Six Emerging Life Sciences Trends for 2024
Grant Yeatman
As the life sciences industry adapts and evolves, JLL’s 2024 Life Sciences Trends to Watch research unveiled six trends transforming the industry, including emerging technological advancements from 3D printing to artificial intelligence, sustainable design, and new modalities.
Lab Design News sat down with Grant Yeatman, managing director of life sciences at JLL, to learn more about these trends and their impact on the coming year.
Six Industry-Shaping Trends
Everything is hyperlocal: the performance of life sciences facilities is tied to hyperlocal factors.
It’s an occupier’s market: lab availability is set to grow in 2024.
Sustainable design and operations for facility management and aesthetics.
Doing more with less by harnessing new technologies.
A wave of new modalities, such as radiopharmaceuticals, will transform the industry.
The patent cliff is the perfect storm for M&A as pharmaceutical conglomerates target startups.
LDN: Could you please introduce yourself?
GY: I am a leader within JLL’s West Coast Life Sciences Team, and our team’s intent is to be the leading real estate advisor and partner in the life sciences sector. We represent both owners of life sciences buildings and campuses and life sciences companies alike, by solving complex problems and developing thoughtful real estate solutions. I work in San Francisco the Bay Area, covering projects locally, as well as throughout the United States.
LDN: What scientific breakthroughs and sustainable innovations are creating abundant opportunities for life sciences companies, investors, and developers?
GY: The beauty is that we have a total convergence of technological advancements happening all at once.
Gene editing not only works for patient therapies but is also applicable to agriculture. New tools are being physically manifested because of artificial intelligence.
The ability to combine AI and automation allows us to fully automate the process of chemical synthesis. This new infrastructure challenges the industry on where these labs actually need to be located. For example, if they are, in fact, “set it and forget it” labs, then you don’t need to have scientists in the labs 24/7; conventional requirements for proximity to employment and the best physical real estate may not be as stringent in future years. These tools are proven and have the accuracy and efficiency necessary for the investments.
All of this will accelerate drug discovery all around, including accelerating the rate of early-stage startup creation, so it is not a question of whether these innovations will impact or disrupt the industry but a question of when and by what degree.
LDN: How do technological advancements like additive manufacturing, 3D printing, and artificial intelligence disrupt the life sciences market?
GY: There are many new platforms to discover novel proteins and drug targets. These new approaches make the R&D process more efficient and are opening new avenues of drug design and drug discovery.
AI allows us to take the libraries of thousands upon thousands of compounds and then apply these compounds to different targets, as well as identify new targets and new chemical structures associated with these compounds. This is taking the entire sector of small molecule drugs and bringing it back to life in a big way. A few years ago, the star was on Cell & Gene Therapy (CGT) and large molecule research. Today, the industry is seeing a resurgence of small molecule research because of these capabilities. This translates to different infrastructure required for companies, and different designs in the buildings in which R&D is being conducted.
LDN: How did JLL come to these six trends, and which ones should developers prioritize?
GY: To distill the entire ecosystem down to digestible bullet points, we first must focus on what is happening in the sector. What is impacting biotech and pharma companies? How are their investors reacting and making decisions? And ultimately, what impact does all of this have on the physical real estate?
We could take each of these trends and blend them together, talking for hours, but from a developer’s perspective, you must be in tune with the fundamental drivers of the sector and marry that with your individual goals: where is your project, what kind of asset is it, what is your portfolio in the surrounding area, when is your project ready for a tenant to occupy the space…this list goes on.
According to JLL’s 2024 Life Sciences Trends to Watch, the trends that developers ought to be acutely aware of looking forward to are that everything is hyperlocal, it is an occupier’s market, and it is doing more with less.
It is no surprise that the real estate market, or any financial market, is in a much different state than it was a year and a half ago. Lab space supply/inventory continues to go up, and demand from tenants is down. This is coupled with tenants “having to do more with less.” The typical pre-revenue life sciences companies are being forced to prolong cash runways and decrease burn rates. They are focusing on one core program instead of multiple programs. This results in a lower headcount and less capital to deploy. Translating this back to real estate, this generally means smaller spaces, shorter-term leases, and greater reluctance to do anything with real estate unless it is a must. So, a developer should be prepared to meet the market – offer flexible lease terms, position space in your building differently than you originally intended or underwrote, and keep in mind that smaller wins today will lead to a better pipeline for your portfolio tomorrow.
LDN: What are hyperlocal factors?
GY: Each “requirement,” or each tenant that may be in the market evaluating possible new lab facilities, needs to be evaluated in a vacuum. For years, the life sciences market was up and to the right, and each new space that became available seemingly set a new high comp or new high for lease terms (rent, term length, size of space, etc.) relative to what it would have been a quarter previous.
For the last 18 months, it has been hard to peg what the “market” actually is. An increasing supply of new inventory, or new lab space, entering the market, coupled with significantly reduced tenant demand, has resulted in very few data points to point to for what deal terms ought to be. So, for each landlord, or each tenant, every situation or “requirement” needs to be evaluated in isolation – you can’t compare one building to another or one company to another because everyone is living in their own capital-constrained world, with different objectives and different levers that they can pull to put a deal together.
LDN: How do these factors influence pricing, occupancy, venture capital funding, human capital, etc?
GY: The short answer is everything is smaller and/or shorter, and margins or expected returns are not what they used to be. Earlier-stage companies are looking to alternate sources of funding with less access to VC funding, which has led to an uptick in M&A and license agreement deals. Big pharma will continue to look to early-stage companies for new IP as their own products roll off patent. With the surge in GLP-1 adoption, the landscape of biomanufacturing is going to change. The sector is and will remain to be cyclical, and it is those that continue to adapt and evolve in their approaches that will succeed.
LDN: Is there anything you would like to add or mention?
GY: It is an incredible time for the sector. Our clients and partners across the country are optimistic about the fundamentals that we closely track, and we are encouraged by the greater trends we see unfolding and excited about 2024 and 2025. The first half of this year will remain a period where everyone is asked to do less with more, but leveraging strong teams, relying on strong relationships, and strong execution will surely result in success moving forward. Please don’t hesitate to reach out to our team with any questions!
