Hughes Marino is typically one step ahead of commercial property trends, and the biotech market is no exception. The COVID-19 pandemic shot the life science sector into the stratosphere, especially in five primary markets — Boston, San Diego, and San Francisco, Raleigh-Durham, North Carolina, and Seattle — all now major biotech incubators. That’s where you’ll find five of Hughes Marino’s nine offices.
That’s because David Marino, a Hughes Marino co-founder, says wherever the biotech industry booms, the firm is sure to follow. Specializing in providing life science property services, Hughes Marino assists companies of all sizes to secure life science lease and purchase agreements to meet their business needs. Hughes says his brand sees the demand for commercial lab space — and they can predict where the market is headed next.
Not All Tech Markets Are Created Equal, Says Hughes Marino Co-Founder
Despite the explosive growth of the life science sector, Marino predicts the industry will remain confined to a handful of hotspots nationwide beyond the big five.
But what exactly constitutes fertile soil for the growth of a biotech hub? Marino says that can be a delicate science. Florida and Texas are two states that tried to attract industry players — but they didn’t quite make the mark.
“The reality is the biotech industry, if you think about it, it’s a big industry and affects every person, but it’s relatively small in the context of the total economy,” explains the Hughes Marino executive.
“We don’t need 20 biotech clusters around the country. In fact, I would advocate it’s not in the interest of science to have a fragmented industry because, unlike the insurance industry or the legal industry, life science companies recruit a very specific type of person and share more information between companies that you see in any other industries. For example, not-for-profit research institutes and universities that have strong scientific programs are constantly spinning out life science technology to form new companies. It’s one of those things where momentum builds over decades, and success builds on top of more success.”
Between 2001 and 2021, according to an investment company report, life science researchers have soared by 79%, and new graduates with biology and biomedical degrees are also showing no signs of slowing. Biological and biomedical sciences is a popular major choice, according to the website Authority, ranking as the fourth most popular major.
Still, it can be challenging for life science companies to find enough of the properly trained talent to take the industry to the next level. Marino says that due to the high specifications of the labor force, companies looking to retain top talent have to be near the hot zones producing that talent.
“These people come out of the local universities and then tend to stay in that community,” he explains.
Talent is one thing, finding the space for that talent is entirely another matter.
Lab Space Leases on the Rise
When it comes to leasing lab space, Hughes Marino’s team is aware of the assurances landlords will want before they invest the major capital it takes to obtain life science lab space.
“When a landlord makes that kind of investment, they want to know that when that tenant moves out, or if that tenant gets acquired and goes out of business, … what’s going to happen next, when that space comes back, and that there’s going to be a demand for it,” he says.
Marino also says he understands that landlords don’t want to make these investments only to have a tenant say they want to tear it out and convert it back to an office space. “Landlords are only going to make those investments where there is established, strong demand,” he adds.
While office space can run $80 to $120 a square foot, lab space can cost a whopping $250 to $350 a square foot.
As the big five biotech markets continue to grow, Marino says developers such as Longfellow Real Estate Partners, BioMed Realty, Alexandria Real Estate Equities, and Healthpeak Properties tend to hover in the same areas, creating a lab space feeding frenzy of sorts, rather than try to forge a new path in a completely different territory.
Hughes Marino Knows Where Biotech Is Heading
While biotech standbys are already solidly existing in select cities, a new list of secondary science locations is forming, including Salt Lake City; Denver; Dallas; Nashville, Tennessee; Columbus, Ohio; Tucson, Arizona; and the San Fernando Valley region of Los Angeles.
Out of the fledgling group of biotech cities, Nashville seems most poised to boom, not bust. Over 35,000 life science jobs landed in the Music City between 2015 and 2020. And it’s flush with government investments in medicine.
Fifteen Nashville institutions and companies received a total of 956 grants amounting to $483 million in funding from the NIH, according to the Nashville Business Journal.
Marino says he sees further expansion for the industry, especially in the backyard of Hughes Marinos headquarters.
“In San Diego, for example, in the last three years, there’s been 5 million square feet of life science leases signed,” he said. “These biotech lab developers can’t build it fast enough. So literally, they’re tearing down one- and two-story office buildings to build six-story lab buildings.”
At that rate, the life science deals will continue to pour in for the commercial property firm.
“Our firm has been representing life science tenants for our whole careers, for 30 years,” he said. “As we have grown, we think that’s a really important part of the economy and an important part of our practice. It’s a very specialized base of knowledge as well as to what those companies and what that industry requires.”
Marino says the firm is staffing up to better serve the growing industry.
“So now we’re truly a national company,” Marino said. “We have a footprint in multiple states with nine offices and more to come. I’m really so excited about where this ends because it’s just going to be more of that [growth], and we have proven that we can scale our culture and technology. It’s going to be more amazing people in more wonderful communities around North America.”