More Biotech Construction Necessary to Compete with Peer Cities
Written by: Tamara Small | This op-ed originally appeared in Banker & Tradesman on September 26
The demand for lab and life science space is driving construction all over the commonwealth, and there’s no slowdown on the horizon. Existing vacancies in Boston are at 1.1 percent and the larger market is hovering at 2.5 percent. This lack of supply has caused pricing to skyrocket where other sectors of commercial real estate have stalled. As one example, rents in Watertown hit levels comparable to Kendall Square’s pre-pandemic rents earlier this year. While new construction and lab conversions are up, prices remain high, as demand continues to exceed supply. The majority of new space coming online in 2022 is already committed.
This means the lab and life science sector is facing tough questions. If companies choose to stay in Massachusetts, will they be able to expand operations and hire new people if they can’t find the space to house them? Will communities open their arms to this wave of innovation, or close their doors?
Booming Sector Benefits Many
Massachusetts is home to incredible research institutions, an unparalleled talent pipeline, and significant venture capital. Medical and research breakthroughs are happening right now in Massachusetts – driving innovation around the globe. While other industries are still in recovery mode from the effects of COVID-19, the life sciences sector is thriving, setting the tone for the future of Massachusetts. We need this sector to drive broader economic recovery and growth.
What does that mean for our local economies? This investment translates into jobs.
The number of Massachusetts based employees in this sector has steadily increased over the past 15 years, and 40,000 new jobs are predicted to be created by 2024. This represents a 50 percent increase from the 84,000 employees currently employed in this sector in Massachusetts.
While many typically think of the life sciences sector as requiring a PhD, the reality is that 47 percent of these jobs only require a bachelor’s degree, and 13 percent of the jobs in the sector require an associate’s degree or high school diploma. Lab and life science jobs are accessible to everyone in our local communities– but only if they stay in Massachusetts.
Lack of Lab Space Is Threat to City
This begs the question: In an industry that, in many cases, never stopped commuting, where will all of these employees go every day? The shortage of lab and life science space in Greater Boston is a threat to our long-term ability to compete against other established life science clusters, such as San Francisco, New York, Philadelphia and San Diego, and may drive investors to look for new emerging markets. Policymakers must be focused on enacting policies that allow this critical sector to continue its growth – including clear and predictable permitting processes to ensure these companies have space in the commonwealth to call home. New space is the only way we as a commonwealth can keep up.
Residents will benefit from this increased investment in their neighborhoods in many ways. As Watertown and Kendall Square have shown, when labs go in, restaurants, retail and housing follow. When labs open, foot traffic in the neighborhood increases, positively impacting small businesses and restaurants. By investing in the future of life science, we are investing in new main streets and revitalizing the ones we love. And it’s not all about labs and life science – holistic policymaking to support workers is necessary for our entire economy. It’s critical that our leaders at the state level focus on providing affordable housing, reliable transportation and quality childcare to ensure workers, and their employers, choose to stay in Massachusetts.
What can commercial real estate do to support this boom in lab and life science? Educate residents and local businesses about what it means to have these innovative companies in their communities. From economic impacts to the highly regulated nature of the design, construction and operations of the buildings, it’s critical that residents understand the value and care that goes into these investments. Work with tenants to ensure transparency and demonstrate long-term value to the public. Community buy-in is critical to long-term success.
The residents and businesses of Massachusetts have shown tremendous grace and grit over these past 18 months and worked tirelessly to survive unprecedented challenges, and we’re still navigating whatever comes next. The lab and life science sector offers an opportunity not just to survive, but to thrive. The choice is ours, and our future depends on it.
Tamara Small is CEO of NAIOP Massachusetts, The Commercial Real Estate Development Association.