We all know that Covid-19 is raging, and it’s handing tremendous blows to the health of the economy. Yet, certain companies seem to be thriving.
This story is a microcosm of how certain parts of the economy are doing well while others are getting killed. In other words, some companies are better suited to survive and thrive amid the pandemic. The idea that some companies do better than others of course, is nothing new under more normalized circumstances. But as with a great many things, the pandemic has enforced different perspectives on even the most normal things in everyday life.
So, here’s the deal.
Commercial real estate is taking a shellacking around the country with the notable exception of one type of commercial space…drumroll, please…wet labs. No, not the wet markets in China with all the beasties swimming and walking around.
We’re talking about commercial lab space occupied by biotech and life science companies.
Growth in square footage. According to a report from commercial real estate firm CBRE, the total square footage of commercial laboratory space has grown by 12% this year to 95 million sq. ft. and Another 11 million sq. ft. is currently under construction.
Top cities with labs. The report further details that the top cities for these labs were: Boston, San Francisco, San Diego, Washington D.C., Baltimore, Raleigh and Durham. Commercial lab space in these cities has relatively low vacancy rates and increased average asking rent. All of this while vacancy rates for general office space have taken a nosedive – for example, San Francisco’s vacancy rate for general office space is 22%, an all-time high, according to an article in Quartz.
Pay attention, Governor. And on the topic of office space, look at midtown Manhattan. Governor Cuomo recently announced that he was considering a plan to turn midtown office space into affordable housing because of low office occupancy rates . Hmm, not sure that’s the best response to the commercial office space crisis, but let’s see what happens.
Commercial lab space has the perfect storm of factors going for it:
- Biotechs and life science firms are considered essential and can stay open;
- You can’t work from home, ie. don’t even think about replicating the lab at home;
- Lab spaces can be built with social distancing in mind, given that they are already large and airy with superior ventilation already built in; and, last but not least,
- Biotechs/life sci companies tend to live off investment and not revenue given that they are in development phase, so the pandemic didn’t really affect their $$ lifelines.
There are a lot of opportunities like this happening amidst the pandemic as we speak, so there’s a lot of stone turning to be done.