Houston’s Life Sciences Industry Needs Spec Space
Houston’s healthcare industry has acted as a steady, lucrative and mostly recession-proof offset to the city’s volatile oil and gas sector. But when it comes to the life sciences, growth has been surprisingly slow.
The biggest hurdle for life sciences in Houston today isn’t venture capital funding or corporate interest. It is the lack of suitable office and laboratory space, experts said at a Bisnow webinar Thursday.
Life science companies often can’t use typical medical office product because they require specialized spaces that have heavier infrastructure for electrical systems, larger floor plates, lab benches, certain floor-to-ceiling heights, and advanced air filtration. Ideally, scientists and researchers also would have little distance between the lab and office space, to make it easy to carry out their work.
There has been very limited speculative development of products aimed at life sciences in Houston, largely because of its specialized nature. In addition, the needs of a life sciences company can shift rapidly and dramatically, depending on its success.
Justin Brasell, executive vice president of Transwestern’s Healthcare Advisory Services Group, said that when a life sciences company acquires funding, it swings into action immediately, and doesn’t necessarily have time to wait for a space to be built.
“When these folks get funding, they can't wait two years to get a building built-to-suit or something that's more tailored to their needs,” Brasell said.
“They get funding, and they're on a clock. This money is expensive, they've got to go, they're got to start clinical trials. They have to hire people, they've got to recruit. So they're really focused on that."
There is already about 7M SF of life sciences-focused research and development space in Houston. That’s without The Ion and TMC3 projects, which promise to boost that footprint significantly in the next decade. Both are being built within the 610 Loop and are expected to attract small and large private sector tenants.
In particular, the TMC3 campus in the Texas Medical Center will allow institutions like hospitals and universities to work alongside the private sector to develop and commercialize healthcare. Prior to the TMC3 concept, there was virtually no space for the private sector to establish office space in the area, despite an abundance of hospitals and medical researchers.
Elkus Manfredi Architects principal Mark Sardegna said that although a life sciences building is expensive to develop, that product can become extremely profitable due to its specialized nature. The industry has seen this in Cambridge, near Boston, where lab space vacancy is only 0.5%.
“The thing that's hard for a lot of people to understand is, it's the second, third and fourth company in a fit-out space, is where private developers of lab space are making a lot of money, because the initial fit-out for a brand-new building is expensive, and it's not a speculative suburban office building cost,” Sardegna said.
“It's really important to design it in a way that is flexible, and is as future-proofed as possible, which is hard to do, but there are certain things you have to do to future-proof lab space to allow it for the second, third and fourth tenant to move in with relatively no cost and no time."