DFW Has Work To Do To Become A Life Sciences Star, And Insiders Say It Starts With Collaboration
Location may be king in real estate, but when looking for the right site for a life sciences facility in DFW, collaboration is equally important to putting together a winning hand.
The Metroplex trails life sciences heavy hitters like Boston and San Francisco, but its 4M SF of facilities are developing promising talent and fostering connections that could propel it higher into the ranks of the nation's most sought-after hubs, according to panelists at the Bisnow Future of DFW Life Sciences Summit at the Texas Research Quarter in Plano.
“DFW has got some real advantages,” said Steven Davis, president and chief operating officer at J. Small Investments, at the Tuesday event. “Proximity to the research institutions is really, really critical, especially for the R&D piece of the life science real estate universe. Building those clusters and having those pieces all fit together is really important.”
J. Small Investments and Lyda Hill Philanthropies transformed a former ExxonMobil office campus in Dallas into the 25-acre life sciences development Pegasus Park near the University of Texas Southwestern Medical Center a few years ago. Its anchor tenant, BioLabs, offers 37K SF of coworking lab and office space, and more development is on the way.
To create spaces that build collaboration, JLL Managing Director and Regional Lead Ethan Garner said it’s important to have amenities available that make people feel comfortable in their labs.
“That type of space is what creates an environment that we believe helps accelerate the science,” Garner said. “In healthcare, quality of real estate improves outcomes. In the life science industry, we feel like the quality of the real estate helps commercialize new drugs and therapies faster and more efficiently.”
Another critical factor is being close to a highly educated workforce, Admiral Legacy CEO and President Ese Aihie said. That’s what drew her company to the DFW suburb of Mansfield for its Mansfield Innovation Community project.
“They have over 70% young, educated workforce — that was very important,” Aihie said. “Also, it's very important to have community support. … Those are very key ingredients for success.”
Flexibility is another key to attracting tenants to a site. Davis pointed out the typical life cycle of a startup at BioLabs is 18 months. Researchers are either experiencing scientific success within that time and graduating to a new space or refocusing on a different project.
“You've got to take some risk from a real estate perspective of having those facilities in place because they have to move fast,” Davis said. “These companies, they don't want to buy green bananas, they want to see it done and be able to move into it and be ready to go.”
Once scientists are working regularly in those labs, adjacent users like investment firms move in to help facilitate outside collaboration, he said. But getting a vibrant ecosystem established is hard without the kind of public support Davis said Pegasus Park got from the city of Dallas.
“We're really lucky to have buy-in from the municipalities because it's a really important part of how you think about the capital stack and how you think about the investment, holistically,” Davis said.
While venture capital funding surged in the first quarter of 2024, life sciences real estate has been dealing with a historic supply glut and the fallout of a funding pullback last year. National data suggests that life sciences leasing has seen an upswing, though the lab vacancy rate remains at 16.7%, per CBRE, with an estimated 21M SF of space still under construction.
Garner noted there is funding to be had in DFW, but not everyone is aware of all the opportunities.
“We suffer because we're spread out, so we're not dense,” he said. “We need more venture capital education at these family offices because if the companies are funded here, they're going to stay here.”
Panelists agreed the metro is likely to see a rising star in the life sciences sector. That company could well come out of Pegasus Park, which will more than triple the amount of lab space on its campus when the 135K SF research and development facility Bridge Labs opens later this year.
“You’ll start to see institutional investors having outposts, coming to Dallas to be part of this industry along with all the other things that they do,” Davis said. “As this industry emerges, and we start to have these proofs of concept be successful, you're going to start to have the snowball effect that starts to happen. I think that happens over the next three to five to 10 years.”
