As the coronavirus pandemic drags on and workspace needs continue to shift, millions of office buildings in the U.S. remain largely empty or at reduced capacity, and companies look to reduce their real estate footprints. But most people who work in the life science industries — pharmaceutical, biotech and other medical research— can’t do their jobs from home. For them, the pandemic has helped fuel a real estate scramble.
Life Science + Lab Space Boom
Powered by the increasing discovery and development of new vaccines, cancer drugs, gene therapies, medical devices, and pioneering technologies, the life science real estate boom is showing no signs of slowing down. In 2020 Q2 alone, private investments into life science real estate reached a record-breaking $17.8 billion, and the demand for lab space will be insatiable over the next few years.
Challenges to Establishing the Right Lab Space
Life science companies facing rapid growth are often flush with capital investments from institutions or private equity capitalists, and under increasing pressure to push their pharmaceuticals, medical devices, tech and other products through clinical trials or meet other schedule milestones. As a result, this rapidly-growing industry is in fervent need of both talent and real estate.
It's no surprise then that the bio-tech real estate market has been flooded with investors, developers and brokers eager to capitalize on the financial opportunity presented by this commercial real estate revolution.
This poses a challenge to the traditional real estate approach because many players entering the life science market have little to no understanding of the unique scientific requirements, specialized equipment, and stringent regulations that pharmaceutical and life science companies face. As a result, they lack the expertise, or industry connections necessary to get the job done right; this results in prolonged project deliveries, or unrealistic capital expectations that ultimately impact go-to-market strategies for critical, life-augmenting science.
So what does this boom mean for life science tenants?
Whether you are a biotech startup graduating from an incubator, or a growth-stage company outgrowing your current lab, life science tenants in every field must find and occupy suitable spaces as soon as possible to ensure continued growth and successful outcomes.
Speed + Scale are Critical for Scientific Innovation
Timing is everything when searching for a lab real estate. Yet fitting out an existing space or building new can take many months, if not years. Lab-specific spaces are mechanically-intensive assets with specialized HVAC requirements and other technically-sophisticated requirements that are expensive to build and to maintain. The complex coordination and high costs involved in delivering a proper space can be frustrating, but with so much at stake, rushing the process or delivering a lab space with design errors or behind schedule can be extremely detrimental to the scientific process and bottom line. Stakeholders eager to scale their scientific innovation often encounter these painful realities only after they’ve begun their real estate search.
How can life science companies avoid these challenges and pitfalls?
Find a talented, tactical real estate partner and strategist, especially one that understands your field inside and out. Serving as an extension of your leadership team, the right real estate partner can advance your science and ensure the optimal space for your company and field.
Finding the Right Life Science Facilities Strategist
Here’s what you should look for when adding an expert to your team:
Proven Life Science Experience. A real estate partner that specializes in life science real estate and understands your company’s processes and requirements is a critical to delivering a functional, efficient and safe lab environment for your teams’ groundbreaking research. There is no one formula, and each company’s lab use and building needs to be evaluated individually. The right partner can offer you data-driven, informed analyses of various spaces and has the proven knowledge and attention to detail to ensure your success.
Tenant Advocacy. From a “tenant’s perspective” your real estate partner should provide objective, independent problem-solving focused solely on your success, not the landlord’s. Everything done should be in your interests alone to expertly navigate any issues that may arise or prevent problems from occurring in the first place. So many things can go wrong in a life science tenant fitout project. Lab spaces with specialty HVAC and exhaust systems are especially power-intensive and can be multiples of a standard office space. Power outages and facility interruptions related to the landlord’s design can result in months of lost progress time and millions in recovery costs. Your real estate partner should advocate for your company holistically and offer proactive, end-to-end project support - from capital expenditure planning to headcount growth and scalability.
Leadership + Effective Communication. The right real estate partner can provide the leadership necessary to communicate with all project stakeholders and ultimately align your real estate needs, critical business drivers and unique science requirements. For example, a leader who can meet briefly with each end-user group, listen, offer strategic advice, and inspire confidence can potentially save months of design work and millions in construction costs.
Comprehensive Understanding of Costs. The right partner will optimize your space. They understand the critical nature of building systems that support lab equipment and scientific experiments, and they have proven, efficient procurement models that help secure long-lead items such as air handling units and keep your project on schedule. Lab construction costs can range from $150 to $1325 per square foot, and buying a project “right” can lead to an abundance of cost avoidance. The right partner will understand these expenses, help you budget for a cost-effective approach, mitigate the risks of exceeding the construction schedule or running significantly over budget.
Looking for that next level of service for your life science project?
GRE has the experience you need to achieve customized real estate for your company, science, brand and culture. Whether your life science project involves new construction, renovation or consolidation, the key is to partner with an experienced advocate that understands your needs, the market, and how to bring your project to fruition.
From concept to completion, GRE offers the full spectrum of real estate advisory, project management and owner’s representation services.
Connect with one of GRE's advisors today to get a head start on your innovation.