Boston Lab Space Now Poised For Even More Growth, Thanks To The Pandemic

The fact that the coronavirus pandemic is a healthcare crisis has important implications for the future of lab space in greater Boston. Namely, urgent research and development related to the pandemic is going to drive growth in the sector, which will mean new development — even more so than before the advent of COVID-19.

"We've seen massive, continued interest in biotech, with new investments made," said Johannes Fruehauf, the president of LabCentral, a 70K SF shared laboratory space in Kendall Square, designed as a launchpad for life sciences and biotech startups. "Since we went into lockdown on March 15, our companies have raised a full $1B, only in these five months."

Investors see the biotech firms — not just public companies, but early stage ventures — as good bets, Fruehauf said. Developers will likewise see an opportunity in local lab space because of a lack of supply.

"The fact that this massive crisis is a healthcare crisis is helping our industry," Fruehauf said on Bisnow's recent Boston Life Sciences Update webinar. "We will see more product."

The Boston area was already short on lab space before the pandemic, with the market dominated by a mix of major pharmaceutical companies and small startups, according to Cushman & Wakefield. At the beginning of the year, the vacancy rate for lab space in greater Boston was only 0.8%.

Developers are eager to fill that void. By 2024, the lab market could be twice as large as it is now, which is about 20.6M SF, according to Cushman & Wakefield.

Even that might not be enough.

"This isn't the last pandemic," city of Cambridge Assistant City Manager Iram Farooq said. "There will be other viruses and bacteria that we encounter. The focus on the life sciences industry has become more acute."

Cambridge is the name that the world knows, Farooq said, but the fact is the entire region is now a life sciences corridor. One role of a life sciences hub like Cambridge is to recognize that further growth will come because of partnerships with other cities and towns in the Boston region, she said.

"Different markets offer different competitive advantages," Farooq said. "It's important to have a range of space, for companies to make choices based on their needs."

Boston suburbs will benefit, as well as submarkets closer to the city, Natick-based ABI-LAB Chief Operating Officer Gary Kaufman said, since there isn't enough land in Cambridge to accommodate all of the life sciences operations that want to be there. Also, cost will be a factor.

"We've seen a number of companies move to Natick from Cambridge and Boston," Kaufman said. "Price is a consideration. With the savings on real estate, you can hire another scientist. This was true before and after COVID. 

"You will see more development along [Route] 128 and along the Mass Pike," Kaufman said. "I call it the 'Biotech Belt.' Gene therapy will take off in the Boston area very soon, and the AI work at MIT will create thousands of companies, many in Massachusetts."

The operators of lab space in greater Boston were quick to adapt to the challenges posed by the coronavirus pandemic, by making sure that essential workers had the distance and personal protective equipment they need to be safe in the new environment, according to the webinar speakers.

"We're a community of scientists, and when COVID hit, we adjusted quickly," Fruehauf said.

The state deemed lab workers essential, so the companies at LabCentral were early in having non-lab workers stay at home, having lab workers wear masks, erecting physical barriers and taking other precautions, Fruehauf said. Now they are rolling out COVID-19 testing with fast readouts.

"I see this as a phase of constant learning and adjustment, and we aren't through this by any stretch of the imagination," Fruehauf said. 

"We have many months ahead of having to deal with waves of infectious risk going up and down," he said. "It's my task to keep the lab community safe by making sure the rules in place are reasonable, such that they allow people to be productive."

Kaufman said that for any operation that needs to stay open during the pandemic, one of the biggest challenges is educating people about best practices. That hasn't been an insurmountable challenge for his facility, an accelerator and bio-incubator established to support life sciences and biotech startup companies.

"We're lucky to have a well-educated pool of scientists," Kaufman said. "We started a safety committee on day one, back in March, jumping on board with masks and social distancing. Frankly, it's worked very well at our buildings. We've had zero cases of COVID at both of our buildings."

Though lab workers have adapted to pandemic conditions, that doesn't mean those conditions are ideal, the speakers noted. Social distancing in particular puts a crimp in one of the most important aspects of bioscience/biotech space: a sense of community that fosters innovation.

"Labs are built around community," Fruehauf said, allowing peers, investors and potential board members to meet each other. "[The pandemic] strikes at the heart of our concept."

LabCentral has set up a web seminar series that promotes discussion and an exchange of information, but it isn't quite the same, he said.

"It's painful because we don't really get the horizontal communication that we typically like to encourage — [people] sharing food and meeting each other."

Painful or not, that is the way it has to be until there is a vaccine, Fruehauf said, but even that won't change things back to the way they were overnight. Healthcare workers will get the vaccine first, and it might take a year or more to roll it out to the population at large. Also, COVID-19 might end up like the seasonal flu, not completely controlled by a vaccine, he said.