and STEM talent, and access to R&D centers that are more likely to be found in larger markets. However, location priorities also depend on the life cycle stage of the company or a particular product under development. Given the lack of available urban space, more mature businesses are looking for office, R&D, or manufacturing space in the suburbs.

Bioproduction companies in particular need suburban locations that offer access to critical talent in the city center, but also access to large facilities in order to expand space-hungry production processes. Organic producers also have special space requirements for clean rooms or “wet” laboratories in which living tissue with different air, water and electricity requirements is cultivated.

The $ 76 million Massachusetts Center for Advanced Biological Innovation and Manufacturing (CABIM) illustrates the importance of proximity. CABIM sits on 40,000 square feet in Boston’s Watertown suburb and was provided by a public-private partnership led by Harvard University and the Massachusetts Institute of Technology, while Alexandria Real Estate Equities Inc. owns and operates the business park in which CABIM is located.

More than 4.4 million square feet of life science space is being developed in the nearby Somerville suburb. In addition to being close to Boston’s Kendall Square and future access to the Green Line, Somerville offers a truly unique live, work-play environment that other submarkets cannot match.

To compensate for the lack of space in key markets, some developers and users are adapting old industrial stocks for specialized life sciences applications. Adaptive reuse, while costly, is sometimes the only option for businesses that need locations closer to the action. In fact, the Boston suburbs of Somerville and Watertown have attracted life science companies because of the zoning favorable for industrial use.

Life sciences-focused developers are getting creative to meet demand. IIn the suburb of the King of Prussia in Philadelphia, for example, MLP Ventures is founding Discovery Labs, the largest coworking ecosystem in the USA for healthcare, life sciences and technology-oriented companies. When completed, the $ 500 million campus will have 1.6 million square feet of R&D space ranging from 50,000 to 125,000 square feet to provide critical infrastructure for life science innovators.

New urban movements

There are also new developments in the urban environment, sometimes in surprising ways. Just three miles from downtown Houston, Hines is partnering with 2ML Real Estate Interests to develop Levit Green, a 52-acre, multi-purpose, master-planned community with life science research facilities at its center.

Alexandria Real Estate Equities is building a 1.3 million square meter second tower in New York Cityts amenity-rich Alexandria Center for Life, which when it opened in 2010 became the first and only commercial life sciences campus in New York City. In West Harlem Near Columbia University, Janus Property iCompany is upgrading old brick factory buildings to house a life sciences coworking incubator and 350,000-square-foot laboratory. Taconic Partners is converting a former car showroom on Manhattan’s West Side into a life sciences center.

Just as biopharmaceutical growth requires innovation, the search for freedom for life sciences businesses also benefits from creative approaches. Companies that look beyond “the usual suspects” can find new opportunities for expansion.

Travis McCready is the National Practice Leader, Life Sciences for JLL Americas.