Reinventing The Legacy Biopharma Campus
Image Credits: JLL
Lab Design News spoke to Jason Benson, managing director for life sciences brokerage at JLL, about companies and universities investing in legacy, multi-use, life sciences campuses. Jason represents life sciences companies and assists them with real estate strategy and implementation.
Q: How does investing in life sciences campuses create state-of-the-art facilities?
A: Investing in legacy multi-use campuses, which have been so popular among big pharma in the past, presents a terrific opportunity for the right investor and developer to unlock value and create a vibrant innovation hub with state-of-the-art facilities. These large single-tenant campuses, often times consisting of more than one million square feet of lab, office, and manufacturing space, were built and maintained with budgets younger or established biotech don’t have. As a result, these surplus technical facilities appeal to younger growing companies seeking a speed-to-market solution and the ability to scale over time without the high initial capital investment that comes with building out technical space. With the right developer/investor partner, the legacy life sciences campus can quickly be transformed into a more modern state; however, given the investments made previously to the infrastructure, the cost to do this is far less than starting from raw land and putting a shovel in the ground.
Q: How do your source life science campuses to transform?
A: With industry consolidation, hybrid work, competition for new drug discovery, and the race for top talent, our clients are concerned about the impact their facilities strategies have on these key issues within their business. As a result, the legacy campus for big pharma that may be duplicative or excessive and, in some cases, pose an environmental impact are costly to maintain and often looked at first as an opportunity to exit over time. It is important to understand that these conversations start years before plans are actually implemented – and at a confidential level. These campuses represent large numbers of jobs in the community and surrounding area, as well as an economic impact on the local municipalities. Because of this, we often times encourage our clients to engage with their local municipalities early in the process to discuss their goals and ideas for the site together.
Q: Is there anything different you do when working with significantly large clients like Pfizer versus smaller or clients with small budgets?
A: No, our process and journey for a large client is the same as a small client. Let’s not forget that the large client once started small as well! However, as it pertains to life sciences campuses, it is more common that these campuses are owned by larger companies that have been established for decades and are looking at some of the early assets that helped them get to the size they are today as opportunities to shed expensive real estate and/or outdated properties that don’t fit within their current workplace/facilities model.
Q: When transforming biopharma campuses what is that process like?
A: The process of transforming a campus is long and not a one-size-fits-all approach. Each campus and client is unique and has their own set of goals or ideas, and it always starts at the executive level of the company. It is important to have the leadership and board’s approval early before starting any projects. In addition, we have identified five key strategies that have helped our clients in the past achieve their goals for the transformation of their campus, whether it’s a sale, partial sale, or restructuring. The key takeaways are: to act with a holistic view of your real estate and facilities options; engage your local municipalities in the discussions; consider a sale-leaseback to retain the space you need and let the developer repurpose the remainder; make the strategic investments to position your campus for new communities or the public; and always keep the legacy and brand in mind when starting this journey.
Q: How does transforming life science campuses lead to innovation in life sciences research and provide the talent pool to operate them?
A: As the life sciences campus transform over time, it leads to new opportunities to innovate, attract new talent, tap the existing talent that worked at the site, and spur new inventor and entrepreneurs to pursue their ideas. If there was innovation and research happening on the campus, there is a high chance that the surrounding geography has the talent pool to continue to support these activities. Our experience has shown that many of these employees have deep roots in the communities they live and disrupting that for a job is often the less desirable choice. This lends new companies the opportunity to tap highly trained and highly skilled talent to run their operations and bring new ideas and innovation to the organization. In some cases, it also leads a company – and employees – back to the campus, as they are familiar with the site and feel comfortable working there. We have seen tremendous growth in the New Jersey market because of large institutional pharma divesting their campus, leaving high-valued skilled labor available to younger companies. It also gives the employees a chance to reconnect with a smaller organization where they feel more connected to the company’s sciences, mission, and values.
Q: Is there anything you would like to add or mention?
A: Executing a successful life sciences campus sale is a complex and timely commitment. Building consensus internally amongst all of the stakeholders early and getting executive leadership and board approval to proceed is one of the most important tasks for a successful disposition. In addition, hiring an experienced team of external consultants and retaining the highly knowledgeable staff who have run the campus throughout its years will allow for the new buyer/investor to understand the complexity of the campus, expedite due diligence and often times yield a higher sale price for the seller.
