*Originally published on CommercialIntegrator.com
The biotech market is red hot, flush with cash and looking to expand, which presents a great opportunity for the pro AV industry.
The global pandemic in 2020 caused new construction and retrofits to grind to a halt, and many of those same projects are scaled back due to the onset of concepts like remote and hybrid work that allows organizations to consolidate their real estate footprint.
However, one sector that has historically enjoyed a wealth of funding from federal governments and deep-pocketed investors got an even larger infusion of cash to solve the global crisis: biotech and life sciences.
In addition to combatting conditions and diseases plaguing our aging population, this market was tasked with developing treatments and vaccines to slow down the COVID-19 pandemic, leading to a very strong year and an even more optimistic future for life sciences companies. With that momentum, the biotech real estate market is on fire, real estate experts say.
A growing market to target
For integrators relying on new construction and new tenants in existing buildings, the biotech market should be near the top of the list.
“It’s certainly a good market to target,” says Steven Purpura, president of life sciences at Boston-based real estate investment firm Beacon Capital Partners, during an interview with Commercial Integrator.
According to Purpura, a real estate expert who previously spent time as head of the Boston Consulting Practice at brokerage firm CBRE, there is about 125 million square feet of biotech space in the U.S., and it’s growing rapidly in areas like Boston, San Francisco, San Diego, Philadelphia and New York.
“It’s growing rapidly, and it will continue to grow,” he says. “I expect it to double in size over the next 10 years.”
Other public reports from real estate firms back up Purpura’s statements and predictions.
A 2021 report on the life sciences market from global real estate services firm Cushman & Wakefield says the market exploded in 2020 with a record $70 billion of private and public capital pouring into the sector in 2020, representing a 93% increase from the previous record of $36 billion in 2018.
If the first quarter is any indicator, we could be set for another record year in 2021 with $32.9 billion invested in the biotech sector in the first quarter alone.
Lab, medical office, and manufacturing space is in demand while other types of real estate like office and retail are struggling. According to the report, there was almost no slowdown in the life sciences space in 2020. The report focused on 14 major U.S. biotech markets and found that the vacancy rates in those areas was 8.7% when the national average office vacancy rate was 14.1%.
Another report from CBRE, this one released in October 2020, found that total commercial lab space grew by 12% at that point last year.
CBRE’s report also found that employment in the biotech space was relatively unaffected by the pandemic-induced downturn, declining by just 1.3% through July 2020 while total nonfarm employment fell 7.6%.
There will always be a demand for medicine and treatments as the population in the U.S. grows older and new diseases and global health crises arise, which makes the life sciences sector one of the most recession-proof industries.
For technology service providers like audiovisual integrators, the biotech sector represents an attractive growth market that is flush with cash and poised to withstand economic downturns.
An exploding AV opportunity
Inspired Technology and Communications is based in Easton, Mass., just a short drive from the Cambridge-Boston area, home to the most active cluster of life sciences firms, hospitals, higher education and research institutions in the U.S., if not the world.
The integration firm started with the biotech industry about seven years ago and their business with that vertical market has grown alongside it, says Ed Sharib, vice president of sales.
“We have some house accounts that have just exploded as the industry expanded in this area,” Sharib says. “I can count probably 400 projects that are out there over the next two to three years that I’m tracking.”
Many of those projects started with small companies based in the burgeoning Boston-area medical community that are now rapidly expanding to other locations across the world. Those relationship helped Inspired Technology and Communication build new relationships as the industry itself grew.
“One of them started in a basement in Cambridge, and now it’s all over the country,” Sharib says.
The pandemic, Sharib said, was just a minor hiccup that eventually helped accelerate the growth of this vertical. The opportunities in biotech are plentiful due to the lightning-fast growth of the industry.
There is plenty of new construction, but there are also many life sciences companies that need new office or lab space so badly that an entirely new building would take too long for them, so they opt instead to move into an existing building and retrofit that space to fit their needs.
Without mentioning specific clients, Sharib says the firm acquired a new account with a pharmaceutical company involved in COVID-related work through working with a Massachusetts-based life sciences consortium.
“They’re expanding, along with others that we’ve worked with that have had some interest or work in that space as well,” Sharib says.
As far as what kind of AV technology life sciences companies need, integrators can expect to find some common AV needs for administrative staff and some not-so-uncommon requirements for the scientific staff.
Technology requirements in biotech
According to Sharib, life sciences companies have similar needs to typical office customers: collaboration, audio, visual, security, surveillance, and structured & data cabling.
In a mission-critical industry where life-saving treatments are being developed, these technologies must work, and systems have to be deployed quickly when companies move into a new space – especially when startups realize they need new technologies as they move out of incubator spaces into a more legitimate office or lab environment.
In addition to typical enterprise AV technology, Inspired Technology and Communications also offers some of its biotech clients lab equipment monitoring systems that alerts personnel if the temperature in a storage unit holding samples falls outside a certain temperature range.
According to Steve Grace, founder of audiovisual consultancy AVH Technology Partners (formerly AV Helpdesk), the scientific side of these businesses have unique needs that are different from a traditional corporate model. Developing a drug is a 24-hour research cycle. For example, researchers working in Cambridge or Boston spend a full workday developing a drug, and that research is then passed on to teams working in Europe, which is then passed on to teams working in Asia.
Life sciences has always been the bread and butter for Grace’s firm. The company’s first headquarters was in Boston and counts pharmaceutical giants Novartis and Pfizer as some of its largest clients along with MIT and Harvard-affiliated research institution Broad Institute and others.
The next thing to consider is how scientists share information. It’s not traditional presentations via PowerPoint, Grace says.
“It’s data and visual aids, the visualization of data, and things like 3D symmetry and things you don’t have in a regular corporate environment,” Grace says. “But they’re all intertwined with everything else in a corporate structure, and they follow the same rules. So, it’s really a unique environment with opportunities for going beyond traditional presentations.”
In a lab environment, videoconferencing and collaboration spaces take on an atypical setting in which spaces are wide open so video feeds can capture scientists as they work.
“They want everybody that works in the company to see the scientist at work,” Grace says. “The scientists are kind of out in the middle of space. It’s more public than what you’d have in a traditional meeting space, and it’s more interactively collaborative.”
How to get your feet wet in the life sciences sector
Given this very attractive opportunity to partner with an industry that never seems to be out of cash and invests in state-of-the-art facilities, integration firms should consider aggressively targeting the life sciences industry.
Do your homework and be ready to answer questions. Biotech executives – and even their end users – are researchers by trade and will have done their homework when sourcing audiovisual technologies, so you should be just as prepared.
According to Grace, biotech companies will take your offerings and look at the market for alternatives if they think there are better solutions out there.
“You don’t want to be caught in that position, so do your research,” Grace says.
Since many of these companies are backed by deep-pocketed investors and routinely win grants and tax benefits from federal, state and local partners, integrators don’t have to restrict offerings to cost-effective solutions.
Instead, these organizations prioritize performance, reliability, and service.
“They will spend the money,” Grace says.
Another angle to take is partnering with real estate investment firms that are capitalizing on the biotech goldrush and building large lab and office space and then leasing to smaller biotech companies, Grace says.
According to Sharib of Inspired Technology and Communications, becoming a trusted technology partner of the life sciences community isn’t all that different from how an integrator should approach any other vertical market: building trust.
That step alone will help your integration firm win more projects in this industry because of the close-knit nature of the relatively small life sciences community. Once you let one company know you can work in their space and solve their communication technology issues, landing more biotech clients becomes easier.
Sharib again pointed to the firm’s biotech customer that got its start in a small incubator space in a Cambridge basement.
“They’re now flying us everywhere,” Sharib says. “That relationship helped us form synergistic relationships with people that knew each other.”