Commercial real estate trends have greatly changed in recent years. Due to the impact of the COVID-19 pandemic, many businesses are changing how they evaluate their use of workspaces, something that may have lasting consequences.
There is much discussion about the standard office environment and its evolving hybrid models for professions that are largely able to transition to remote work with relative seamlessness. But there seems to be little attention being given to the high-touch, high-impact life-sciences sector, where working from home is not an option. This industry requires expensive laboratories that use specialized sanitation equipment and other tools that cannot be found at the local hardware store.
For commercial mortgage originators with knowledge of these types of deals, they have had a front-row seat to the high-stakes process of helping scientists remain engaged in critical discoveries while experiencing an evolving workplace. The expertise of brokers, lenders, building owners, project and program managers, and others has only become more valuable as the science community seeks new ways of delivering on its mission.
The lenders and brokers who work with property owners and life-sciences companies need to be aware of the industry’s trends and new workplace strategies. This business sector continues to evolve and change.
Like many aspects of office life, the model for how scientists are working in labs also is changing. There is more use of technology in which scientists start experiments in the lab but then can monitor results remotely.
Those helping to create new spaces for life sciences must always strive to understand and stay ahead of the industry’s needs.
These adoptions have implications in changing the number of people who flow into the lab space. This, in turn, results in more of a shared asset culture that allows organizations to invest in smaller spaces with shared equipment. At its core, this means changing how science is performed.
From a capital perspective, lab changes have given some industry leaders the opportunity to re-imagine their asset investments. Some are freeing up more assets to invest in smaller firms with specialty research areas that develop, promote and fund research through a partnership model. Others are looking at entirely different locations for their operations. As the science community advances a new model of how it works, the investment in where that work is done inevitably changes as well.
Because of the COVID-19 pandemic, the life-sciences sector reinvented itself strategically and operationally. This was done in the name of keeping employees, contractors and guests as safe and connected as possible. It also has created an enormous number of challenges as well as opportunities.
As life-sciences corporations reimagine the use of space, they need to do so with the idea of what people need from these spaces. In science, as in other industries, much of the value of shared space is the opportunity for collaboration. By designing the space based on how people can best collaborate — and how they can share equipment in a safe, effective way — it allows for more opportunities to be intentional in workplace strategy and design.
A core mission for life sciences is to make the world a better place through the development of medicines, technologies and systems that improve the health of people and communities. So, it makes sense that the environmental, social and governance framework that many socially responsible investors use to assess whether an investment is good for the planet would also be used by companies to help determine whether their corporate environments are good for their workers and the earth.
Long before the pandemic, there were increasing demands to build more sustainably. But sustainability can be expensive. Because there are new ways for scientists to collaborate in shared spaces while remotely monitoring some elements of their research, some of these investments can be made through savings.
Assessments will always be necessary, but the ability to invest in sustainable aspects of a building are changing and the opportunity to advance sustainability at a reasonable rate is increasingly becoming the norm. Globally, companies are investing in sustainability to meet goals they have set for their stakeholders.
When looking, for example, at Leadership in Energy and Environmental Design certification (given by the U.S. Green Building Council to honor architects’ environmentally friendly building structures), life-sciences companies need to ask themselves, what level of green do they want to reach? It’s not only whether they will build labs to these environmental standards, but at what level and at what pace.
Moving the lab
As companies reassess their use of space, the question of moving locations inevitably emerges. There are some signs that life-sciences corporations are reversing a recent trend and are now moving from suburban campuses to urban cores, closer to universities and other think tanks. Not only does this help to recruit talent, but it develops innovative ways for cross-institutional collaboration.
Sometimes the type of science that a lab conducts may dictate this decision. A biotech firm in San Francisco that focuses on vaccine development, for example, found the need to expand during the pandemic due to evolving scientific discoveries. Although the company could have looked to locate new research facilities anywhere, it chose to expand near its current headquarters in the Bay Area, thus staying close to the talent pipeline and the researchers who were already invested in this work. This decision was made despite the fact that the permitting process was significantly longer than it might have been elsewhere.
Regardless of where a building is located, its function remains core to its value. In addition, its proximity to other resources, transit hubs and population centers remains important for both talent acquisition and perception of scientific expertise.
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Regardless of the work that goes into creating and advancing the commercial real estate strategies for the life-sciences industry — whether as lenders, brokers, owner representatives, leasing agents or program managers — some core truths of the business remain constant. Those helping to create new spaces for the life sciences must always strive to understand and stay ahead of the industry’s needs. And they must remain committed to being a resource for information and advice. The lenders and brokers who support the industry must strive to build and maintain trust so that when change happens, they can help guide the inevitable pivots and decisions that are necessary to carve a path forward. ●
Siobhan Harold Fink is vice president of workspace consulting for Pacific Program Management (PPM). A member of PPM’s senior leadership team, she powers the firm’s strategic consulting practice and drives innovation in markets across the U.S. and Canada. Fink focuses on helping businesses reimagine their workspace strategies to value real estate as an asset rather than as a cost center, drawing on more than 20 years of experience as an adviser on the creation of global real estate portfolio plans for Fortune 500 and 1000 companies. Reach Fink at email@example.com.
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