Examining Current and Future Trends in R&D/Lab Space
According to a recent report by JLL, the life sciences and research & development real estate market experienced a reset in 2023. However, experts predict that demand will rebound in the coming year. Here are some additional trends for this sector as we look ahead to 2024.
Increased Power in Established Clusters
Nick Cassaro, vice president of life science development at BGO, explains that venture capital investments are rising in core clusters like Boston/Cambridge, South San Francisco and San Diego. These established clusters also include Greater DC/Baltimore, Philadelphia, Raleigh-Durham Seattle New York City/Northern New Jersey.
Cassaro notes that companies use these core clusters for employee growth and retention as well as fundraising capabilities. He predicts that investments will continue to increase with a likelihood of returning to pre-pandemic levels.
Mergers & Acquisitions Drive Growth
In addition to increased VC investment activity within established clusters driving growth for the industry overall; mergers & acquisitions (M&As) have always been part of this sector’s landscape but they’re expected accelerate even more over the next few years due largely because today’s financial markets make it easier than ever before smaller companies merge with other firms further extending their runway while researching common goals,” Cassaro explained.
Meanwhile larger pharma companies target smaller ones increasing market share which further concentrates power among these already dominant life sciences hubs.”
VC Investments More Strategic Than Ever Before
While VC investment is expected remain strong through 2024; there may be more strategic focus on financial milestones path clinical trials according Nick Cassaro “This stabilizes market growth predictability” he added noting how important stability is when planning future projects especially given current economic climate where many businesses struggling stay solvent during pandemic.”
More Deliveries Less Construction
Ken Richter executive vice president national Life Science Sector Lead Project Management Advisors notes that following pandemic major secondary life sciences markets experienced boost speculative construction. As result R&D vacancies will increase 2024 even as under-construction lab & R&D space fell Q3 2023 according CBRE report.
Richter explains “For big three primary life science markets many secondary tertiary markets well amount new speculative space coming into market far greater than any other point sector’s 25-to-30-year history.” Many projects were initiated during pandemic when urgency drug development interest rates low. “Not overgeneralize but these projects completed it challenging environment have pure underwritten” he said.
PMA Bullish on Life Sciences Market
Despite the challenges, PMA remains bullish on the life sciences market noting that demographics and complexity of today’s drug delivery modalities will drive more research and Current Good Manufacturing Practice (cGMP) space than traditional small-molecule delivery.”
Lab Design Overhauls
Bobby Savarese principal at Unispace Life Sciences Pharma Engineer Principal says pharma biotech CEOs anxious accelerate drug discovery process. He predicts next generation of R&D labs need become technology-enabled ready support new design delivery plans which include accommodating quantum computing capabilities.”
Savarese adds “The new design plans also help support cost reduction fast-track carbon neutrality with achieving functional footprint reduced from eight square meters six per specialist.”
Examining Current Future Trends in Research Development Lab Space
In conclusion, while there may be some challenges ahead for the life sciences/R&D real estate market; experts predict a rebound in demand as we move into 2024. Increased power within established clusters, strategic VC investments, M&As driving growth and changes to lab design are all trends to watch for in this evolving industry.
