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Move Over Cambridge: Houston And Dallas Poised For Life Sciences CRE Growth

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The best predictor of future healthcare-related construction is the quality of a city’s scientific and medical talent pool along with its access to venture capital inflows aimed at medical research. 

Dallas-Fort Worth and Houston score high on each of these metrics, which is turning the two markets into hotbeds of life sciences activity and medical-related commercial real estate development.  

Move Over Cambridge: Houston And Dallas Poised For Life Sciences CRE Growth

A 2019 report from CBRE pegged Houston and Dallas among the nation's top seven emerging life sciences markets, with Houston ranking second and Dallas seventh.

Both markets scored high thanks to quality local talent, access to top researchers, recent life sciences workforce growth, ample National Institutes of Health funding and the emergence of top-ranked medical schools and research facilities. 

While Boston, New York, San Francisco and Los Angeles remain the top established life sciences markets in the U.S., commercial real estate experts see something special emerging in Texas, according to CBRE.  

“Historically, the life sciences business has been dominated by the coasts,” CBRE Vice Chairman Jeff Ellerman said. “It’s been in the Boston area and the San Francisco area."

But, he adds, “UT Southwestern [in Dallas] has become a hotbed for research and development of new drugs that could have commercial applications, so there has been more life sciences companies that have come to fruition out of the Dallas area.”

In Dallas-Fort Worth, life sciences demand isn’t just from big pharma research, but data solutions and tech innovations related to healthcare that create real estate needs around medical centers like UT Southwestern and Parkland, Transwestern Managing Director of Healthcare Advisory Services John Huff said. 

While much of the real estate that is highly valued is located around research hubs like UT Southwestern, Huff sees a trend of life sciences companies branching out and looking for more open, collaborative workspaces known as innovation hubs. This asset class is growing in demand even as companies still look for traditional data, research and lab settings. 

Houston outpaces Dallas for its growth in the life sciences sector, announcing plans for TMC3, a private-public project that will bring a 30-acre research campus into Houston and give medical facilities like Texas Medical Center, Baylor College of Medicine, Texas A&M University Health Sciences Center, the University of Texas Health Science Center and the MD Anderson Cancer Center a hub for medical and healthcare-tech related innovation. 

"The core of this whole movement seems to be [the creation] of collaborative space, where people can get together and work ideas out because bringing them together creates that synergy of ideas," Huff said. 

Houston already is stretching itself from an innovation hub standpoint with the Texas Medical Center “literally the largest medical center in the world,” said Gayle Blakeley Farris, Transwestern Development Co. regional partner, Life Science & Healthcare. “The numbers are staggering from a real estate point of view, 60M SF of facility with 110,000 employees on 1,350 acres, which is larger than the downtown loop in Chicago.” 

As Dallas and Houston continue to expand in the life sciences space, Farris also sees a need for diverse facilities that are built with collaboration in mind. 

“The whole goal is to provide facilities not only for the institutional researchers, but space where private companies can locate and work closely together,” she said. “I think we are at the top of the hill and the sled is beginning to go down and will accelerate quickly thanks to the shared vision between government, the public sector and the universities and institutions.”