In the News
April 10, 2015
Lab space shortage could squeeze biotech firms
Puget Sound Business Journal
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Expedia is moving into California-based biotech Amgen's office complex in Seattle's Interbay neighborhood by 2018. Expedia plans to rip out all the lab space to make way for its offices. That's bad news in a city where other biotech companies are looking for offices that include laboratory space. I talked to real estate company Kidder Mathews Senior Vice President and partner Bill Neil, who specializes in the biotech real estate market, about the dilemma.
What does this mean in a city where lab space is already hard to find? Nobody really expected (the Amgen campus) to be bought for the exact function that it's designed for. We don't have those large users in town, and you're not going to have a Gilead or a Celgene or something like that move in from out of town. The problem here in town right now is there just isn't any laboratory space. When you're a scientist, an academic coming out of the public environment where you've been in everything from high school to postgrad, you've never had to worry about lab space. It's always been there. But when you jump out into the real world (it's different). The demand for lab space had been very lethargic for a number of years. It's coming back some now. All of these spaces that were available, all of that has been leased in the last 18 months.
So what's a biotech company hunting for office and lab space in Seattle to do? There are several organizations that are going to need office lab space in the next 18 to 24 months. We have some clients that need it today. Until there's more construction, it's just not going to happen. These developments are very expensive and landlords are not building speculatively anymore. Will the demand curve change that? Who knows. Somebody always expands and other people fail. Companies really have to be in the market two years in advance and start planning way far in advance and nobody likes to do that because it's committing for something today you can't take advantage of for a minimum of 18 months, and things change. It's a real dilemma, especially for younger and medium-stage companies.
What are some of the other challenges for biotech companies establishing themselves or growing in the Puget Sound region? As they get to be larger, they have whole real estate divisions and people who concentrate all their effort on full-time employee growth. As a young company, you're always out there with your hand looking for money. Planning is absolutely critical. A company's probably not going to go out of business because it can't find space for 10 to 12 months. They'll make something work.
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