Commercial real estate life sciences have been a thriving asset class for a number of years. The pandemic has only strengthened its position in the commercial real estate sector. VCs have increased their investments in life sciences during the pandemic, according to Newmark’s 2021 Life Sciences and Market Clusters. In 2020, funding levels rose to a record $ 33.1 billion. What’s more, record paces will continue in 2021, with venture funding reaching $ 26 billion in the first six months of this year.
The impact of Covid-19 means that investors do not need to be reminded of the critical importance of maintaining infrastructure that supports critical bio-innovation. Result: The life sciences sector is likely to witness sustained growth for many years to come.
To look at the far-reaching impact of the life sciences industry on real estate, Forbes.com tracked down Lauren Gilchrist, managing director of research at Longfellow Real Estate Partners, the largest privately held life sciences developer and manager in the United States. The square foot portfolio covers life sciences centers in Cambridge, Boston, Raleigh Durham, San Francisco and San Diego. Gilchrist answered a series of questions from Forbes.com regarding life science clusters, addressing everything from the life sciences as an economic generator to the growing urbanization of life science clusters.
In recent years, the cities listed above and other U.S. subways have vied to become life science capitals. This raises questions about exactly what factors are helping to determine whether a city will become a center for biological sciences. Not all answers meet your expectations.
“Life sciences companies thrive in strong ecosystems that include academic institutions, capital sources and dense research talent groups,” says Gilchrist.
“While scientific discoveries have historically taken place in vast research parks to protect intellectual property, today’s breakthroughs are taking place in innovative areas that foster collaboration, community and interaction.
“Each of the regions [above] has its own unique aroma. But the most important factor in predicting where a company will be located and grow is the location of the founder or CEO. Of course, some of these regions will compete with each other for specialized talent. But generally speaking, the choice of location is very difficult. “
The growing importance of advances in the life sciences are making them nothing more than engines of economic growth. Gilchrist reports that jobs in the life sciences have an economic multiplier effect of about three times, which means three additional jobs are created for every job created in the life sciences industry, according to analysis by the Biotechnology Innovation Organization. “As a result, life sciences work has an impact on communities and economies that go far beyond individual companies,” she added.
“Life sciences companies play a big role in the economic structure of the region. The properties under construction they occupy play a key role in promoting scientific progress. And in an economic climate where talent is everything, well-located quality real estate can be the key to attracting and retaining scientific talent. ”
Remote suburban campuses were once geographic centers of scientific innovation, but they have given way to dense urban environments.
There, scientists with different backgrounds can come together to create next-generation innovations. Thus, over the past two decades, cities such as San Francisco and Boston have developed a cluster model in biomedical innovation areas.
In terms of real estate, this means that the “feel” of an urban innovation district must be created regardless of where the campus is located.
“To support, attract and retain a highly skilled workforce, you need modification in buildings where innovation occurs,” she says. “Balancing modern space with spaces [for] Communication and collaboration – in cafes, restaurants, breweries, food vans, outdoor areas, and more – are essential. It fosters interactions that drive innovation. “
What will the next five years bring in terms of trends in life science? “Locations close to research and healthcare facilities, often in densely populated centers, where companies gain access to patients and partners,” Gilchrist replies.
“We will continue to see how this model builds on existing clusters on both coasts. In large part, the reason for this movement – the trend towards personalized medicine through gene and cell therapy – is the hottest sector in life science right now – requiring access to patients and facility staff. It will also affect surrounding markets, which is likely to result in higher rents in areas close to popular development areas. ”