NSXFORD NANOPORE’S Accurateion It is a small but powerful device. When a hotel worker in Sydney tested positive for COVID-19 in March last year, the mobile device DNA The sequencer traced the infection to a flight attendant for a US airline, avoiding a public shutdown. The success of biotech companies — another celebrity is BioNTech, best known for its Covid-19 vaccine — sucks capital into the life sciences. When such companies expand, they do so not by offices or stores but by scientific laboratories with glossy white walls.
Commercial real estate investors have long relied on office, retail and industrial buildings. Less traditional assets such as mobile phone towers were the preserve of specialists. Now the big real estate cannons are also competing for it. Thus the laboratory space has become one of the most important commercial real estate, along with other facilities that support the digital economy. Data centers and infrastructure that connects smartphones are booming.
Investors’ motivation is clear. The pandemic has disrupted commercial real estate prices globally. US retailers closed nearly 15,000 stores in 2020. By mid-October, with people on remote work, offices were only a third full. The risk profile of some conventional property assets has deteriorated sharply.
In contrast, demand for assets like labs and data centers has never been stronger – a trend that was evident before the coronavirus started to spread. With rental pools for shops and restaurants dropping last year, data traffic from virtual meetings and online shopping has mushroomed. Companies using data centers and basic mobile towers are demanding more of them. These digital economy winners seem as safe as homes.
This shift is reflected in the changing composition of America’s top ten real estate investment trusts (real estate investment funds). A decade ago the most valuable vehicle of this type was Simon Property Group, the largest owner of the mall in the country. Today it is American Tower, the rapidly expanding owner of tens of thousands of telephone towers around the world. Five out of the top ten real estate investment funds It currently operates either data centers or mobile towers.
The life sciences and lab space are currently surrounded by loudest voices. Investors are flooding the healthcare sector with capital. Pharmaceutical manufacturers, medical equipment manufacturers, and other life sciences companies have raised a record $103 billion in venture capital so far this year, up from $63 billion in 2019, according to the JLLReal estate consultancy. A generous slice of capital goes into real estate. JLL It is estimated that up to $87 billion is now directed toward life sciences real estate worldwide. This is equivalent to a third of all global spending on commercial real estate in the second quarter of this year.
Notable deals are increasing frequently. in October GIC, the sovereign wealth fund of Singapore, bought 40% of the shares of Oxford Science Park from Magdalene College, part of Oxford University. The deal valued the park ten times its value just five years ago. Blackstone, a private equity firm, recently doubled its ownership of Britain’s life sciences space, investing more than $1 billion in two new sites. share of life sciences real estate investment funds Thrive.
At the moment, it is getting more and more difficult to obtain lab space. In Boston, where most of America is held, less than 5% of labs were available in the third quarter, and in the Golden Triangle, as the area between London, Oxford and Cambridge is known, buildings ran out. The Harwell Life Sciences campus near Oxford will add 1.5 million square feet over the next seven years to meet demand – equivalent to three-quarters of all office space the London financial district will add this year. Chris Walters, Director at JLLUnmet demand for lab space in and around Cambridge is estimated at around 1 million square feet – the equivalent of a quarter of the retail space on London’s Oxford Street.
When markets are tight, participants will seek to expand supply. In the case of property science and technology this is more difficult than it seems. Building new phone towers means navigating strict planning laws and nimbez. New data centers need land with access to cheap electricity and high-speed Internet. Life sciences companies like to gather around the best universities and academic medical centers that supply the chemists, microbiologists, and other experts who operate their laboratories. One fix is to find secondary sites. Cities like Los Angeles, somewhat close to the San Francisco Bay Area, and Pittsburgh, home to Carnegie Mellon University, known for its prowess in artificial intelligence, are attracting start-ups full of capital. In Britain, centers of life sciences are emerging in the north, where giant pharmaceutical companies such as AstraZeneca and . are located GSK manufacturing sites.
Another remedy is the conversion of existing offices and industrial spaces. Boston Properties, one of the largest offices in America real estate investment fundsIt says it can convert 5 million square feet of traditional sites and buildings into laboratories. It is not an easy process, because laboratories are complex spaces governed by biosafety rules. They need four times as much air as offices. Queues are long in London for ‘wet’ labs, facilities where hazardous chemicals and other hazardous materials can be handled, but real estate investors are trying. In New York, New York conversions could nearly double the lab’s rental space in the city, according to real estate advisory Newmark.
Even empty stores are being repurposed. Savills, a British real estate company, believes that London has at least 1.8 million square feet of retail property that can be reconfigured in labs. Undoubtedly, it will take years for supply to catch up with demand. But as the workplace and commerce move, real estate investors are shifting with it.■
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This article appeared in the business section of the print edition under “Experimental mice”
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