Providing flexibility, maximizing building codes and understanding best uses for retrofits are among some of the tips to capitalize on the life sciences gold rush.
Demand continues to outpace supply in the life sciences industry, which consists of work for clients in pharmaceutical and biotech sectors, among other fields. Part of the reason for the growth is activity around vaccine development, as well as larger trends in the real estate industry pushing investment into the life sciences sector, said Nick Iselin, general manager of Boston development at Lendlease, during an online forum focusing on life sciences real estate strategies.
Although vacancy rates have been rising in major office markets the past 18 months, there is virtually no vacancy in the life science sector, especially in major hubs like Boston and San Diego. But a life science project is not as easy as traditional office construction.
"I think the biggest issue is related to setting up the building to maximize the number of chemicals that are allowed in it," said Scott Strom, one of DPR's life sciences core market leaders. "And that's kind of where the secret sauce for this is."
Life sciences projects have special considerations compared to most other types of projects. Here are things to consider for a successful life sciences project:
Building codes. Building codes allow only a certain quantity of chemicals in a building. In a typical office building, contractors generally do not plan for how many chemicals will be going into the buildings.
But in a lab building, Strom said contractors should "want to increase that [chemical] amount because [life science tenants] will need them to do the research." Existing codes favor chemicals down on lower floors than on upper floors. Therefore, "when you're evaluating the building, generally you're going to do some things to that zoning that allows you to address and increase chemicals on the upper floor through other design strategies," said Strom.
Upfront planning. The intended purpose of a building is critical before starting a project, but, in the life sciences market, user requirements are often unknown at the outset. The key to overcoming this challenge is to remain agile, be prepared to switch gears quickly, and account for gray areas, said Joseph Whalen, vice president of operations at Suffolk's New York office.
"This is where we shine," said Bill Kane, president of east coast and UK markets at BioMed Realty, a Blackstone portfolio company. "It's about intelligent programming that applies best practices from our 16 million square feet portfolio to create highly diverse and flexible building systems that allow decisions to be deferred or changed over time."
Details. Flexibility has been traditionally difficult due to the specific equipment needs in life sciences spaces. Kane added it is also important to "have an acute understanding of occupier nuances and high level of expertise" when it comes to creating and managing these life sciences assets.
"Typically, buildings that offer a 20-to-25-foot column free span from the perimeter work well to provide lab bench areas with lab support and offices towards the interior core," said Whalen. "There are varying layouts that can be achieved in both steel and concrete reinforced buildings, but generally steel will offer the most flexibility in a retrofit."
Retrofits. Whalen said clients want to get individuals in labs and research centers as fast as possible and space is at a premium. For this reason, he adds contractors need to quickly understand how traditional office buildings can be retrofitted to best serve the needs of this fast-growing industry.
"Buildings with existing infrastructure systems that can bring additional capacity to program areas are the most favorable. HVAC and electrical systems are the primary disciplines to solve for from a cost perspective," said Whalen. "Buildings requiring a limited amount of reinforcement to these existing disciplines will be the most attractive."
Kate Keller, principal at Keller Augusta, said their team has seen a 60% increase in conducted searches for companies seeking to grow their workforce as they expand their portfolios. The type of positions demanded by these clients are for acquisition, development, asset management and leasing. She said this affirms an uptick in investment, development and hiring, as companies view life science as a road to economic development.
The spike in demand for life science has been unprecedented, with slated predictions of upwards of $90 billion to be invested in the sector in 2021, said Keller. With demand outpacing supply, office owners and landlords are repurposing vacant spaces.
Infrastructure needs. "A life science building requires much more robust infrastructure and floor to ceiling height while also providing redundant power, specialized HVAC equipment, and greater loading capacity," said Kane. "Said differently, while every lab building can function as an office, few traditional office buildings have good 'bones' to be considered lab-capable."