Hines recently outlined its plan to place a larger emphasis on investing in more life sciences sector opportunities. This market outlook is supported by the heightened focus the pandemic has placed on life sciences within the commercial real estate industry. According to CBRE, Denver is the tenth-largest U.S. life sciences market in the U.S. in terms of square footage of lab space. And currently, 33 life sciences companies are searching for a cumulative 1.6 million square feet of lab space in the Denver-Boulder area.
To meet the new demand, Hines plans to be a leading investor and developer by providing more purpose-built life science facilities in growing markets with state-of-the-art, operator-driven design and amenities.
“The life sciences sector is experiencing an era of unprecedented growth driven by a rise in both public and private funding combined with a post-pandemic sense of urgency and market opportunity,” said David Steinbach, Global CIO at Hines. “As this industry surges, it is pivotal that developers keep pace by delivering spaces that are as innovative as the tenants occupying them. Hines is dedicated to delivering purpose-built facilities that meet the physical, functional and technological needs of the occupiers.”
Hines’ investment thesis is based on a confluence of factors that are driving the demand within the global landscape for life sciences real estate that are outlined in the new Hines Perspective: “The Potential of Purpose-Built Properties” white paper. In this piece, Hines puts the context for investment into perspective, while sharing the firm’s vision on the potential of purpose-built life sciences development and its proprietary analysis on the sector.
New Frontier Markets
To continue breeding innovative outcomes, life sciences companies tend to cluster in cities where their facilities are near others whose academic approach or research methodologies may improve their abilities to produce treatments via collaboration provided in physical partner adjacencies. This shows why Boston and San Francisco have become industry behemoths. However, there are many new frontier cities, both globally and domestically on the rise that can offer the convergence of financial funding, as well as academia and research/medical facilities including London, Boulder, Austin, Shanghai Salt Lake City and Pittsburgh.
Critical Design Elements
In such a competitive landscape, developers must optimize the space based on two fundamental criteria: structural specification and the balance of lab and office space. Different tenants have different needs, and the same tenant can also complicate matters with changing needs as the company evolves. Therefore, it is essential that lab space is flexible and modular.
With ESG at the top of mind for developers, investors and occupiers, this must also be an important consideration when constructing life sciences assets. Building highly efficient assets, sourcing from sustainable energy sources as well as considering embodied and operational carbon emissions will be key in competing for the most sought-after tenants.
Industry Proof: Levit Green
Hines has already brought this type of curated life science asset to the market. Levit Green, the five-story, 270,000-square-foot Phase I lab building in Houston, Texas, matches a life science tenant’s constantly changing needs, with capital that backed the firm’s credit risk. The Hines team decided to build Class AA quality labs that are highly flexible and with key features required by top life science tenants, in a market with access to top talent and world-class research institutions. The team also took careful consideration during the design phase to incorporate the unique needs required by top life science tenants. Key building features will include: redundant emergency power, enhanced structural vibration attenuation and augmented mechanical systems. 33-foot structural bay depths, allowing for an ideal 11-foot lab module, and floorplates more than 55,000 square feet will also enable research and office teams to create efficient configurations that enable teamwork and collaboration.
“Our carefully built team of national life science leasing, design and capital experts has put a tremendous amount of thought and effort into Levit Green’s planning and design. We are confident that our team will deliver one of the highest-quality commercial laboratory assets in the world once complete,” said John Mooz, senior managing director at Hines. “We are excited to bring top-tier projects like Levit Green to other highly anticipated, growing markets.”
