Longfellow Real Estate Partners’ Post

Another office segment bites the dust nationally....Life Science space. Remember in 2021 when life science space was expected to be the hottest growth investment for office space? With $100/RSF rents? Since Q1 2020, nearly 60 million SF has been built in the USA. Guess someone forgot to check the recent historic growth in the segment was 3.7 MSF annually. We now have a 15+ year inventory of this space. See the vacancy curve in the COMMENT BOX. Worse, many biotech, pharmaceutical, and other life-sciences companies have lost their appetite for rapid expansion because of high interest rates, weak venture capital financing, and an uncertain economy. In 2020, Greystar launched its first major life-sciences initiative with a 1.7 Million SF campus in Somerville. The first of three buildings with 465,000 SF is opening later this year...with no announced tenants. Oops. Suspect buildings 2 and 3 will be delayed a bit. Oh, and most of these projects with $100/RSF proforma rents will gladly take $70/RSF. And if you smile hard, can probably get some free rent too. While most of the major investors in this segment have deep pockets, they are not stupid. We may see some walking away and look for a better day tomorrow.

The post-pandemic world has made high-quality, amenity-packed campuses a must for the life sciences sector. Class A properties, which make up half of the life sciences inventory, are in high demand and crucial for adapting to new tech and evolving needs. Over the past five years, these top-tier spaces have seen higher rents and larger lease sizes, showing just how valuable they are. With a building boom and lots of new space coming in 2024 and 2025, tenants will have plenty of options, though the availability of brand-new Class A spaces might tighten up, driving prices even higher. Read below what our rockstar research analyst, Sandy Romero has to say... #lifesciences #cushmanandwakefield #cre

"Biotech and pharmaceutical buildings became one of the hottest investments in commercial property at the start of the pandemic. Now, the glut of life-sciences properties has gotten so bad that some developers are exploring the unthinkable: marketing the space for office use. In the Boston region, for example, owners of at least 10 life-sciences locations are now offering those buildings for office space instead of lab space, according to brokers and other real-estate professionals. The building owners are willing to lease it for office use even though they can face a 30% haircut on what they had hoped to charge for life-sciences use." A niche, but substantial, asset class in such real estate markets as Boston, San Diego and San Francisco in the US and Switzerland, Germany and the UK, empty life-science properties are putting further pressure on already distressed office markets and lenders.

𝗩𝗲𝗸𝗼𝗺𝗮 𝗶𝘀 𝗯𝘂𝗶𝗹𝗱𝗶𝗻𝗴 𝘁𝗵𝗲 𝗳𝘂𝘁𝘂𝗿𝗲! 🛠 On the former football field in Vlodrop, the new Vekoma campus is being built! The construction sign has been unveiled, and the initial work is in full swing. Vekoma is building the future!   Over the years, Vekoma has experienced significant growth, leading to changing logistical needs. Temporary offices were set up following a fire in the early 1990s. These temporary offices lack capacity, have illogical layouts, and no longer comply with current laws and regulations.   Due to the lack of capacity, storage options, and the outdated nature of the current location, research has been conducted to find an alternative solution. Vlodrop holds a special significance for Vekoma, being easily accessible for current employees and providing the right facilities based on location needs.   The campus is renowned for its innovative and high-quality character, mirroring the products it produces. The campus is representative, functional, and reflects Vekoma's identity as "a progressive company focused on providing innovative and high-quality solutions to its customers." In a green, inspiring environment, the campus's role is to support connectivity between employees and production processes.   In addition to developing approximately 300 workstations, two types of production halls will be built, along with a spacious warehouse and a multi-story office building including meeting rooms and a restaurant. All buildings will be equipped with the latest technologies to support employees as effectively, efficiently, and innovatively as possible in their work. By repositioning the headquarters, assembly, and the warehouse, space will be created on the current Schaapweg site. The current offices will be (partially) demolished and rebuilt to accommodate full track production. Vekoma will thus merge two locations (Roermond and Vlodrop), creating one unified site.   Legislation regarding sustainability is being tightened annually. Additionally, reducing the ecological footprint is of general importance. Sustainability will also be a key focus for the new Vekoma campus and the revamped track production location. To determine the level of ambition, Vekoma uses the DCBA method and a comprehensive approach to strengthen this ambition. The potential for sustainability certification will be thoroughly explored, such as BREEAM qualification or WELL certification.   Sustainability is also a focus during the renovation of the current offices into the track production location, with extra attention given to climate control and optimizing working conditions. #vekoma #vekomarides #buildingthefuture #ingenuitythatmovesyou #rollercoaster #themepark #amusementpark #IAAPA

Lack of Grade A space driving up Oxford rents, says Vail Williams 🏙️📈 Oxford continues to see good demand for offices and laboratories, reflecting the diversity of the city’s science and tech cluster. But a lack of supply of Grade A space could send rents spiralling, says Mike Watson, a partner at property consultancy Vail Williams. “A lot of the growth in the Oxford office market has been driven by the lack of supply of Grade A office or laboratory stock, which has always been underserved here”, he said. “Given last year’s take-up figures, which were around 420,000 sq ft of lab space, there remains approximately 12 months’ worth of supply left. “This is driving rents up from the early £30s per square foot (psf) for traditional office space, to the mid-£60s psf – rising as high as £85 psf for lab space on some business parks." Continue reading... https://lnkd.in/eu8v92Qi Oxford University Innovation, University of Oxford, Begbroke Science Park, Harwell Science and Innovation Campus, Howbery Business Park, Milton Park (Oxfordshire), ARC Oxford (formerly Oxford Business Park), Oxford North, The Oxford Science Park (TOSP) and Oxford Technology Park. #property #realestate #finance #investing #technology #innovation #businessnews #businessintelligence

🔬 Science Sum up: September 16-20 Councillors across the OxCam Arc have been incredibly busy this week, not least effective. As a result, an impressive 1.9m sq ft of science-related space has been over the line (correct me if I’m wrong). The largest scheme to get the go-ahead is proposed to sit near Cambridge City Airport. Spanning 1m sq ft across seven buildings, a new urban district is expected to cater for companies throughout their growth journey – from start-up to large multinational – within a single location. Mission Street and BGO are keeping their cards close to the chest, but the market has heard that the value of the campus, designed by Hawkins\Brown, is north of £1bn. About five miles away, Prologis UK will be bringing forward two lab and office buildings, measuring 142,847 sq ft and 134,807 sq ft, after securing the consent earlier this week. The £200m scheme, created by Scott Brownrigg, forms a part of the second phase expansion at Cambridge Biomedical Campus. As such, the most recent report from Greater Cambridge Shared Planning Service, a partnership between Cambridge City Council and South Cambridgeshire District Council, has concluded that future supply for dry labs and general office space is “relatively healthy”, with additional requirements for space expected to emerge no earlier than in the 2030s. The supply for wet labs from 2025 to 2030 is also “substantial and sufficient” to meet expected needs. Where the region lags, though, is satisfying real estate needs for start ups and scale ups. At the other end of the stick, two buildings at plots 2000 and 5000 at John Smith Drive have now got the nod. Both projects will be delivered by Brookfield Properties life sciences spin-off ARC | Advanced Research Clusters at its Oxford campus. The Hawkins\Brown-designed development on plot 2000 will comprise a part five, part fourteen-storey building, providing 251,585 sq ft of laboratory and office space alongside amenities at ground level and on upper floors, and 109,943 sq ft of integrated, split-level car parking. On plot 5000, the existing three-storey building will be extended to provide a five-storey lab-enabled office hub, totalling 124,463 sq ft. It will provide a 70:30 lab to office split and designed by Aukett Swanke to shell and core but with plug and play infrastructure for lab retrofitting. In the Oxford city centre, Forge_Kn, a joint venture between Reef Origin and UBS have seen thumbs up for the transformation of buildings at Hythe Bridge Street, known as Beaver House and Boatman’s House. All of them will be demolished to pave the way for a 213,179 sq ft facility, created by Purcell, which will provide lab space and a community hub including a café and garden. The rumours are that the sector will stay away from planning next week, with updates across all the fronts live at EG all day every day, and summed up on this page each Friday. #lifescience #realestate #planning #outlook #development

In his latest EG column, our CEO Jacob Loftus discusses how, and why, our industry can help the UK maintain its status as a creative superpower   In the past 20 years, the makers, artists and manufacturers that cemented the city as Europe’s creative capital have been pushed to the fringes, being priced out from increasingly scarce fit-for-purpose space in central locations   London has, over the past two decades, lost more than a quarter of its industrial floorspace - 64m sq ft, or 840 football pitches   In stark contrast to the rapid increase in creative industry jobs…   Today, one in five jobs in the capital is in the creative industries - representing over 1.1 million people and a 200,000 people increase since 2016   With increasing office space vacancies in prime areas, the need to rethink how these spaces can accommodate the creative workforce becomes obvious   For us, the solution lies in integrating structures to support small creative businesses within our spaces that also help us create a more unique and animated offer for our users   Creating an ecosystem that fosters creativity and where businesses can support and learn from one another will ultimately attract larger companies seeking to be part of a vibrant creative community   This mindset is front and centre across most of our portfolio   Take Florentia Village, our creative maker campus in Haringey, or Fox Court, our recently submitted office reuse project off Hatton Garden, we will be providing high-quality, fit for purpose and -crucially- affordable space, as well as mentoring, accelerator programmes and support for creative small businesses, alongside inspiring, design led spaces for those who are more established   Or Walworth Town Hall, our reinvention of a fire-ravaged civic building into a creative-led workspace and community hub in Southwark, which is anchored by a new purpose-built community space, operated by a not-for-profit organisation, that can host events curated by the local community, for the local community    But a focus on creativity isn't solely idealistic - it's also commercially beneficial. #creativeindustries #futureofwork #industrial

Biotech and pharmaceutical buildings became one of the hottest investments in commercial property at the start of the pandemic. Now, the glut of life-sciences properties has gotten so bad that some developers are exploring the unthinkable: marketing the space for office use. In the Boston region, for example, owners of at least 10 life-sciences locations are now offering those buildings for office space instead of lab space, according to brokers and other real-estate professionals. The building owners are willing to lease it for office use even though they can face a 30% haircut on what they had hoped to charge for life-sciences use. “They’re no longer aspiring to get $100 [per square foot] rents,” said Fred Borges, a senior managing director of Boston-based investment firm Rockpoint Group, referring to the asking rents for lab space. “They will gladly do a deal for $70 on the office side.” As the U.S. office market downsizes and works off its surplus nationwide, owners of life-sciences buildings in such regions as Boston, San Diego and the Bay Area are also facing a glut of new life-sciences properties. When the pandemic hit, developers moved at warp speed to develop life-sciences workspaces with climate-controlled laboratories and specialized systems for controlling tiny vibrations that could interfere with experiments, as well as for ventilation, fire safety and power. Newcomers to the sector included owners of office buildings, who saw demand for their own properties crater partly because of remote work. Many then converted conventional office space into space for life-sciences usage. Since the first quarter of 2020, more than 59 million square feet of new space has been added with an additional 19.1 million square feet in the pipeline in the U.S., according to real-estate services firm JLL. By comparison, an average of 3.7 million was added annually in the five years leading up to the pandemic. “A lot of people just threw money in stupidly,” said Joel Marcus, executive chairman and founder of Alexandria Real Estate Equities, one of the largest owners of life-sciences property in the U.S. Making matters worse, demand for life-sciences space has fallen sharply from its pandemic peaks. Many biotech, pharmaceutical and other life-sciences companies have lost their appetites for rapid expansion because of high interest rates, weak venture-capital financing and an uncertain economy. “This is the age-old story of real-estate developers over-responding,” said Travis McCready, head of life sciences, Americas markets for JLL. Some projects that have hit the market in the past three years have seen little or no leasing. Most traditional life-sciences core locations in places such as Cambridge, Mass., South San Francisco and the northern suburbs of San Diego remain healthy. However, the pain from overbuilding and faltering demand is severe in new locations the industry tried to pioneer during the boom years. 

Life-Sciences Real Estate: From Boom to Oversupply Once a hot investment during the pandemic, life-sciences buildings now face a significant oversupply. In Boston, over 10 properties built for lab use are being converted to office space (yes, more office space) at up to 30% lower rents. Vacancy rates have surged to 27.7% as demand drops amid high interest rates and reduced venture capital. This shift highlights the need for a sharper focus on market trends and demand signals to avoid overbuilding and make more informed, strategic decisions. https://lnkd.in/egR_dZPC

Did you catch this? According to Midtown Alliance, there are 13 developments underway in Midtown. One being 1072 West Peachtree, a projected 60-story building comprised of office space, housing units, stores, and restaurants. Heather Lamb, an Atlanta market leader, expresses how projects will evolve in the era of hybrid work. If you didn’t get a chance to read the previous article I posted, take some time to do so. The build-to-rent sector is the future.