How Can Lab Construction Stay Resilient Amid Market Slowdown? Learn More At Bisnow’s Bay Area Conference

While the Bay Area reigned as one of the powerhouses in the life sciences sector during the pandemic, it has slowed due to high interest rates.

The area's life sciences vacancy rate in the first quarter exceeded 20%, while gross leasing was “41% below its 10-year quarterly average,” according to CBRE.

Despite economic uncertainty, Rossi Builders, a 90-year-old Bay Area commercial construction company, is committed to working with facility directors to create labs that fulfill tenants’ needs, Director of Preconstruction Sherif Eldash said. The company’s secret to success lies in its strong relationships with clients and enduring partnerships with subcontractors, especially when the market is tight, he said.

“We build upon these relationships by delivering successful projects and staying connected to our clients, most of whom are repeat customers,” Eldash said. “We embody our core values of humility, responsiveness, empathy and communication in every project we take on.”

Eldash will be participating in Bisnow’s Bay Area Life Sciences Conference June 20 at the San Carlos Research Center in San Carlos, California. Alongside the other speakers on the Bay Area Life Sciences Pulse Check panel, Eldash will discuss the trends in the region, the demand for labs and the aspects propelling life sciences advancement.

Click here to register for the event.

Eldash walked Bisnow through how project owners have been meeting tenants’ needs while mitigating risk, the importance of a lab’s location, and artificial intelligence’s role in the construction and design of lab spaces.

Trends In Life Sciences

Eldash said that chief among the investment trends impacting this asset class are high interest rates, which continue to make construction loans more costly.

He added that a modern construction contract may also include a performance bond as a protection measure to ensure that the contractor can uphold the project requirements to completion. Should a contractor fail to meet their end of the agreement, the project owner can put in a claim to the insurance company to pay up to the bond amount.

Another key trend is flexibility, which Eldash emphasized the importance of in the life sciences realm. Each tenant has different requirements for their lab spaces, so as demand slows, it becomes difficult to design a space without a specific client and their needs in mind. To solve this problem, developers have been shifting toward building speculative lab spaces, or flexible spaces that can be suited for different types of tenants and their research needs.

One trend that always remains, however, is the attractiveness of the Bay Area for life sciences companies, thanks to its proximity to biomedical and biotechnology research and educational institutions where researchers work toward advancements in cancer research, stem cell therapy, genetics and more.

“Being in a space that’s located close to talent pools is extremely attractive for today’s tenants,” Eldash said.

He said that when life sciences developers scope out space for a lab, they should factor in site selection aspects such as zoning regulations for particular areas, workers’ access to public transportation, proximity to institutions to foster collaboration opportunities, and amenities nearby for employees to enjoy outside of work.

Emerging Technologies On The Radar

Eldash said artificial intelligence is poised to transform the way labs are designed and how they perform.

“Artificial intelligence can help with reviewing contracts and drawings, performing takeoffs and assisting in building information modeling tools to predict potential conflicts in the construction process, which could result in significant time and cost reductions,” he said.

He said another potential impact on construction is the use of AI-operated drones for site surveys and progress tracking, eliminating the need to have contractors constantly on-site to monitor work.

What To Expect At The Bay Area Life Sciences Conference

Eldash said he looks forward to exchanging perspectives on the state of the life sciences industry with the other panelists, as well as helping developers, investors and owners make informed decisions when designing and constructing their lab spaces.

“It’s always exciting to be in a room with thought leaders in the life sciences space,” Eldash said. “I’m looking forward to hearing their take on what’s going on in the industry.”

Don’t miss out on the opportunity to register for Bisnow’s June 20 Bay Area Life Sciences Conference.

This article was produced in collaboration between Studio B and Rossi Builders. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.