Investing in Life Sciences Real Estate: Design
Designing and fitting out a property for laboratory use is incredibly complex and specific to the company operating in that space. A ‘one size fits all’ approach does not work.
Life sciences businesses can occupy offices, laboratories, industrial buildings, or a combination of the three. Laboratories, wet or dry, can be offered to tenants as fully fitted, open plan, or as a shell and core. Getting the building’s design and specification correct, from the beginning, is an essential element of success.
''Defining the occupier brief early is crucial. Do it early on and it can form part of the due diligence of assessing whether a space is right, or not'' - Sam Potts, Building Consultancy
SIZE MATTERS. Lab requirements change as companies grow so
make sure you know the segment of the market you are catering for.
Start-ups
Incubators offer ‘fully catered’ small spaces on flexible terms to scientists taking the first steps out of the lab with their ideas. They may need lab space, but not necessarily all of the time. Grassroots in Oxford is one example, offering mentoring as well as dedicated space. Accelerators cater for scale-ups on similar terms.
Intermediate-stage companies
It is more challenging to cater for intermediate-stage companies
seeking 5,000-10,000 sq ft – not yet large enough to take their
own building. Typically, lease lengths are too long for companies
with unpredictable growth plans, which tend to outgrow space in
two to three years. The pace of growth means a pre-let is often
unattractive.
Larger companies
Tenants requiring 10-30,000 sq ft will have more stability, but usually also greater technical requirements. More established corporates will usually accept longer leases, and may prefer to take a building with a shell and core specification so it can design and fit-out its accommodation, as they will not be able to compromise on technical requirements.
FUTURE-PROOF. Build in the flexibility to make changes without
altering the lab’s physical layout.
As science and technology continues to take the world by storm with its explosive growth, research and development priorities are ever-evolving. This means base build designs require flexibility to accommodate different installations and changing requirements.
As our Life Sciences 2030 report has identified, the majority of life sciences operations require laboratory space with internal configuration flexibility. Each area within life sciences requires different levels of facility specialism, as shown in the below graph, which is overlaid with the understanding of the opportunities to be derived in each area.
From Biopharma, Diagnostics and Medical Devices, to Digital Health and Bioprocessing, to name a few – each research area may require different laboratory specifications, and business space will need to evolve in tandem with science as the life sciences sector continues to grow.
There are many other exciting areas of science coming forward but their significant commercialisation is unlikely within the short to medium term.
Technical ‘industrial’ R&D spaces are also increasingly in demand for researchers conducting pilot experiments to create industrial-scale production processes. The space will need to facilitate a process layout from sample delivery, sample processing and delivery of results.
SPEC IT RIGHT. Technical and safety specifications vary greatly
across life science specialisms.
Lab : Office ratio
While each life science tenant’s needs are bespoke and dependant on their operations, there are some common considerations. The property should have a mix of laboratory and write-up space/office space. The ratio of office:lab may be dependent on the business operations, and should also be flexible for imminent advancements, which could fundamentally change operations as the technical requirements of businesses change further. Our Life Sciences 2030 research looks in more detail at how AI, robotics and specialist manufacturing will transform real estate requirements over the coming years.
Safety is paramount
Some life science tenants may require biological grade laboratories, including biocontainment precautions. At the lowest level of biosafety, precautions may consist of regular hand-washing and minimal protective equipment. At higher biosafety levels, precautions may include airflow systems, multiple containment rooms, sealed containers, and high levels of security to control access to the facility. This type of facility may be for a company trying to develop vaccines, for example.
Containment levels
In addition to biological grade facilities, you will need to consider which containment level the company occupying the lab space requires, and how this will impact the lab’s fit out. From Containment Level 1 Laboratory (CL1) and Containment Level 2 (CL2), Level 3 (CL3), Level 4 (CL4) for investigating diseases and viruses, to Cleanroom grade for firms investigating agri-tech – companies require varying amounts of building specification depending on which life sciences areas will take up their laboratory space.
Equipment
Often specialist laboratory equipment is purchased and owned by the tenant, leaving with them when they move on. But it’s this equipment that demands particular building requirements, so a changeable set-up for incoming tenants is ideal. Even larger entities will look for flexible alterations rights in their leases to facilitate work arising from unexpected chance discoveries.
Additionally, robotic lab systems and specialist instrumentation will need to be accommodated now and more so in the future.
Risk
Landlords also need to be prepared for the possibility that concepts may fail, requiring the lab to be repurposed for another venture, and possibly a new tenant. Evaluating the covenant strength of tenants is complex, and accounts will be heavily influenced by the stage of funding at which a company is at.
''Real estate development for the future of Life Sciences is inherently uncertain. But, understanding this uncertainty and where flexibility is necessary for future advances plainly helps to mitigate financial risk, support viability and maximise the opportunities clearly presented by the life sciences sector over the next decade'' - Saul Western, Head of Commercial
Related projects
An extensive renovation of laboratories and office space in the heart of Cambridge’s science cluster
Strategic real estate partners to one of the world’s largest university spin out venture capital fund
Get in touch
Download the pdf
Privacy notice