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Contributor • Life Science

Life Sciences and the Suburbs: Three Factors Behind the Real Estate Shift

October 23, 2020

by Imran Khan

Even before COVID-19, seismic shifts in the life sciences industry were encouraging labs to think beyond urban centers. The global pandemic has only accelerated and magnified these changes, particularly in Cambridge and Boston, where real estate and infrastructure challenges pose problems for the booming biotech industry. Follow along to learn more about three key factors influencing the life sciences expansion into the Metro and Greater Boston areas.

Virtual (Re)integration of the Ecosystem

Traditionally, life sciences companies were large enterprises whose vertical structures encompassed all aspects of the development of a product – from R&D to commercialization – in-house. Then technology entered the picture, creating a new eco system of contract development and manufacturing. Startups popped up, with vastly different needs and business models. Today, developing and commercializing life sciences products has dispersed into a virtual network of smaller partners that each focus on a single aspect of the process. This has also meant a shift in what these companies need in terms of physical space.

Consider, for example, a gene therapy startup. Gene therapy requires blood collection, amplification, gene manipulation, and infusion therapy. If one company took on all aspects of this process, the processing needs for equipment alone would be immense. Under the newer virtual integration model, however, one company can focus solely on manipulating genes while outsourcing other needs, like media and reagent preparation, or waste management, to another partner. This division of roles saves the gene-therapy startup huge expenses – particularly when it comes to real estate.

Resource and Infrastructure Challenges in Urban Centers

Resource and infrastructure challenges have also pushed life sciences companies to think differently about location. Most life sciences startups – even those focused on a narrow specialization – require large laboratories and sterile environments. Greater-Boston, offering more square feet per dollar, is more conducive to building labs that demand larger footprints and spatial volumes.

Last year, 30% of National Institutes of Health funding went to firms located in the suburbs west of Route 128, according to the same report by CBRE, and venture capital monies funneled into the western suburbs increased 76% from 2010 to 2019. In Boston and Cambridge, limited lab space, combined with traffic and parking issues, has made the suburbs even more attractive. At the end of 2019, the vacancy rate for labs in Cambridge was only 1.5%, according to CBRE’s Boston Life Sciences 2020 report. In response, more labs are moving out of the city.

Government Support of Onshoring

Boston has been a biotech hub for decades, boasting assets like MassBio Edge, a purchasing consortium which allows life sciences companies to use collective buying power to reduce costs and improve access to necessary supplies. Over time, the Massachusetts state government has played an important part in fostering this growth via regulations supporting “onshoring,” the practice of keeping manufacturing jobs inside the United States. In 2008, for example, the state passed legislation for a 10-year, $1 billion plan to support onshoring in the life sciences.

With the emergence of COVID, onshoring has become even more of a priority as government leaders are focused on ensuring medical facilities have access to critical drugs and equipment. The effects of onshoring will increase the virtual integration discussed in No. 1, with an emphasis on all parts of the supply chain being physically near one another to reduce shipping time and improve communication among partners. In this regard, Boston shines, with life sciences companies from all parts of the supply chain already located in-region. As the onshoring continues to expand the industry, the Boston biotech zone will need more space for more companies – and that space is found in the suburbs.

COVID Accelerates the Trend

The life sciences ecosystem has been undergoing a profound structural and paradigm shift. The pandemic is merely putting a spotlight on a transition that was already in motion. The global pivot toward remote work has leaders in every sector questioning how and where we work; although life sciences employees often need to be in the lab, commute times and quality of life issues give suburban-situated labs a clear advantage. And after a year marked by drug, PPE, medical device, and testing shortages, the push to fortify life sciences manufacturing within the United States now has rare bipartisan support. In booming biotech hubs like Boston, these trends mean that the expansion into the suburbs is only likely to accelerate.

Imran Khan

Imran Khan is an associate principal and director of science at Margulies Perruzzi, a New England architectural and interior design firm.

biotech boston LifeScience
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