Growth potential in the life sciences sector has investors assessing opportunities to meet demand for laboratory, manufacturing and associated support space. Real estate analysts likewise point to burgeoning momentum in Canada’s strong research institutions, increasing calls for domestic production capacity and the STEM (science, technology, engineering, math) job creation engine.
“Employment growth in scientific R&D has outpaced even the tech sector,” observed Paul Morassutti, CBRE’s vice chair, valuation and advisory services, during last week’s online release of the firm’s 2021 Market Outlook. He cited Oxford Properties’ recent foray into the sector in the United States with a USD $276 (CAD $350 million) deal for four buildings and announced plans to invest a further USD $500 million (CAD $635 million) on expansion and redevelopment of those facilities.
“Here in Canada, we have seen considerable activity in Montreal and Vancouver. We fully expect this sector to follow a similar trajectory that we witnessed in the U.S., albeit on a smaller scale,” Morassutti submitted. “Supporting sectoral fundamentals include: increased life expectancy; technology and AI facilitating scientific breakthroughs; on-shoring of the medication supply chain; and strong funding availability — all of which has been accelerated by the pandemic.”
JLL’s newly released 2020 review and 2021 projections draws similar conclusions. “COVID has exposed Canada’s undersupplied life science and lab sectors. Growing employment and private investment on the demand side are making the case for more investment in this space. Real estate investors, especially long-term-oriented institutional groups, are taking a closer look at this space and we expect a supply response over the next few years,” it states.
Avison Young’s examination of global trends influencing real estate in 2021 also highlights two factors in life sciences growth potential: deglobalization and governments pouring stimuli into the economy.
“The pandemic has understandably led to a focus on medical facilities and life sciences. Venture capital funding for medical research has increased substantially, with medical infrastructure and R&D spending now increasingly seen as relevant to national security and demand for lab space likely to increase,” it forecasts.