While the good news hasn’t always been easy to find over the past two years, the only place where optimism reigns in commercial real estate is the life sciences sector, which emerged as a savior in difficult times and a place where growth flourished and seems to be just beginning, with incredible potential for further expansion. Partner Insights spoke with Matt Gardner, head of American life sciences for CBRE, about where the sector is today and its prospects for the future.
Matt Gardner leads CBRE’s practice of advising life sciences in the U.S., including leasing and sales to tenants and investors. A veteran with more than 30 years in the technology and life sciences sector, Mr. Gardner works with CBRE professionals across U.S. centers of life sciences and emerging markets to advise clients on their real estate needs. It is headquartered in Northern California.
Commercial Observer: What drives the success of the life sciences sector?
Matt Gardner: When the world needs science to come up with an answer, you see capital moving toward life sciences. This has never been more true than in the last five years. Inevitably, investing in the living environment must happen. You can’t escape clinical trials, for example. The Food and Drug Administration has rules and requirements, as do all drug evaluation agencies around the world. So even if the economy shrinks, you don’t change your investment in a clinical development program. This is one of the things that has sustained the industry for a long time. There is another part of the industry that we don’t talk about often enough, and that is the biological materials segment: synthetic biology products. That part of the industry has gone incredibly well over the last decade, and we’ve seen billions of dollars invested there in the last few years. That will pay dividends in the near future.
Which of the other asset classes is most likely to receive a boost from the local proliferation of life science objects?
Research parks have been home to much of this industry for 70 years, and that segment is currently undergoing a huge renovation. So we see a whole generation of updated investments in university research parks. A huge amount, almost a generational investment, has also been invested in new laboratories across the country, and in Class A conversions and offices for the life sciences industry. Also, the production environment is full around the world, so we’ve seen more than $ 6 billion in new production investment over the past year, and that will continue. Also, large healthcare systems are reducing their dependence on overnight stays and pushing the point of care into retail, where you see more clinical care facilities appearing in malls.
What are some of the cities that benefit from all this? Are these the traditional epicenters of life sciences we are used to or are new hotspots of life sciences evolving?
I think the answer is both. We’ve seen huge growth in the Big Three: San Diego, the San Francisco Bay Area and Boston. They did very well in this round of investment. Of course, the traditional headquarters of pharmacy, between Philadelphia and New York, including New Jersey, always works well and continues to be the anchor of multinational companies in the industry. But now we see the emerging group emerge in other parts of the country: Montgomery County, Md., Houston, Seattle. We see a lot of investment in Research Triangle Park (Raleigh, Durham and Chapel Hill, NC), as well as in Chicago and Colorado. The industry will continue to break into the next level of life science centers as it finds it difficult to find talent.
Are there any properties or attributes of these sites that make them particularly suitable for life sciences?
There are three main common ingredients. The first are large research institutions other than universities, such as medical research institutes and philanthropic scientific institutes. The second talent is – not only degrees in biology, but also in chemistry and engineering. There are collaborative programs for laboratory technicians across the country that support the growth of the industry. And the third is, of course, venture capital. I would include not only venture capital, but also the entrepreneurial spirit of the region and its willingness to take risks. This has been a feature of successful innovation ecosystems for decades.
Is there any information – studies or statistics – that shows the effect of making the city a center of life sciences, both on their economy and on the environment as a whole?
As salaries in life science professions rise, it has a lasting effect on the community. Professions in the life sciences have a long career and higher-than-average salaries; the average salary of a biochemist in the Bay Area is over $ 100,000. Thus, we see a significant economic contribution of the industry in terms of payroll and the direct benefits it produces.
Also, the Economic Policy Institute in Washington measures industrial multipliers, and within heavy science industries, for every job in life science, as a result, you usually get four to five support jobs. And when you look at economic impact studies from Stanford University or MIT [Massachusetts Institute of Technology], their long-term results in the life sciences are much greater than the influence of other sectors. This is due to the high cost of wet labs, the talent involved and the long duration of the work. All this leads to higher investment results.
Is there a danger in overemphasizing the positive effects of the industry?
I’m incredibly optimistic about it, and the main reason is that we’re still at the beginning. I would like to point out how young this industry is in general. The two initial discoveries that led to the industry were recombinant DNA in the early 1970s and pulmonary chain reaction (PCR) technology a decade later. So we are still quite early in the biotechnology century.
Is the growth of life science significant enough to have a significant impact on the U.S. economy, and if so, what kind of impact will it ultimately expect? be?
I think so. Now we are beginning to see biology-based materials appear in the supply chains of many other industries – whether you are looking for detergents, cosmetics or even shoes that are made by a biotechnological process. We see things getting into the hands of consumers in industries we didn’t expect when we set out on this path, and they will continue to attract innovation in all possible directions. This view of the world is called bioeconomy, and we are just at the beginning of it. More people will create more jobs in more parts of the world. So, there is reason to be excited, no matter where you live, that biotechnology is not just coming into trade, but also coming into your backyard in ways that are useful and productive and help the community grow.