Denver's Life Sciences Market Embracing The Mixed-Use Lab Campus Trend

Life sciences hubs that include residential, retail and other commercial uses in addition to laboratory space are making their way to the Denver-Boulder market as developers look for ways to address headwinds from a tight labor market and a dearth of affordable housing in the area. 

The development strategy comes as the Denver market adapts to changes it experienced during the pandemic when the life sciences industry expanded as a whole. Establishing hubs that mirror those found in more mature life sciences markets is seen as a step toward leveling up in the biotech business.

“We’re really striving to be a partner to the businesses on our campus so we can make it a talent hub for the future,” Fitzsimons Innovation Community Vice President of Business Development April Giles told Bisnow. “We have the ability to bridge the gap between investment opportunities and help our businesses scale faster than they would at other life science communities.”

Nationwide and locally, the life sciences industry has recalibrated in 2023, with funding slowing and development pipelines supplying new product.

The Denver-Boulder market’s life sciences venture capital funding total declined by 8% year-over-year in September while the market’s vacancy rate increased slightly to 8.1%, Cushman & Wakefield found. For comparison, venture capital funding at the national level declined by 26% and total vacancy increased by 2.5% to an average of 11% across the U.S.

Giles said these issues mean life sciences developers need to find a way to partner with the businesses that lease space at their sites. She added that the Fitzsimons campus demonstrates how some Denver-area developers are working to attract new life sciences businesses to the nascent market. 

The development has more than 428K SF of life sciences space, including an 89.7K SF manufacturing facility called Bioscience 5 that is under construction. The campus also includes about 600 apartments, as well as restaurants, retail, a police station and a church being converted into a mindfulness center. 

The campus is also adding another 230K SF of lab, office and incubator space in a development known as Bioscience 4 that is expected to deliver in 2026. Giles said Fitzsimons has a roughly 10% vacancy rate without including the unfinished Bioscience 5 building. 

Giles said Fitzsimons is using its real estate holdings to support life sciences businesses rather than simply providing them with lab space.

For example, Fitzsimons aggregates residential housing units with lab space and manufacturing facilities all within walking distance of each other, Giles said. This means small startups that are ready to start manufacturing a product don’t have to go through the headaches of sourcing a manufacturing partner. Instead, they can use space at Bioscience 5 to make their products. 

Combining residential and lab space also helps promote collaboration between life sciences companies at Fitzsimons, Giles said. She pointed to RheumaGen as one example. RheumaGen is a cell and gene therapy company working to edit the human leukocyte antigen gene, which supports immune health. The company was born out of technology developed by ClinImmune, another gene and cell therapy company on the campus. 

RheumaGen is inching its way toward Stage 1 testing of its gene therapy treatment for rheumatoid arthritis, and if it is approved by federal regulators, the company could manufacture its treatment at Fitzsimons, Giles said. At the same time, RheumaGen benefits from working in proximity to the experts in ClinImmune who can discuss research and offer insights, RheumaGen CEO Richard Freed told Bisnow. 

The same kind of collaboration exists in Fitzsimons’ leasing process as well, Giles said. This approach allows businesses who need more space to move into a new part of the campus without having to restart their leasing process, she added. The same is true for companies that decide to downsize their lab space.

Fitzsimons is located across the street from the University of Colorado Anschutz and the Department of Veterans Affairs hospitals in Aurora, which can foster a culture of collaboration between researchers and medical practitioners, according to Giles. This setup allows researchers to make discoveries and then use them to treat patients, she said. 

“As capital is tight, we know companies and their investors are focused on critical technology milestones and need their capital to progress this work,” Giles said. 

Other developments in the Denver-Boulder market are jumping on the trend of establishing community-centric life sciences campuses instead of individual office and lab spaces. 

Conscience Bay Co., a Boulder-based real estate investment firm, is in the process of building one of the state’s first net-zero life sciences and technology campuses in Boulder called Ridgeway Science & Tech. The 112K SF campus sits on more than 5 acres and is expected to break ground in 2024. The campus will also include a wellness center, an indoor bicycle garage, an outdoor gym and collaborative workspaces. 

Then there is BioMed Realty’s Flatiron Park, a 22-building life sciences campus in Boulder. BioMed, a subsidiary of global investment firm BlackRock, purchased the 1M SF campus in April 2022 and plans to spend roughly $200M to double the amount of lab space on the property. It also plans to add a food hall, recreation area and mindfulness center for employees on campus, the Denver Business Journal reported. 

“We really do have the ability to pivot and go a lot of different directions to accommodate and cater to the varying requirements of the industry out there in life sciences and technology,” BioMed Realty President of West Coast Markets Jon Bergschneider told DBJ in June.

Fitzsimons, Ridgeway Science & Tech and Flatiron Park are expected to become economic drivers in their respective areas going forward. For example, the restaurants and shops on the Fitzsimons campus could attract additional sales tax revenue. Fitzsimons also has an 88-room hotel called The Benson Hotel on campus, which life sciences businesses can use to host investors, Giles said. 

Bioscience 4 and Bioscience 5 represent the forward-looking aspect of the Fitzsimons development, Giles said. For instance, Denver’s market suffers from low availability of incubator space, which Bioscience 4 will include. Manufacturing has also become an issue for some small businesses, and Bioscience 5 will be able to handle the manufacturing operations for up to three businesses, Giles said. Fitzsimons also has about 55 acres still available for development, which could help the campus make an even larger economic impact. 

But there are still a couple of hurdles that Denver-Boulder’s life sciences market needs to jump. One of the main issues is the lack of affordable housing for life sciences employees. The median home price in the seven-county Denver metro area, which includes Boulder County, increased by 1.4% year-over-year in September to $575K, according to data from the Colorado Association of Realtors. In Boulder County alone, the median home price stood at $829K, a 3.6% increase year-over-year. 

Cushman & Wakefield said the Denver-Boulder market needs to add more incubator space in order for it to be competitive with other growing life sciences markets like Philadelphia and San Diego. 

“The life sciences market remains in its nascence in the area, due in part to the lack of incubator space available,” Cushman & Wakefield’s report reads.