Joshua King: Most institutional investors believe demand for healthcare will continue to increase given the demographic tailwinds in the US and in many advanced societies across the world where declining birth rates and medical advances are resulting in longer life expectancies and an aging population.

There are many property types that should benefit from these dynamics. The three most commonly cited are medical office, senior housing and life sciences. There's a pretty wide spectrum of investors interested in healthcare properties. Most notably there are the healthcare REITs like Welltower, HCP, Ventas and Alexandria who dominate the sector, some of whom invest in all these property types and others of whom specialize in just one.

But beyond the REITs virtually all institutional investors have demand for it that typically exceeds the supply of available opportunities. While the healthcare industry represents the third largest sector of the S&P 500 (~15%), it is a niche sub-sector of real estate with limited inventory particularly in high-barrier-to-entry markets like New York City.

Q: Speaking of New York City—an increased focus on life sciences seems to be a trend lately, what are you seeing?

King: When you look at the Manhattan office market since the financial crisis, the big story has been about how the New York City economy has become more diversified. Twenty years ago if you were graduating college and wanted a high-paying job and to live in Manhattan, you pretty much were headed to Wall Street. But since the financial crisis, the job market in New York City has become largely driven by technology, media and other emerging industries.

The path of technological progress in the past 20 years has been unprecedented. The iPhone only came into existence in 2007 and the modern internet only in the late 1990s. Yet these technologies have transformed the world irrevocably in an extremely short time span.

The next 20 years will yield similar advancements, not just in tech, but also in biotech and life sciences. What makes the intersection of real estate and life sciences so enticing is we are literally providing space for the companies seeking to commercialize these breakthroughs in cures and technologies that will prolong and enhance the quality of our lives.

Q: What sets life sciences real estate apart from regular office buildings?

King: Typically when you hear someone talk about life sciences real estate they are talking about laboratory space or “wet labs” as it's often referred to. This is space where scientists are conducting biological research and the requirements to facilitate this use (infrastructure, HVAC technology, zoning requirements) are highly nuanced.

Alexandria was the pioneer in this space and was the first real estate company to develop for-profit purpose-built laboratory space in New York City with the development of Alexandria Center for Life Sciences on the East Side. What has become more of a trend lately is the extent to which life sciences companies are engaged in computational research or “Big Data” which is less reliant on expensive lab build outs.

This type of research bears a closer resemblance to jobs at Google or Facebook than jobs at a big pharma company working in the laboratory. The space requirements tend to be more open layouts with exposed ceilings and benched seating like you would see in typical creative office space.

Pfizer world headquarters on E. 42nd St.

Q: You mentioned Alexandria earlier, your team worked on the sale of the Pfizer Headquarters last year to David Werner and Alexandria which was an interesting partnership. What was the logic behind it?

King: The Pfizer transaction made a lot of strategic sense given that Pfizer is one of the largest life science companies in the world. While Pfizer will be relocating to the Spiral on the far West Side, they negotiated a short-term leaseback and remain the major occupant of the complex for the next several years.

The asset is also located on the eastern edge of Midtown along 2nd Avenue which makes it proximate to a lot of the medical research institutions and hospitals located along the East River which is typically a major driver for life science companies. The building also offers physical characteristics that could work well for life sciences including high ceilings as well as available air rights for further development. So the site offers a lot of what life sciences tenants are looking for.

Q: Long Island City has been in the headlines, most notably for the rise and fall of Amazon HQ 2.0. Why do you think LIC makes sense for Life Sciences?

King: There was actually a good story beginning to emerge in LIC in the months leading up to the Amazon announcement which was ultimately overshadowed by the Amazon saga. A month or so before the announcement our team completed an off-market transaction selling the Bindery, a former converted warehouse building in the Factory District, to Alexandria on behalf of Brickman / Third Point.