What is Different About Post-Pandemic Life Sciences CRE

According to new surveys from DLA Piper, one of the hot areas of CRE is life sciences. 

“This year’s survey finds 57% of respondents indicating life science/biotech as an attractive opportunity, on par with 58% in the 2020 Survey and up by 14 percentage points from the 2019 survey,” the DLA Piper report notes.

“Life science and life science-related real estate was gaining in popularity before the pandemic,” John Sullivan, chair of DLA Piper’s real estate practice, tells GlobeSt.com. “It wasn’t as red hot as logistics before the pandemic, but it was popular. The pandemic shined a light on the importance, just on a society level, of the importance of research.”

“The pandemic only caused the growth to go parabolic,” says Jason D’Orlando, vice-president and head of the life sciences group at global professional services firm Turner & Townsend. “As a result, pharma companies began to seek locations closer to the major metropolitan markets in order to reduce the speed-to-market of their products, provide greater operational flexibility, and shore up the supplies closer to their customers.”

Another driver for new facilities was to increase the proximity to “major academic institutions, with strong process engineering programs, where companies could source talent for the development of new facilities,” D’Orlando says. “Locations like Research Triangle Park in North Carolina, which is located between NC State, Duke, and University of North Carolina, have seen an enormous influx of major pharma corporations looking to be closer to the talent pool.” 

One difference from the past has been a new focus to incorporate attention to manufacturing and not just R&D.

“The thought was that you do R&D where the brain power was, but you would manufacture where the cost of manufacturing was lowest, or was the most convenient to manufacture,” Sullivan says. “I think there will be more in-country actual manufacturing of pharmaceuticals. It’s not like you can have the manufacturing process disassociated from the skills that you need as part of the process.”

What could make decisions on life sciences building needs more complex, though, is the new nature of work in that industry, as well as others. Deloitte’s 2021 Global Life Sciences Outlook notes that life science companies are developing hybrid workplace habits. “Companies are rising to meet the needs of the individual,” the report states. “In July 2020, Novartis moved from manager-approved remote work to manager-informed remote work. Employees can choose to work how, when, and where they want.”

While certain types of work, like laboratory activities, might have to take place in a specialized facility, a life science company, as is true for any business, involves much more. While investing continues, investors should keep an eye on management and operational trends in the industry.