Life Sciences Lab Owners Tap New Tenant Source: Ascendant Clean Tech Companies

Lab developers and operators in key innovation centers like Boston are finding the clean tech boom, fueled by the Inflation Reduction Act, has provided them with a small and growing new stream of potential tenants, just at a time when increasing supply is leading to more concessions and competition to fill their buildings.

Boston, the Bay Area, San Diego and Research Triangle Park in North Carolina are seeing new tech firms focused on sustainability and green technologies — especially those involving advanced manufacturing — leasing lab space, Newmark Head of National Life Science Research Elizabeth Berthelette said.

Lab and biomanufacturing spaces can serve this growing subgroup of firms well, Berthelette said, because both biotech and these types of clean tech firms need workspaces with additional electrical capacity, higher floor loads, advanced mechanical and HVAC systems and an ability to handle vibrations.

This works best for what she calls “white box” projects, which aren’t fully built out and can easily pivot to serve a different kind of client without ripping out and replacing infrastructure and mechanical systems.

Boston’s King Street properties began building a 45-acre, $1B manufacturing campus in suburban Devens for life sciences tenants a few years ago. Since shortly after the initial buildings were complete, tenants including climate technology firm Electric Hydrogen and Ascend Elements, a battery recycling company, either signed a lease or have been negotiating lease terms, according to the Boston Business Journal.

BBJ research found hundreds of thousands of square feet marketed to biotech and pharma firms in Greater Boston have been leased to clean energy companies in the last six months. While clean tech is still relatively small compared to the total life sciences real estate footprint, the fast-ascending sector may be poised to be a bigger player in leasing going forward. 

“It’s another sector they can tap into, and it diversifies their portfolios from a tenant perspective,” Colliers Executive Vice President Kevin Hanna told the Boston Business Journal.

In the Bay Area, battery companies have tended to take up space marketed for labs or manufacturing due to the power requirements, Cresa Life Science Research & Analytics Director Andrew McShea said. Research and development and battery production require significant amounts of electricity.

One of the biggest reasons for this overlap in demand is the concentration of talent in these markets. Innovation clusters, and the universities they are centered around, attract talent in high-demand fields, including mechanical engineers, robotics and automation and AI, that can work in both clean tech and biotech and biomanufacturing. It suggests the winners of the biotech race may see additional growth.

It’s early days for this new industry, Berthelette said, but growth is predicted to accelerate. Newmark has tracked roughly 900K SF of leases from clean tech firms in Boston in recent years, with roughly 500K of active demand.

“It’s not a huge drop in the bucket,” she said. “But it’s something we’re watching closely. It’s likely to build on itself, similar to what we’ve seen in the life sciences biotech sector.”