Multi-Billion Dollar Investment Into Life Sciences Property Will Drive New Opportunities For Smart Building Vendors

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Multi-Billion Dollar Investment Into Life Sciences Property Will Drive New Opportunities For Smart Building Vendors

As the majority of firms plan to downsize their real estate and accelerate their implementation of hybrid working strategies, the rapidly growing life sciences sector is bucking this trend by pursuing a massive expansion programme across office and lab space. According to CBRE’s research on New York City, life sciences firms took on the highest volume of leased space since 2011 because of the pandemic and new VC funding flowing into the sector. CBRE also tracked a boom in demand for office leasing during 2020 from life sciences firms across Bangalore, Beijing, Hyderabad, Shanghai and Tokyo.

Real estate investors are pouring capital into the scientific research space, funding office-to-lab conversions, building new properties and upgrading existing facilities. In July 2021, AXA IM Alts, a subsidiary of AXA Investment Managers, announced the raise of $2.24 billion, which it will invest in European specialized laboratory and office space through Kadans Science Partner, a science park developer. It will use half of the funds to develop new assets, with the other half for upgrading or repurposing existing facilities. In July 2021, Boston Properties announced it will acquire an ageing office campus in Rockville to convert into Class A laboratory space to meet the growing demand for life sciences facilities.

This increase in demand for laboratory space poses an opportunity for building technology providers. Laboratory space is much more technologically demanding than office space, with the need for more advanced building controls, HVAC systems, energy management systems, IWMSs and space management to maintain regulated environments, manage space and assets, monitor specialized equipment, and optimize energy efficiencies. For example, Thor Equities repurposed the 95 Green Street building, previously used by banking firm Merrill Lynch, into a multi-tenant life sciences building, bringing in infrastructure upgrades such as enhanced ventilation systems and service elevators. Additionally, large life sciences firms are looking to open new research facilities to support rapid business growth during the COVID-19 pandemic. In July 2021, GlaxoSmithKline announced plans to develop a $550 million life sciences campus in Stevenage, UK. In August 2021, the Texas Medical Centre started constructing a 37-acre life sciences campus in Houston, backed by $1.8 billion of financing.

Smart building technology providers need to develop their technology offerings to make the most of the life sciences real estate boom and help their customers build efficient, compliant and flexible spaces. To learn about the innovative smart building solutions on offer for life sciences facilities, read our latest report Market Overview: Building Technology For Life Sciences Facilities.

Ben Hext

Industry Analyst

Ben is an Industry Analyst in the Verdantix Smart Buildings practice. His current agenda covers hardware and software solutions for energy management, on-site power generation, and COVID-19 mitigation management. He holds an M.Eng in Mechanical Engineering from Durham University,