Dive Brief:
- The lab occupier market is expected to continue experiencing a stratified leasing environment, with talent-centric decisions driving top companies to prioritize high-quality space in desirable locations with amenities, according to a JLL report.
- Firms are reevaluating their real estate holdings and optimizing portfolios, focusing on assets that offer the best value and align with long-term corporate goals, JLL says in its 2025 life sciences global real estate outlook released Monday. Top-tier assets in prime locations are expected to absorb demand before secondary spaces, such as underperforming lab spaces, standalone aging assets and conversions, JLL says.
- Looking ahead, JLL expects increased outsourcing of life sciences operations and advancements in technology to facilitate a shift in operational strategies within the pharmaceutical and biotech sectors, as companies assess which functions need to be performed in-house versus those that can be outsourced, while working to near-shore some operations, according to the report.
Dive Insight:
Life sciences organizations are leveraging AI to accelerate scientific discovery and implement workplace strategies, JLL says. As firms mature, from startups to global entities, their real estate needs become “more complex, encompassing supply chain logistics, production capacity, and workforce considerations,” with a more integrated, technology-driven real estate management reflecting “the industry’s recognition of real estate as a critical strategic function,” JLL says.
While wet labs and hands-on science remain core to research, more extensive use of modeling and AI in research will fundamentally alter laboratory design, which “affects the overall layout, altering the number of benches, power, server and data connections required, as well as how people move and interact in the lab space,” Gul Dusi, managing director for project and development services life science projects in the U.S. at JLL, states in a separate report released Wednesday.
Life sciences companies are prioritizing operational cost reductions and innovation as key objectives for their corporate real estate strategies, JLL says, citing its 2024 Future of Work survey. Supporting innovation and cutting operational costs were a top five goal for commercial real estate for 48% and 47%, respectively, of the 145 life sciences respondents surveyed by JLL.**
Current market dynamics, characterized by laboratory oversupply in the U.S., will benefit occupiers, even as landlords face the need to demonstrate competitive rental rates and service charges, strong ESG credentials and high-quality services and amenities within the building and its vicinity, per the report.
Life sciences professionals often prioritize dining options as a top amenity they want near their labs, but also value wellness features like green spaces and fitness facilities, JLL says in a Nov. 25 note that sheds light on its Future of Work survey findings.
“Labs need the ‘wow factor’ in terms of location and amenities to stand out in the competitive talent market,” George Beaton, EMEA life science research lead at JLL, says in that report. “When employees are satisfied with their work environment, their engagement is much stronger, and their productivity is likely to increase dramatically.”
To navigate the current oversupply, many landlords are diversifying their tenant base by leasing space in newly built life sciences projects to traditional office users, Daniel Maldonado, managing director of life sciences of the Americas at Unispace, said in a Q&A with GlobeSt. “This flexibility allows them to generate revenue while waiting for lab space demand to recover. Additionally, some landlords are designing properties to include flexible spaces that can cater to various kinds of tenants to better ensure steady occupancy and income,” Maldonado said.
Meanwhile, key life sciences markets and clusters continue to thrive, driven by their dependence on direct research and face-to-face collaboration, Commercial Property Executive reported.
This rising focus on costs is likely to prompt large organizations to reassess their real estate portfolios, “favoring a shift towards more energy-positive buildings for their R&D, manufacturing and major in-house distribution sites,” JLL says in its life sciences outlook.
As companies evaluate which functions to keep in-house or outsource, their requirements for locations and spaces are likely to shift, emphasizing the need for strategic and adaptable real estate solutions, JLL says. Over 36% of life science organizations expect to mainly outsource lease administration and facilities management functions over the next five years, compared with about 25% of all companies, according to JLL’s Future of Work survey.
