Hybrid real estate boosts life sciences innovation

R&D spaces increasingly have office and laboratory functions coexisting under one roof. This evolution of the workplace has been driven in part by a lack of affordable or available laboratory space in the world’s renowned tech clusters. 

A new pathway to sought after life sciences clusters

The phenomenon is happening at the greatest pace and scale in regions that have become hotspots for technology development, such as Munich, where US blue chip titans like Apple, Google, Microsoft, Amazon and IBM have established themselves. This has led to an inflow of ambitious start-ups seeking admission to this tech epicentre, further consolidating the area’s status as Europe’s answer to Silicon Valley.

At the same time, companies are establishing R&D campuses in locations where there is a concentration of specialised talent, ready access to technical universities and an array of campuses clustered together in one location. This is intensifying the competition around sourcing appropriately resourced real estate.

While many companies have struggled to attract workers back in-house following COVID-19, remote working is not an option for R&D-heavy quaternary sector industries like tech and life sciences, as products need to be developed, initiated and tested under strict conditions that cannot be replicated at home.

Although this trend is now gathering pace, it began some years ago, with the pandemic accelerating the process, rather than being the root cause. With speed to market a major life sciences priority, anything that can act as a catalyst in this process is of significant interest to companies. Logically, having key laboratory and office functions under one roof will expedite the route to market.

In addition, R&D staff are highly valued by companies, and to attract and retain the best from across the world, they must be afforded access to working spaces centrally located in the major hubs. Amenities that provide comfort but also foster communication and collaboration need to be woven into R&D spaces to optimise working conditions, promote innovative thinking and enhance productivity.

Delivering fit-for-purpose lab space takes work

It is important to understand, however, that delivering a fit-for-purpose laboratory space involves higher compliance thresholds and more complex infrastructure. R&D spaces are synonymous with high energy and water usage, comprehensive HVAC systems, greater floor-to-floor heights, increased structural load bearings and the generation of potentially hazardous waste. 

The additional work needing to be undertaken to satisfy these expectations will certainly add to the bill. However, with higher retention rates associated with such tenants and the fact they are willing to pay a premium to be in the right location, the higher upfront development and build-out costs can be worth it. 

From an overall investment perspective, given the challenging prevailing funding environment, repurposing existing buildings could even present scope for reduced construction costs, shorter timelines and a lower carbon footprint, compared to delivering a bespoke asset from scratch.

There are, nonetheless, clear challenges that come with the coexistence of two functions with disparate technical requirements. For example, an R&D space will come with inherent risks a traditional investment bank office will not possess. These can include protection for occupants from noise, vibrations and potentially harmful substances, each of which must be factored into the design and build. In addition, labs contain sensitive information that must be protected from theft or sabotage. Extra layers of security might include multiple layers of access controls and spaces obscured from sight.

Future-proofing higher on agenda, driven by innovation 

It is also important to future-proof such spaces where possible, driven by the increasing application and influence of artificial intelligence, digitalisation and automation, which is leading to a move away from traditional wet labs and siloed iterative processes. 

While each laboratory will still need to be planned differently, with each tasked with performing a specific function, anticipating and integrating appropriate reserve capacity to meet future needs is important. This technical resilience can be achieved by factoring in a ready ability to connect to and draw on the forces transferred and distributed from the structure and skeleton of a building, as well as more straightforward measures such as the introduction of sufficient empty conduits to be called on later.

Aside from the requirement for novel architectural and technical solutions, procurement strategies in delivering these projects will also be different. The skillsets demanded to deliver a space that is both aesthetically pleasing and one that reflects complex technical needs are not skillsets that all general contractors (GCs) can collectively bring to bear. This necessitates adjustment to the procurement route whereby there must be access to a bigger pool of GCs to cover all bases.

Adaptability and innovation key to project success

R&D campuses are in a constant state of flux informed by ever-changing technologies, processes and personnel. Consequently, projects are subject to change at short notice as requirements shift. 

During design, construction and even after handover, it is not unusual for changes to be implemented. These will have cost implications, and so it is essential all parties work in concert and pivot as necessary in accordance with robust established and well understood mechanisms to prevent those costs from spiraling.

For those tasked with delivering these projects, it is important to let go of attachment to the design freeze concept. Those avoiding convention and able to show a proven capacity to embrace and successfully implement change at any given point along the project life cycle should find themselves in high demand.