Navigating the Changing Tides

Insights from Zachary Richards, PE, on Life Science Real Estate Strategies

In a recent article exploring the impact of evolving market conditions in the life science real estate sector, PharmaVoice highlights the contributions of Zachary Richards, PE, senior project manager in Bohler’s Boston office. Zack provides insights into the evolving strategies of builders and developers in the industry.

During the COVID-19 pandemic, the biotech sector experienced significant investments, leading to increased demand for real estate to support drug development. However, as capital markets tightened and interest rates rose, developers and biotechs began to reassess their growth plans, resulting in a slowdown in new projects.

Zack emphasizes the importance of timing and financing in the current market. He suggests that developers focus on obtaining permits and preparing for construction with the goal of breaking ground in the spring when interest rates may have stabilized. He also advises tenants to thoroughly evaluate developers and scrutinize their financial standing to avoid potential delays or issues during the construction process.

The article discusses the power dynamics in the market, with life sciences tenants now having more leverage to negotiate favorable terms with landlords and developers. It highlights the importance of finding partners who understand the specific needs of the biotech industry and can provide tailored office and lab spaces.

Longer move-in timelines are attributed to supply chain difficulties and worker shortages, resulting in delays in the permitting process. As a result, companies must plan several years in advance or consider leasing spec spaces, which are pre-built and allow for faster occupancy.

To enhance worker satisfaction and attract talent, developers are incorporating more amenities, such as gyms, into newly constructed units. With this in mind, Zack says that Bohler has been working to include more outdoor amenity space for employees.

Conversions of former office and retail spaces have become popular, providing environmental benefits and allowing companies to secure lab space in prime downtown locations. Zack notes, however, that careful consideration of utility requirements is necessary for successful conversions.

Read the full article here.