Why Stability, Not Negativity, Defines Today’s Life Sciences Market

For many of us, 2019 feels like a lifetime ago. Combined with the rapid increase in costs during the pandemic years, stability has been lacking when it comes to measuring certain aspects of the economy. In the commercial real estate market, particularly within the life sciences industry, this upheaval has caused some pundits to sound alarm bells about the broader economy and the pipeline of next-generation companies coming out of Cambridge and nearby environs.

The question is this: is that panic really necessary? When you look back at the pre-pandemic years, what we witnessed was a case of extreme optimism as organizations faced such a competitive real estate market that it was considered sound strategy to land-bank and take more space than needed. Bidding wars for suitable locations were common, as were leases with surplus square footage. To say things were frothy was an understatement.

Now, with investors exhibiting greater caution and businesses in general more conservative in their outlays, cash is king - and organizations are only taking what they absolutely need. For more insights into Boston’s life sciences market, be sure to check out the most recent Cresa market insight reports here.

Smart Growth is Still Growth

However, is that such a bad thing? That’s a topic regularly discussed around Cresa’s offices, especially given what we know about the life sciences industry. The principles haven’t changed: companies still need credible evidence of their proposed solutions being needed in the marketplace; the science behind the solution must be suitably bench-tested; and biotech companies still need to identify potential funding sources.

When you look at how competitive the landscape was prior to the pandemic, and the dramatic pivot the other way when workers stopped coming into the office - well, we haven’t seen a pendulum swing like that in any recent lifetime. Laboratory staff still need to be in the office, and researchers were likely among the few personnel that never had the option to work from home. The fact that companies are simply being more cautious about space requirements and how quickly they’re agreeing to a potentially more expensive lease doesn’t mean the Boston commercial real estate market economy is declining; it simply means we’ve come full-circle back to a landing zone that makes sense for most early-stage firms: a place where stability rules all.

Arthur Tzianabos, President & Chief Executive Officer of Lifordi Immunotherapeutics, recently penned a fantastic article about the power of positive thinking in Boston’s life sciences industry, and one statement stood out: “It’s time to get off the negative bandwagon and keep our focus on what we do well, what we could do better and what we believe is possible.” This is not just sound thinking for right now; it’s a smart way to do business all the time. While it’s tempting to look for the negative, it might be time to consider we’ve just returned to normal.