Data from a recent CBRE report revealed that these types of conversions totaled 9.9 million square feet in the 12 top life sciences markets at the end of 2021. This was an increase of 49 percent from the beginning of the year. By the end of 2021, ground-up lab development had expanded by 42 percent to over 18.8 million square feet.
Converting space suitable for lab science use comes with its own unique set of challenges. Conversions make more sense in densely populated urban areas that are more expensive to develop. Yet whether the facility is a reconstruction or a brand-new development, creating lab space comes with its own set of risks for investors. Life science buildings require specialized HVAC systems and other unique equipment, making them a more expensive venture than a traditional office building.
But it’s precisely because life science labs differ from traditional office buildings that investors feel more confident about their future. While most offices across the nation have embraced remote or hybrid work, laboratory and research and development facilities are an entirely different story. Most lab work requires exclusive equipment that isn’t suitable for home use, so few occupants have the luxury of working from home in some form or another. Since life science occupiers have few remote work options, occupancy levels in life science buildings have remained much higher than the general office sector. Despite the challenges, developers are certainly seeing the potential of office-to-lab conversions.