A seismic transformation in biomanufacturing real estate is having a direct impact on the availability of space.
The cell and gene therapy (CGT) industry is on track to hit a record number of regulatory approvals this year—and the boom could have big implications for commercial real estate.
Life sciences employment is riding high and the marketplace is increasingly demanding accelerated innovation. But real estate development happens at a slower pace, leading to a supply shortfall that has left many enterprises engaged in large-scale research, development and production in the lurch.
According to Global Data, 582 CGT clinical trials commenced last year as regulatory approvals of new gene therapy and gene-modified cell therapy products gathered steam, and the first quarter of this year has seen an additional 138 clinical trials.
“This seismic transformation in the underlying fundamentals of biomanufacturing real estate is having a direct impact on the availability of space, as well as its design, architecture, engineering and financing,” says Roger Humphrey, President, JLL Life Sciences.
A JLL analysis also shows that investment in CGT has more than tripled over the past five years, with global regenerative medicine financing increasing by 16 percent in 2021 to $23 billion. Greater Philadelphia is ranked first in the nation for the National Institutes of Health grant funding for CGT, attracting more than $3.8 billion in VC and NIH funding last year alone. In December, Spark Therapeutics, a member of the Roche Group, announced plans for a $575M gene therapy innovation center within Drexel University’s campus in Philadelphia’s University City neighborhood. Construction is slated to begin in the fourth quarter.
“Investor understanding and interest in developing and acquiring GMP facilities has been an education process and is gaining momentum as the biomanufacturing sector continues to accelerate,” said Lynn LaChapelle, Managing Director, JLL Capital Markets. “From an investment perspective, cGMP facilities have many base characteristics of industrial buildings, with inherent tenant ‘stickiness’ and lower second-generation tenant improvements as a majority of the occupiers fund their highly specialized improvements.”
Venture capital dollars have been flowing seemingly unabated into the life sciences sector since the onslaught of the pandemic, as biotech and pharma players compete to develop new treatments harnessing genomics. According to CBRE, VC funding of life sciences R&D has tripled over the past five years, with more than $8 billion in new VC funding for the sector in Q4 2021. Boston-based RA Capital Management leads the VC firms in terms of life sciences investment, pouring $6.1B into the sector in 2021.
Source: “What Gene Therapy’s Record Year Could Mean For CRE”
