As other segments of the economy have suffered in 2020, life sciences are emerging as a bright spot.
Private investors have put more than $16 billion to work in life sciences in the first half of 2020, while the National Institutes of Health continues to up its grant volume. In 1994, NIH gave out $11 billion in grants. By 2019, that number jumped to $39.1 billion, JLL’s Life Sciences practice Global Leader Roger Humphrey wrote for NAIOP.
The pursuit of COVID-19-related therapeutics, antibody tests and a vaccine contributed to this increase in funding. But it wasn’t the entire story, according to Humphrey. An aging US population needing life-sustaining and life-extending care, wellness-conscious millennials and a prescription drug market on track to reach $1 trillion by 2022 also drove this market.
To secure funding, Humphrey writes that life sciences companies must create a work environment that encourages innovation and productivity while remaining flexible to meet new and evolving demands.
As these firms need to remain flexible, they’re adopting more technology, such as machine learning and artificial intelligence.
“That means a growing portion of today’s lab looks more like a traditional office, even if its operational systems are far more sophisticated,” Humphrey writes.
While computers and the internet have allowed many office workers to work remotely, Humphrey writes that life sciences companies still brought workers into labs. They are incorporating staggered shifts and social distancing to keep their work on track. Many administrative staffers at these companies are working from home.
“Flexible lab space that can adjust to a variety of work tasks with limited downtime will be critical, along with ‘free’ space that can be called on to meet changing industry conditions,” Humphrey writes.
The locations of this space could be changing, though. Boston, San Francisco and San Diego secured up to 70% of venture capital investments in 2019. While these locales offer proximity to a highly educated workforce and ties to leading research institutions, Humphrey reports some companies are starting to look to secondary markets to cut costs. He writes that these secondary markets include Maryland, North Carolina’s Research Triangle, Philadelphia, New York and Los Angeles.
Others agree that high costs are creating new life science hubs. “Major metropolitan cities like Boston, San Francisco, Seattle and San Diego that have been long-established life science hubs are expensive to operate in,” Mark Hefner, CEO and shareholder of MGO Realty Advisors told GlobeSt. in an earlier interview.
“Everything from real estate to cost of living in these cities is expensive. Now, with the Covid-19 crisis, companies are facing tremendous budget constraints and increasing pressures on their bottom line, forcing them to reconsider where they are located.”