July 2, 2020
As stay-at-home orders were implemented across the country in mid-March, Colliers International identified five key life science real estate metrics that were likely to be impacted by COVID-19 and the response to the pandemic. These were lab productivity, expansion plans, development of new facilities, supply chain, the funding ecosystem and the regulatory process. With the third quarter now underway, Colliers EVP Joseph Fetterman reports, “most of our observations today are consistent with what we reported in March. If anything, the life sciences sector has recovered from the shock and accelerated more quickly than anticipated.”
Additionally, new themes have developed over the past few months that provide “a more nuanced outlook on the impacts to the life sciences sector that will play out over the remainder of the year and beyond,” Fetterman, a member of Colliers’ Life Sciences Practice Group, says in a new white paper.
Despite some reversals, stay-at-home and business operations directives are generally being relaxed across the country. “There is uncertainty about whether the measures going forward will contain the spread of the virus because of inconsistent messaging and unpredictable public compliance to CDC and governmental direction,” Fetterman writes.
During the height of the shutdown, “lab productivity was slowed but is recovering. COVID-related investigations are on a fast track.”
As a Colliers report highlighted in March, companies focused on COVID-related treatments, vaccines, testing and prevention have accelerated their R&D activity while using measures like staggered shifts to address density and safety issues. “In addition, over the past six weeks, we noted there are many companies that have identified COVID applications for their core or secondary investigations, and have redirected their efforts to contribute to broader public health solutions related to testing, vaccination and treatment” for COVID-19.
In many instances, this pivot to COVID-related initiatives has increased the activity, staffing and demand for lab space, says Fetterman. While lab activity and productivity has recovered significantly from the initial shock, PPE supplies remain a challenge as a result of redirected inventory to hospitals and COVID-related work.
Due to the pandemic, many non-COVID development initiatives have slowed because of delayed timelines for clinical trials resulting from greater challenges to secure volunteers and complications with necessary hospital visits that were considered non-essential when COVID cases spiked. “As the number of critical COVID cases have leveled off in specific geographies and hospitals have been cleared to begin elective procedures, clinical trial activity for non-COVID therapies will restart,” Fetterman writes.
Meanwhile, life science expansion requirements are back on pace, even exceeding pre-COVID levels, notes Fetterman. “This is evidenced by the reinvigorated pipeline of active requirements for new lab space lab building owners are seeing and the recent announcements of executed leases.”
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