Roger Humphrey
Roger Humphrey, Divisional President, Life Sciences, JLL

Growth in the life sciences sector has sustained a robust pace in the past decade, with funding, research budgets, and new jobs all on the rise—and that was prior to COVID-19. Since the pandemic began, public and private investments have rushed into the sector to fast-track discovery and production of therapeutics, antibody tests, and especially a vaccine, creating cyclical tailwinds. The race is on,1 with drug makers standing to gain potentially billions in profits, enhancing a prescription drug market that is already on track to reach $1 trillion by 2022; rapid demand growth for state-of-the-art medical devices is concurrently being fueled by the aging of the baby boomer generation.

COVID-19 has also highlighted some of the challenges of life sciences real estate orientation. The current system of offshore drug manufacturing, originally instituted as a cost-saving measure, is now acting as a limit on potential profitability. The slower time to market and supply chain complications that arise from offshoring can prevent life sciences companies from capturing the accelerating gains offered by new product development. The companies behind pharmaceuticals, precision medicine, wearables, cell and gene therapies, and other biotechnology solutions are now more motivated than ever to reexamine how their products can best move beyond the lab to improve the lives of consumers.

Clearly, the need for speed, efficiency, and productivity in life sciences has never been greater, and it is increasingly recognized that life sciences real estate plays an irreplaceable role in fostering the collaboration and innovation that can help companies obtain a competitive edge.

With new trends emerging to amplify life sciences developments, companies must look to the future and create a next-generation lab space to meet evolving demands.

The changing nature of lab work

The mere mention of labs conjures images of test tubes and petri dishes, with white-coated scientists hard at work mixing chemicals to solve the world’s most pressing challenges.

In reality, chemical-based wet labs are increasingly sharing the stage with computational space designed to facilitate the digitization that has revolutionized nearly every other industry, meaning a greater share of lab space may start to look a bit more like the traditional office.

It’s not that wet labs are going away; rather, their technological infrastructure can now capture and analyze the millions of data points each experiment produces. That data can be combined with other data sets from global sources—including research, medical records, insurance claims, and digital clinical trials—to deliver more targeted insights and spur innovations.

The speed at which data is analyzed has also accelerated, with advances in artificial intelligence, computational biology, and machine learning expediting life sciences invention. As more companies take advantage of the digital tools at their disposal, lab design must also evolve.

Prior to the pandemic, the configuration balance between wet labs and computational (“dry”) stations had begun to rebalance toward the latter. Wet labs once made up 50% of lab space, with the remainder split between flexible and computational stations, but the next-generation lab will have a more equitable split of the type of work that is required.

This shift will call for specialization to accommodate both wet and dry space; in addition to traditional lab tenant improvements, new space will require enhanced infrastructure to power advanced computer systems and Internet-enabled devices.

Enabling a dispersed, flexible workforce

Life sciences companies have traditionally held the belief that in-person collaboration is vital to innovating new solutions, improving speed to market and protecting highly confidential information. However, lockdowns necessitated by COVID-19 have forced a reckoning in how research and development is done on a practical level.

It’s simply not possible to pack up the highly sensitive and sophisticated equipment many wet lab workers need to perform their jobs and recreate the lab environment at home. Even computational researchers and analysts need more than a standard laptop to be effective.

For this reason, staggered shifts and social distancing have been the preferred method for continuing research during the pandemic. However, some measure of remote work has occurred, largely related to administrative functions. These jobs are most likely to stay remote, or at a minimum move to a different corporate location, as the demands on physical lab space grow. Computer labs may also be relocated offsite, depending on the needs of the company and how interconnected its teams can be while working in different locations.

In the end, given the unique productivity-maximizing qualities of life sciences real estate, the most likely scenario is for companies to retain their real estate footprint, using the space to accommodate both social distancing and growing life sciences demand. Flexible lab space that can adjust to a variety of work tasks will be increasingly important, as will “free” space that can be quickly mobilized to meet changing industry conditions. One of the lessons of COVID-19 has been for companies to reconsider running “lean,” which could impede their ability to ramp up work when necessary.

Throughout the pandemic, life sciences companies have faced the dual demands of keeping employees safe and socially distanced at work along with the need to accelerate their R&D and production efforts to participate in the race for COVID-19 countermeasure development. Rotational staffing and shared desks, strategies similar to those found in more typical workplaces, have helped maintain momentum right when it’s needed most. These strategies may last beyond COVID-19 as life sciences demand continues to rise.

Ultimately, the next-generation lab will be more dispersed and adaptable than ever before. To effectively manage this changing portfolio, life sciences leaders will have to make investments in on-site supporting technology to replicate the co-working environment, from virtual collaboration technologies to remote training and robotic lab support.

Location, location, location

Talent is the primary driver of performance in the life sciences space. The lab of the future must position itself to attract and retain a top-of-industry workforce, but doing so can be a significant challenge given the limited, highly specialized pool from which life sciences companies draw.

Historically, the premium placed on talent has given a major advantage to lab space in life sciences’ primary markets: Boston, San Francisco, and San Diego, which together secured up to 70% of venture capital investments in 2019.2 Buoyed by large pools of highly educated workers and strong ties to research institutions, these cities continue to dominate.

However, the high cost of living as well as competition for talent from high-tech firms, along with the advancement of life sciences research in new locations, has pushed some companies to look beyond the top markets to add to their portfolio.

It’s possible these secondary markets, which include Pittsburgh, Maryland, the Raleigh-Durham Research Triangle, Philadelphia, New York, and Los Angeles, may provide the right talent pool and additional space to house administrative and computer-based lab workers, or companies may look to even lower-cost markets. Some companies have already split their workforces, taking on smaller R&D lab space in top markets while moving ancillary services to less-expensive venues.

Another important consideration for the lab of the future is its proximity to appropriate manufacturing space. As mentioned earlier, reshoring manufacturing to better control the supply chain has become a priority for many life sciences firms in the wake of COVID-19-caused supply chain disruptions. Despite complications due to government regulations, onshoring is gaining momentum as a solution to increase productivity while shortening time to market. To connect the lab with production requires enough Good Manufacturing Practices space to produce, process, and package pharmaceuticals and medical devices, with the ability to scale up and down depending on demand.

The time it takes to build such facilities, however, is often at odds with the timeframe in which it is needed. Geographic areas with space to lease or reuse will likely be more effective at capturing the benefits of life sciences innovation.

Speed, flexibility, and ongoing innovation

Next-generation labs will be powered by the same qualities that drive success in life sciences overall. With intense competition and high-stakes rewards for delivering first-to-market drugs and devices, adapting labs to enhance productivity will be critical to determining future life sciences leaders. The desire for good health and longevity will only rise, increasing the demand for cutting-edge, productivity-enhancing life sciences—and the real estate that supports it.

 

References
1. Kommenda K, Hulley-Jones F. Covid vaccine tracker: when will a coronavirus vaccine be ready? The Guardian. October 29, 2020. Accessed November 5, 2020.
2. 2020 Life Sciences Real Estate Outlook. Accessed November 5, 2020.

 

Roger Humphrey is divisional president, life sciences at JLL.

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