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Houston On Track As Future Life Sciences Powerhouse, But Everyone Needs To Mind The Gaps First

Houston isn't yet where it wants or needs to be to provoke a boom of new life sciences business and associated real estate. 

But those already involved with the city's life sciences business are determined to work together to "fill gaps" that will precipitate a wave of biotech, pharmaceutical, medical device and other companies wanting to set up shop in Houston.

CRB Group's Lynne Meers, CUBIO Innovation Center's Wesley Okeke, Fannin Innovation Studio's Dr. Atul Varadhachary, Millar's Tim Daugherty, Rice University's Samantha Nava and The Signorelli Co.'s Craig Laher at Bisnow's Houston Life Sciences Industry Update on Jan. 12.

“We’re in a unique position where we all want the same thing,” Rice University Director of Partnerships Samantha Nava said at Bisnow’s Houston Life Sciences Industry Update event at the Museo Center for Surgical Excellence Jan. 12. “We want to grow this ecosystem.”

But gaps in funding, real estate, workforce and talent are all inhibiting Houston’s life sciences potential. Panelists agreed that a unified approach will be necessary to change that, starting with identifying roadblocks and collaborating to fix them.

Houston's life sciences industry is growing, as evidenced by the approaching completion of Levit Green, a 53-acre master-planned life sciences district adjacent to the Texas Medical Center, and the recent announcement that Baylor College of Medicine will anchor TMC Helix Park, a 37-acre life sciences campus at the Texas Medical Center.

Other developments include San Jacinto College partnering with McCord Development to create a National Institute for Bioprocessing Research and Training-licensed center in Generation Park and Cellipont Bioservices, a cell therapy contract development and manufacturing organization, building a 76K SF manufacturing facility in The Woodlands.

All told, Houston has 1.1M SF of life sciences under construction and another 1.5M SF proposed. That is in addition to about 7M SF of existing life sciences space when counting distribution and flex space, Transwestern Executive Managing Director Justin Brasell said, adding that amount could quickly be doubled considering what is under development. 

“All of that 7M SF, 8M SF has already been acquired, potentially already on a life sciences campus that’s being developed today with smart, experienced capital behind it,” Brasell said.

“We’ve primed the pump, [and] we’re going to continue to fill in the gaps from a real estate perspective. We’re filling in the gaps from the talent perspective. And then the money’s just going to continue to come.” 

There are 168K SF of spec labs being delivered this year, which Brasell said doesn’t scare him at all from an absorption perspective. But with so much more to come, if space isn't an issue, finding tenants to fill it is a slower process.

Brasell said money is on the sidelines just waiting for the right opportunity.

“We’ve come a long, long way from where we were a year ago,” he said.

A flood of capital that went into real estate in 2020 and 2021 led to a bottleneck when it came time to develop in 2022, McCord Development general counsel Shawn Cloonan said. And life sciences companies won't flood in overnight.

“The reality … those funds were raised, it’s still being dispersed,” Cloonan said. “You look at the life cycle of these life science companies, it’s a long life cycle. This isn’t a tech startup that’s zero to 60.”

Initial funding can be a challenge, especially for companies just starting off, said Dr. Atul Varadhachary, a managing partner for medical device technology company Fannin Innovation Studio. Biotech startups have a failure rate of more than 90%, he said. 

The panelists agreed that family companies and small private equity firms would make good investors for Houston life sciences, but they need to be educated about the opportunities. 

Allen Matkins' Martin Togni, HOK's Tim O'Connell, McCord Development's Shawn Cloonan, Transwestern's Justin Brasell, Gensler's Rebekah Gandy, Harrison Street's Dave Liu and CBRE's Nelson Udstuen.

Another gap that needs filling is the lack of Class-B lab space for startup research companies, said Rebekah Gandy, sciences practice area leader for Gensler's South Central region. That starter lab space would meet a demonstrated need and ensure early investors their money is going to science rather than fancy office space, she said.

“We need that first car that you get … not a new car, but a used one to get you from point A to point B,” Gandy said.

Eventually, life sciences will be a sector that benefits Houstonians whether they know it or not, according to Texas Medical Center President and CEO William McKeon.

“Helix Park is a place you’re gonna go irrespective of if you’ve ever cared about research,” he said. “It will be where you meet a friend and have a bottle of wine in the park. It’s gonna be where you bring your kids on a Saturday for the market.”

The first three buildings of Helix Park will be activated at the end of this year, McKeon said, but more than buildings, they will create highly amenitized environments. 

“Our scientists and researchers are just as demanding as we are for that experience,” he said.

McKeon doesn’t see other life sciences projects as competition. Instead, making Houston a major life sciences hub will take huge collective investment, he said. 

“We want every one of them to be successful,” McKeon said. “You want to build out a core. … We want life sciences to be Texas. This is the largest collection of minds ever assembled on this earth to do this. It is the future. It will be, I promise you, one of the economic vehicles.

"People think about Houston, they think about energy. They’re going to think about life sciences in the future.”