BioMed Realty i3 Campus, San Diego, California, United States
All Eyes on the Life Sciences Sector
Blackstone is one of the leading investors when it comes to life sciences real estate assets. Recently, the firm acquired an over $3bn portfolio of lab office buildings, nearly all of which were in the Cambridge (Massachusetts) market, and last year, it recapitalised BioMed Realty, the largest private US owner of life sciences properties, for a whopping $14.6bn. Why has the life sciences sector been such a focus for the firm in the past few years?
Ken Caplan explains that technology and innovation are at the heart of these investing strategies. Blackstone bought BioMed Realty in 2016, when the life sciences sector was still very much misunderstood: investors and traditional office landlords didn’t quite understand these life science office properties and tenants as they were operating in a very niche and specialised environment. As a result, life sciences properties were not valued as high as traditional offices.
But as Caplan states, when Blackstone did its work and research, the firm quickly realised that there was an extremely compelling opportunity in this asset class. Tenants invest in their own space and provide the right infrastructure for the business to advance its work and be at its best – from air capacity to gas lines to technology. Moreover, these buildings have now proven to be essential locations, as they remained opened throughout the pandemic: last year, approximately half of BioMed’s tenants in the life sciences space were working on some type of COVID research. After all, you can’t do lab work from your kitchen: you need controlled environments. This only goes to show how strong the industry is and how innovation and technology has prepared them for unforeseen challenges like a global pandemic.
It is worth noting that life sciences buildings can mostly be found in hubs: ecosystems where you have universities, governmental institutes, venture capital firms and top talent converging in a node. As Ken says, 60% of Blackstone’s portfolio in the life sciences industry is located in Cambridge, Massachusetts, with San Diego and San Francisco not too far behind.
Building Performance Requirements in Life Sciences and Tech Start Ups
These life science companies tend to act and work like tech start ups, where innovation, collaboration and in-person interactions are key. Jennifer Magnolfi Astill believes that a lot can be learned from these companies. 30 to 40 years ago in the technology space, end users had specific conditions and requirements when it came to the performance of the buildings they would work in. They were looking at factors such as air flow monitoring, the ability to analyse in real time the occupancy of a space, even the social distancing of an environment – they were quite ahead of times. Not only can these factors be found currently in every life sciences building: they are also applicable and desirable for many types of industries and environments. Jennifer even ventures to say that in the next few years, there will be a standardisation of these types of design principles into other kinds of assets and industries.
Sylvain mentions how buildings’ performance will need to be a priority for landlords in the near future. Historically, firms like Ivanhoe Cambridge would focus on their tenant companies instead of the end user – the business’ employees. In the next few years, investors and landlords will have to pay close attention to their tenants’ activities in order to optimise their buildings’ performance, and make sure the staff are getting the best environment to perform their duties.
Smart Buildings and Technologies to Enable a Return in the Workplace
As they plan their return to work, companies will have a lot of questions for their landlord. Will the building be made safe? Do we know how busy it will be? How is the landlord handling cleaning and disinfection? And how will that be communicated to tenants?
These questions could easily be answered by smart buildings and technologies. Like Sylvain Fortier says, there is no way we can return back to normal in the next few months: we need to implement strategies and technologies who will allow end users to feel safe in the office whilst optimising their time. Otherwise, we might end up with massive queues in front of elevators as firms will try to control the number of people in each lift. Going back to normality simply isn’t viable: landlords will need to innovate in order to avoid such issues, and a proper understanding of the usage of space and their tenants’ activities will be required.
Jennifer agrees on that front: managers, real estate executives and landlords will need to look at multiple different variables and understand how they all interconnect to evaluate if a building is viable for re-entry, so for the workforce to fully inhabit the space again. Local government regulations, occupancy rates, health status of workers, new circulation patterns or even the new design of a floor plate must all be considered before allowing people to get back to normality. She believes that the right technology can support landlords and managers with these challenges: an employee app, for example, could allow individuals to look into the latest policies for the work space, to be able to reserve a desk or a meeting room, to log in their health status before actually accessing a location or to even see the occupancy rate of the space. But whilst technology can help and support on that front, a broader conversation should be held internally between managers and employees, as the latter will need to feel safe from a psychological perspective. At the end of the day, end users will want to feel like their concerns are being listened to, and that they can share them freely with those in charge of the re-entry into the workplace.
Blackstone’s New York office has been open since the middle of last year on a completely voluntary basis. They took a lot of steps to address potential concerns, including the implementation of a daily attestation app in which team members are asked to answer five questions that will give them the clear to come into the office. Other measures include temperature checks in the lobby, contact tracing in the office, touchless elevators and an increased amount of air purifiers on each floor. But even with the implementation of an app or other technologies, communication and transparency remain key in the process.
Managers and landlords must listen to end users’ concerns and be flexible with solutions. Furthermore, as Jennifer mentions, employees will need to feel like they can voice their opinion on the matter without fearing any repercussions – a demotion or social dynamic where they could be penalised. Managers must be open and flexible at all times: not everyone will be comfortable with coming back into the office, and this has to be respected by the leadership team.
Transforming Old Buildings Into Smart Ones: What to Look For
Whilst apps can help end users feel safer in the workplace, office buildings will need to improve their overall performance and get inspired by what the life sciences and tech sectors have been doing for decades. The concept of smart buildings isn’t new, but it will definitely become increasingly popular within the real estate industry as employees will ask their employer to meet specific requirements and conditions in relation to their health and safety.
As Sylvain says, it is definitely easier to start from scratch when it comes to smart buildings, though it is possible to transform older ones into technology-enabled properties. Investors and landlords should be smart with the transformation, though: as Ken Caplan states, there will be a need to analyse how the building is being used and what is the purpose of the space before kick starting any renovation process. This is hard to do right now since people are not physically in the office, but once they will gradually return, landlords should closely monitor the usage of the space, if it truly serves the purpose of the company and if it correlates to the performance of the business.
Designing Spaces For the Future
UC San Diego’s Science Research Park, La Jolla, California, United States
As mentioned earlier, life sciences and tech start ups have created decades ago office spaces that have proven to be incredibly relevant today, thanks to the implementation of smart technology that actively protects their workforce’s health and safety. How can we now design spaces that will be relevant in a decade or two? How should we approach office design?
Jennifer, who has been specialising in the subject for the past decade, has a specific approach to office design. She starts by focusing on technology lead users, specifically on people who seem to be solving problems that the rest of us are not quite solving yet. For example, she has recently been studying teams of teenagers who solve complex problems in robots or software competitions. Whilst this has nothing to do perhaps with the design of a workspace, it gives us useful information on the future users of office spaces: how they break down a problem, how they brainstorm and collaborate, what assumptions they make and, most importantly, how they use the environment with each other.
What companies have had to struggle with in the past year will also tell us a lot about how we can futureproof office spaces of tomorrow. For example, business leaders have had to face at one point or another a context where they really had to solve complex problems, come up with a course of action and make decisions together. That process is best addressed and optimised in a physical space in real time with each other: when designing the office of the future, this will need to be carefully considered.
Sylvain thinks that the office of the future will need to consider how team members can remain connected and close to one another if some of them aren’t physically in the office. At Ivanhoe Cambridge, many employees have mentioned how they have felt more connected than ever to their colleagues in the past 12 months as everyone was working from home: remote teams were no longer the only ones on a screen in a meeting. When creating offices that will last through time, investors, landlords and designers will have to think about how we can preserve human connections through technology.
The Life Sciences Approach to the Office of the Future
The life sciences sector has always been ahead of its time in terms of office space design: what are businesses within the field doing now with their buildings?
According to Ken, life sciences companies continue to make significant investments in their real estate in order to advance their goals. Those investments though must come with flexibility and adaptability. What we have seen in the market is a tendency to build campuses that bring people together with food and beverage outlets, gyms and spaces for people to get together and take a break from work. These buildings not only help enhance the overall work experience: they also serve as a way to attract the best talent and keep them motivated in commuting to work every day. They will want to come into the office because it’s a better experience than working from home.
Whilst the COVID-19 pandemic has forced a large number of businesses around the world to rethink their work practices and the purpose of their office space, some industries were able to soar amidst the crisis thanks to their innovative and collaborative ways of working. The technology and life sciences sectors can certainly teach us about the office of the future and what should be implemented in the physical workplace for the years to come. It will be interesting to see if businesses will be making the move and adopt smart technologies to make the office of the future a better place for end users.