Rapid growth in the life sciences industry will present significant opportunities for Asia Pacific commercial property owners and developers, according to global real estate consultant JLL, as real estate becomes a priority for businesses that provide health and medical products and services.
According to JLL, access to highly specialized spaces, such as research and development (R&D) labs and medical offices, is seen as a catalyst for releasing the sector’s growth potential. Life sciences-focused businesses in Asia Pacific are also expected to grow significantly between now and 2025.
More than 7 in 10 (76%) of the real estate and facilities management professionals JLL surveyed in Asia Pacific’s life sciences firms think the industry’s operational performance will improve over the next three years. The development and distribution of Covid-19 vaccines, the manufacture, and supply of ventilators, therapeutic treatments, and testing, among other new revenue streams, have all had a transformative impact on the industry, according to the respondents. The pace at which research and innovation are needed to address current public health problems is a longer-term growth driver for the life sciences industry, which in turn drives up real estate needs.
“The breadth of the commercial real estate market’s offering will determine how well the Asia Pacific life sciences sector performs in the future. Owners and investors in life sciences real estate have the chance to contribute to fostering the next stage of the industry’s growth as competition for high-quality and specialized space increases “Tim Graham, the head of JLL’s Asia Pacific capital strategies, says.
Only one in three of those surveyed, however, believe it is simple to locate real estate that satisfies their needs for the area, location, and high-quality fit-out. According to JLL, life sciences, companies are more willing to commit to longer leases than short-term flexibility in order to secure high-quality space, with one-third of respondents now seeking longer leases than they were five years ago.
As the industry develops in the area, occupier demand is most likely to be strongest for R&D facilities and medical offices. According to two-thirds of respondents, in order to achieve their business goals by 2025, they will need more R&D space; 60% of respondents say they will need more medical offices, and 56% say they will need more space for manufacturing facilities.
“To achieve their business goals, life sciences tenants will increasingly need cutting-edge spaces. The lack of specialized real estate that can support the sector’s growth potential will be their biggest obstacle, though. Our discussions with clients have led us to believe that more collaboration between life sciences occupiers, landlords, and developers will be necessary to tailor real estate to meet the changing needs of the sector “explains Richard Cheeseman, Director of Life Sciences for JLL in Asia Pacific.
Between now and 2025, the relationship between tenants and landlords will become more crucial, according to life sciences real estate experts. In designing R&D spaces, more than three-quarters of respondents (76%) wanted to collaborate more closely with landlords and developers, and 66% were open to doing so when it came to designing office space.