Hines recently outlined its plan to put greater emphasis on investing in more opportunities in the life science sector. This market outlook is supported by the increased focus of the pandemic on the life sciences in the commercial real estate industry. According to CBRE, Denver is the 10th largest US life science market in the US, measured by laboratory space in square meters. And currently, 33 life sciences companies are looking for 1.6 million square feet of cumulative laboratory space in the Denver-Boulder area.
To meet the new demand, Hines plans to become a leading investor and developer by providing more purpose-built life science facilities in growing markets with cutting-edge, user-centric design and amenities.
“The life sciences sector is experiencing an era of unprecedented growth, fueled by an increase in both public and private funding combined with a sense of urgency and post-pandemic market opportunity,” said David Steinbach, global CIO at Hines. “With this industry booming, it is vital that developers keep pace by offering spaces that are as innovative as the tenants who inhabit them. Hines has set itself the goal of delivering purpose-built facilities that meet the physical, functional and technological needs of the users. “
Hines’ investment thesis is based on a confluence of factors driving demand in the global landscape for life science real estate, as outlined in the new whitepaper Hines Perspective: “The Potential of Purpose-Built Properties”. In this post, Hines relativizes the context for investing while sharing the company’s vision of the potential of purpose-built life science development and its in-house analysis of the sector.
New frontier markets
To continue to produce innovative results, life science companies tend to band together in cities where their facilities are close to others whose academic approach or research methodology depends on their ability to produce treatments through collaboration in close proximity to physical partners can improve. This shows why Boston and San Francisco have become industry giants. However, there are many new frontier towns both globally and domestically that can offer convergence of financial funding, as well as academic and research / medical institutions including London, Boulder, Austin, Shanghai Salt Lake City and Pittsburgh.
Critical design elements
In such a competitive landscape, developers have to optimize the space based on two basic criteria: the structural specification and the balance between laboratory and office space. Different tenants have different needs, and the same tenant can make matters worse as their needs change as the business develops. It is therefore important that the laboratory space is flexible and modular.
Since ESG is paramount for developers, investors and users, this must also be an important aspect when building life sciences assets. The construction of highly efficient systems, the procurement of sustainable energy sources and the consideration of physical and operational CO2 emissions will be decisive in the competition for the most sought-after tenants.
Industry verification: Levit Green
Hines has already brought this type of curated life science asset to market. Levit Green, the five-story, 270,000-square-foot Phase I laboratory building in Houston, Texas, meets the ever-changing needs of a life science tenant with capital to cover the company’s credit risk. The Hines team decided to build high quality AA grade labs that are highly flexible and have key features needed by top life sciences tenants in a market with access to top talent and world class research facilities. The team also paid careful attention during the design phase to accommodate the unique needs of top tenants in the life science space. Key building features include: redundant backup power, improved structural vibration dampening, and improved mechanical systems. 33-foot structural bay depths that allow for an ideal 11-foot laboratory module and floor slabs of more than 55,000 square feet also allow research and office teams to create efficient configurations that enable teamwork and collaboration.
“Our carefully assembled team of national life science leasing, design and capital experts put a tremendous amount of thought and effort into the planning and design of Levit Green. We are confident that when our team is complete, it will deliver one of the highest quality commercial laboratory facilities in the world, ”said John Mooz, Senior Managing Director at Hines. “We look forward to bringing high-profile projects like Levit Green to other highly anticipated growth markets.”