PODCAST—Life
Sciences real estate
tackles COVID-19

James Cook: [00:00:00] You know, all the life science companies out there, the ones that make pharmaceuticals, medical devices, biotech, I knew there'd been a boom in life science activity leading up to our new COVID-19 recession. And I also knew that the pandemic had had a huge impact on the industry itself. So in order to learn more, I called up an expert.

[00:00:21] This is building places where we look at the world of commercial real estate through the eyes of the experts that study it every day. My name is James Cook and I researched real estate for JLL today. I'm calling up my life science expert. It's Roger Humphrey.

[00:00:37] Roger Humphrey: [00:00:37] My name is Roger Humphrey and I'm the global leader.

[00:00:40] JLLs life sciences practice. So life sciences is the research and production of pharmaceutical drugs. Whether it's a biopharma, pharmaceutical or medical devices, they're all regulated by the yes, da the research and manufacturer of these drugs and medical devices. And so life sciences is the umbrella that encompasses all of that.

[00:01:01] Research facilities in general, is it been in high demand and major clusters like Boston and Cambridge, South San Francisco, Raleigh Durham, San Diego. And because it's in, been in such, I demand newer clusters are starting to build their inventory like Houston, Chicago, the suburbs of Chicago, of course, New York and New Jersey, New Jersey, where pharmaceutical, I would say had its concentration of manufacturing research for many, many years still is a, is a major cluster in the U S.

[00:01:30] James Cook: [00:01:30] These cluster cities that you're talking about is that because those are the places where the universities are.

[00:01:38] Roger Humphrey: [00:01:38] The primary driver for life sciences cluster is access to the talent that's being produced to go into this industry. There's a significant amount of findings degrees that are being created.

[00:01:50] It's simple economics. The demand for the space goes where the supply panel is being created. Closely associated with the research of new medicines is the trials of those new medicines and have an active to, to the patients who utilize this medicine, having close proximity to major healthcare system, also a very important driver to create a major clusters.

[00:02:10] And I think having access to those patients are going to be key. To the future success and growth of this industry. The last 10 years for the, for the industry has been very, very good, definitely borderline booming in the last two to three years. And I think with COVID-19 hitting us, I think it's going to continue on abated for the next several years.

[00:02:31] And the major clusters around the country, the vacancy rate for research facility has always been in a very low single digits. And so it's always been in high demand. I don't see a lot of vacant research facilities going unused currently. And that was, that was even prior to COVID-19. We have seen a significant amount of officers and distribution and warehouse space being reconfigured.

[00:02:58] To accommodate an additional investment made to accommodate research capacity in major markets like Boston and Cambridge up in Massachusetts and South San Francisco.

[00:03:08] James Cook: [00:03:08] And when you think about these buildings, you know, I imagine like a scientist lab on, on TV or in the movies, is that what it's. Really like, are these really expensive to build these out?

[00:03:18] Roger Humphrey: [00:03:18] Well, some of them can cost actually a thousand dollars a square foot to build out depending on the type of research. And, you know, I think what you see on TV and in terms of research facilities is, is portrayed accurately in terms of what you see in laboratories. If you think about state-of-the-art spaces that require a special cleaning, special air conditioned HPAC protocols, then, then that's basically what you would imagine that they look like.

[00:03:44] James Cook: [00:03:44] What's the impact of COVID-19 on the life science industry,

[00:03:49] Roger Humphrey: [00:03:49] life sciences companies had to deal with the impact of caring for their employee safety. You know, as part of the pandemic, just like all other industries and while a lot of their administrative employees and some of their research employees that were working remotely, the manufacturing of vital medicines and medical devices has continued unabated.

[00:04:06] And many of these organizations are now involved in creating therapies, vaccines, and testing devices to combat. COVID-19 so many of increased research and manufacturing to deal with the pandemic. There are 795 pipeline drugs, including the combination of novel agents, as well as repurposed drugs to treat or potentially prevent COVID-19.

[00:04:25] This number goes up every week. Many of the treatments that these companies, the drug that they produce. To treat health conditions like cancer and cardiovascular disease and rare disorders. These folks don't need their medicines. And so a lot of these companies had to continue to manufacture these drugs and continue the research associated with new drugs that they've been creating this 795 pipeline drugs.

[00:04:49] A lot of them are repurposed drugs that have been previously manufactured. For other uses and now they're being put into trials to see if they can help treat COVID-19.

[00:04:59] James Cook: [00:04:59] So do you think, is there an increased demand and an increased need for this kind of real estate? Because of COVID-19.

[00:05:08] Roger Humphrey: [00:05:08] Well, there's definitely an increase in some of the, the capacity for manufacturing and research.

[00:05:13] A lot of the research for pipeline drugs that weren't associated with COVID-19 has been put on hold so they can accommodate the research for COVID-19 therapies. But I think one of the, one of the outcomes. Will be definitely an increase in demand for research and potential manufacturing. A lot of our clients who are pulling existing drugs to see if they can treat COVID-19 with those drugs have increased their manufacturing output by adding additional shifts.

[00:05:40] And some are starting to look at whether they can expand the footprint that capacity as well. I think there's a distinct possibility that we'll see an increase in both research facilities, as well as manufacturing facilities in the U S.

[00:05:52] James Cook: [00:05:52] Now that we're sort of in this re-entry phase, what has re-entry looked like for these life science organizations?

[00:06:00] Roger Humphrey: [00:06:00] Some research was put on hold as part of caring for safe worker safety and almost all of the administrative personnel has been working from home. So all of our clients are there. Various stages of returning to work either reactivating, non operational labs, or bringing workers back to the office.

[00:06:17] Obviously with respect to labs and research facilities, there was always a higher standard of, of, of care and the operations of that space. But we're seeing all of our clients limiting space capacity, they're rotating schedules that are doing enhanced, increased cleaning. They're putting floor and wall markers on they're putting flexi glass dividers in between laboratory desks, having enhanced and designated the PBE and lab coat stations are important.

[00:06:43] We also see a lot of clients when it comes to office workers, bringing them back in various stages. So they're starting at a small percentage to see how that works, and then slowly increasing that level of workers coming back to work. Well,

[00:06:58] James Cook: [00:06:58] Roger, this has been a fascinating conversation about a topic I didn't know much about.

[00:07:02] So I learned a lot. I really appreciate you joining me today to talk about it.

[00:07:06] Roger Humphrey: [00:07:06] Thanks, James. I appreciate it.

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