3 Trends in Life Science Real Estate for 2021

February 2021
Austin Barrett

The professional world quickly learned how to navigate Zoom. However, it has yet to figure out at-home laboratory spaces. This simple fact has had quite an impact on the state of the real estate industry in 2021 and beyond. 

Life science facilities have quickly turned into premium playgrounds for real estate investors and developers. In Q2 2020 alone, private investments into the sector reached a record-breaking $17.8 billion. As investments continue to climb, life science has solidified its place as one of the most attractive industries for real estate to date.

This overarching trend presents immense opportunities for real estate enthusiasts. But what does it mean for tenants, like startup or high-growth life science companies? 

A Buyer’s Market, But Tenants Beware 

Life science properties are drawing major investments—a sharp contrast to the declines in traditional real estate. This trend has pushed many CRE developers and investors outside of their established verticals. With closures of brick-and-mortar businesses and offices, these agents are now aiming to capture the booming demand. 

This may seem like great news in life science hotspots like Boston or the Bay Area—an influx of specialization can mean more consumer choice. Unfortunately for many real estate players, life science demands specifically-designed spaces. As much as investors may try, not every open space, like a warehouse or a lofted office in NYC, can be retrofitted for scientific operations.

This spike in “experts” is not without consequences. The rush of faux specialists and unfit spaces can seriously harm potential tenants; science-specific requirements around design, construction, and FDA-compliant procedures quickly fall through the cracks. Yet, science innovation requires those conditions to be met—so tenants, beware. 

A Rush For Purpose-Fit Laboratory Facilities 

Lab space is at an all-time demand in 2021. The kicker? Tenants are learning that not every laboratory suits their needs. For example, some biotech companies require traditional labs with a long annex of offices; meanwhile, pharma companies may need hyper-specialized laboratories for screening, in-vivo studies, and product development. 

On top of appropriate layouts, life science companies should be looking for appropriate utility support. Utilities play a major role in purpose-fit spaces: HVAC capacity, power requirements, and waste systems in a laboratory drastically differ from traditional office needs. 

For example, during COVID-19, factors like backup generator capacity for vaccine storage played a major role at distribution sites. Similar factors are critical for every life science subsegment. The wide range of facility requirements add a layer of complexity which makes appropriate space even more in-demand.

There’s Still More Demand for Space than Supply 

There’s a concern in the industry that developers may create a too-high supply of life science properties. That speculation is misleading. The supply for well-fitted, specialized facilities remains tight in 2021 and beyond—on top of this, companies have to navigate poorly-repurposed options as the real estate industry scrambles to take advantage of the moment.

Another trend remains unchanged: startup and high-growth life science companies must move quickly to find a space and kick off their research to remain competitive. However, this goal is now barricaded with a lack of true experts in the field paired with increasing demand. So how can companies navigate this chaos? 

How Can You Get Ahead of These Trends?

The life science sector is heating up as high-growth life science companies quickly look for space that meets their needs, and as inexperienced landlords and developers cut corners to serve the demand. At the end of the day, these companies need in-house facility expertise to avoid missteps that may be catastrophic to their scientific practices and contributions to public health.

That’s it, the not-so-easy but simple solution: establish a good-fit partnership and a facilities strategy—and early. The right facilities partner knows the life sciences sector inside and out and can help companies carry out proactive due diligence early in their search. This cost-effective consulting approach to planning allows companies to focus on their science, attract and retain top talent and ultimately innovate in their field.

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So where do these effective partners hide? Well, you can attempt to book an over-capacity but seasoned life science expert in your area—or, reach out for support from experienced, but more widely available, specialists at T3 Advisors. We’re here to help.

Looking for more insights that can help your organization navigate the chaos? Download our 2021 Guide to Life Sciences Facilities Strategy today!