While the COVID-19 pandemic pressures most of the U.S. real estate sector, including hotels, shopping centers and senior housing communities, it has stoked demand from life sciences companies developing vaccines and treatments for the respiratory infection due the need for laboratory space.
Last week, Alexandria Real Estate Equities (ARE +1.2%), the largest life sciences real estate investment trust in America, raised $1.1B via a new share offering which was significantly oversubscribed.
Other life sciences-focused real estate players are beefing up their coffers. Blackstone Group-owned BioMed Realty plans to add 2.5M sq. ft. (Boston, San Diego, Seattle) to its 11M sq. ft. portfolio.
In April, Toronto-based Brookfield Asset Management (BAM -0.2%) acquired a 50% stake in Harwell Campus, a 700-acre life sciences campus near the University of Oxford for more than £200 million ($251 million).
Over-supply, as always, could spoil the party. Jason Kaufman, SVP at Silverstein Properties Inc., says, “This has been the institutional focus du jour. Now everyone who operates a loft-style building in New York City thinks they have a life-sciences building.”
Opportunists looking to cash in on the demand should be wary of the high costs and hidden complexities of space used for scientific and medical research, including the need for sophisticated ventilation and gas & water delivery systems. Alexandria founder and executive chairman Joel Marcus adds, “If you don’t know what you’re doing, you blow yourself up.”
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