Life Sciences Needs More Deal-Makers
Breakneck expansion and new spending have put life sciences — and the developers and brokers who build and sell lab space and specialized offices — in an enviable position. But the sector is missing one key ingredient.
“Today we have immense amounts of capital, lots of focus and a big market," Cushman & Wakefield Director of Business Intelligence Brendan Carroll said. "What’s lagging is the skill."
The maturity of the life sciences market has lowered the perceived risk of investment, inviting new ventures and new capital. According to S&P Global Market Intelligence, biotech alone raised $20B in private equity and venture capital, and UBS found healthcare represented 14% of all deal activity in private equity last year. With President Joe Biden requesting billions of dollars of new spending for the nation’s top health organizations, it’s possible that even more investment may flood the industry.
It’s created a rush for space, and a big gap in the number of real estate professionals with the specialized knowledge to talk and execute ground-up research centers or converting traditional commercial spaces to labs. Newmark’s 2020 year-end analysis on the sector found two can’t-miss symbols of a continued boom in deal-making, amid so many signals of growth: extremely low vacancy, especially for wet lab space, and sprawling construction plans. The top 14 life sciences markets have 36M SF under construction right now.
With the coronavirus pandemic acting as a catalyst for the booming life sciences development market, Carroll wasn’t surprised 2020 was a monster year. Deal volume rose 93%. But what makes that figure even more intriguing is that Carroll could have told you that was going to happen back in late 2019.
“What’s actually more interesting is that the increase had nothing to do with the circumstances of last year,” he said. “Larger deals were already in progress.”
Carly Glova, president of Building Careers, a commercial real estate talent firm based in San Diego, one of the nation’s life sciences hubs, said life sciences roles, especially on the development and project management side, have been her clients' biggest need. Life sciences development and acquisition roles are in high demand, and often earn increased compensation; equity or other incentives average 30% of their total compensation, up to 100%, Glova said.
“That talent pool is comparatively small and folks with that experience can command high comp packages,” she said.