Life Science Experts Optimistic for Industry’s Future in Nothern California

CBRE, Gidel & Kocal, Longfellow, L&B Realty Advisors, Transwestern Ventures, Bay Area, Burlingame, Vacaville, Gidel & Kocal Construction, DivcoWest
Courtesy to Varun Yadav

By Kate Snyder

Though it’s not without its challenges, the life science industry in Northern California is in a robust and positive state with some exciting projections for the future, as discussed by several market leaders in a forum hosted by The Registry on Wednesday. The forum was sponsored by both Gidel & Kocal and Longfellow and featured speakers from several different corners of the market.

As far as the current state of the life science market is concerned, experts generally agreed that it’s been busy, resilient, and compared to other sectors, “life science looks as good as any,” said Paul Noland, executive vice president for L&B Realty Advisors. Noland and others further said that vacancies are still extraordinarily low and while the market likely won’t repeat the highs of 2021, there are still plenty of reasons to be optimistic about the future.

Fred Knapp, managing partner at Transwestern Ventures, noted that the rise of inflation has made an impact on the industry but despite that challenge there are still opportunities to be found, depending on the company and its specific needs.

“While it’s not entirely immune to what is happening from a macro-economic standpoint and rising interest rates,” Knapp said, “there is still tremendous demand for the space and depending on where you are, what markets and what type of product for the life cycle of a life science company … we do see supply and demand in balance and opportunities for developers and investors to take advantage of that.”

One issue that was discussed during the forum was the state of the supply chain and how that is having an impact on project plans and construction. Steve Smith, senior project manager for

Gidel & Kocal Construction, said there have been improvements in some areas and deterioration in others – the wait time for electrical equipment, for example, has deteriorated. Six months ago, he said, getting certain components or upgrades would take six to eight months and now the wait could be a year or more.

“It’s having an impact,” he said. “And obviously things have slowed down a little bit. We were hoping that with the slowdown it would be an improvement, but for some reason there’s still deterioration in some areas, and like we always tell our customers, get in there, put these projects together faster, better, sooner so that we can get these things ordered. But it’s kind of all over the map, is what we’re seeing.”

Speakers also discussed the effects that remote work is having on the industry. Noland pointed out that he’s been seeing the ratio of lab to office space tilt more toward lab, and part of that could be because companies are able to shift more office work from in-person to remote and then building out more lab space.

“You certainly can’t do lab experiments at home, so depending on the company, clearly [office is] the easiest thing to move home,” he said. “It really depends on the company, because as these companies mature, some of these really big companies have a lot of office space because they have a big sales department, big accounting, so I think a lot of it actually has to do with where the company is in its life cycle.”

Part of the discussion also touched on where the life science market is expanding geographically. Speakers generally agreed that while life science projects are continuing to grow in the outlying areas – Transwestern Ventures is planning a 390,000 square foot biomanufacturing campus in Vacaville and DivcoWest is involved in a plan to bring a new tech hub to Burlingame – the major life science clusters will remain in the major cities.

“You really need everything from incubator lab space all the way up to campuses and GMP space within a short drive and Boston and San Francisco because they’ve been in this industry for so long, they really have a huge advantage in that space,” Noland said.

Speakers also speculated that for the next two or three years there would likely be somewhat of a cooling off – ground-up newer projects would accelerate while others would slow – but they also expected that the market would stay busy. Gregg Walker, senior managing director and head of business development at DivcoWest, said he believes the flexibility of lab space and the collaboration between technology and health care would continue to increase.

“Another reason to kind of be bullish on this industry is just the effects and the efficiencies that technology is bringing to research,” Walker said. “So that will continue… and I think we’re going to see some amazing companies come out of this area as well as all of the regions, and technology is going to be a big part of that.”

West Coast Commercial Real Estate News