Investors Should Proceed into the Life Science Market With Caution

Life science assets have made the list of commercial real estate darlings, along with industrial and multifamily. That means a slew of new capital is entering the market—but Bill Kane, president of East Coast and UK markets at BioMed Realty says that the highly specialized sector isn’t for everyone.

“The life science sector has been resilient, and we remain strong believers in long-term market fundamentals. While we’re seeing an uptick in companies that want to capitalize on the life science boom, it takes a truly specialized team to develop and manage these complex properties and portfolios and establish trust with the occupants,” Kane tells GlobeSt.com.

BioMed has been active in the life science market since long before it became a popular asset. “We have decades of expertise and experience from developing ground up lab space and office-to-lab conversions, which is an important factor when clients look for a real estate partner in the core markets,” says Kane.

Kane notes that development timelines for life science properties are long, and therefore can be risky. Large-scale campus, for example, might take 18 to 24 months, which a conversion project can take 12 to 18 months. “Both require a significant amount of capital investments and development expertise as well as deep understanding of what type of life science operations are optimal for that particular area,” says Kane. “In our view, only a handful of lab property owners in our core markets can build high-quality products that will attract well-established life science tenants and offer long-term residual value.”

BioMed doesn’t only have a fully integrated platform, but also relies on its expert team of 250 people, which Kane says has been an important differentiator. “It’s a streamlined solution that really allows our tenants to focus on what they do best: innovating and developing life-saving therapies,” he says. “In addition to the benefits of our fully integrated platform, our 14 million-square-foot portfolio offers our tenants remarkable optionality. This size and flexibility of our portfolio allow our tenants to grow their business and transition easily between properties as their company expands, even into new markets.”

Above all, BioMed has remained flexible to respond to market demand and a wide-range of tenants. Kane says, “A key benefit to our portfolio strategy is that our ground-up developments and conversion properties are both designed to be flexible; that way, if a tenant receives additional capital and needs a larger space, we can accommodate them with another property and backfill their original space with another growing tenant.