The Lab Space Race: Considerations for Life Science Users
The demand for lab space isn’t going to slow down anytime soon. As noted in our recent Market Insight Reports, life science companies in Massachusetts collectively raised more than $13 billion in 2021, allowing the demand for real estate in Boston to skyrocket. But that’s also created some unique complications. Simply put, there isn’t nearly enough supply to meet the demand. As a result, life science occupiers may feel pressure to grab any space that’s available – a strategy that has a variety of potential pitfalls. Here are a few things to consider when you’re on the hunt for a new space.
Landlords and developers recognize the significant need for lab space, and they are eager to convert whatever they have. However, not every building is a good candidate for lab conversion. Some buildings are appealing based on their location within certain neighborhoods or life science clusters, but that doesn’t always mean they have sufficient infrastructure to support lab functions. It’s critical to ask the right questions to ensure that potential new spaces have the physical requirements and resources to work for you. Is that space equipped for the permitting that’s necessary? Can a lab operate in the specific building? Does it have the right power, plumbing, HVAC, and lab casework to support the organization’s R&D initiatives and goals? What is the landlord’s track record? Carrying out thorough due diligence in the early stages of a search will reduce obstacles and streamline your real estate decision making.
Waiting in Line
With unprecedented demand for lab space, the race to convert office buildings to lab is in full swing. But with so many buildings waiting to begin the process, it creates a crowded queue of building developers and potential tenants eager to start construction. Some business-critical items, including lab casework, HVAC equipment, and utilities/power, are seeing significant delays in lead times. This is less likely to affect larger companies that have a footprint and lab operations elsewhere. However, earlier-stage companies on the cusp of expansion that previously existed in incubator spaces are scrambling for any available space. These companies should anticipate longer processes across the board, from site selection and due diligence to fit-out and renovation. With their business continuity dependent on this space, smaller, less-established organizations should consider engaging an advisor early in the process. A knowledgeable advisor can provide insights around the general market landscape as well as life sciences-specific trends that will streamline the process.
The good news for life science occupiers is that increased inventory is on the way. A number of projects are expected to deliver in 2023 and beyond, and tenants will have increased options to consider. But these decisions shouldn’t be made lightly, or without proper counsel. Cresa’s team of seasoned advisors who understand the market and future opportunities can help you analyze your options to position your organization for long-term success.