CREJ

Page 12 — Health Care & Life Sciences Quarterly — April 2022 www.crej.com LIFE SCIENCES Keep your vital systems running strong. Building careers and communities by providing ALL THINGS power, technology and energy. Connect with us. encoreelectric.com | 303.934.1234 T he life sciences industry constitutes businesses and organizations engaged in researching, developing and manufacturing pharmaceuti- cals, cosmeceuticals, biotechnology- based medicines and food, food processing, nutraceuticals, medical devices, biomedical technologies and other products that improve lives. Whether you’re a life sciences enthusiast or a real estate investor in Boulder, you should be excited to learn how the area’s life sciences market is doing. n Life sciences market insights. Based on a recently published report from CBRE, hefty increases in employment and funding have sig- nificantly boosted the demand for lab space and promoted new con- struction in Boulder. The study revealed that the demand for life sciences lab space has surged by a staggering 87% in the past year. Despite only a 0.5% vacancy rate for lab space in the area, demand is fast outpacing sup- ply. It seems that a different biotech company announces a move or expansion to the Boulder area every other week. These findings indicate that life science lab space is emerg- ing as a highly sought-after seg- ment of the city’s commercial real estate sector. In the first quarter of 2021, the life sciences industry within the state raised $704 million in funding from federal, public and private sources, setting a new record. National Institutes of Health funding and record-setting pri- vate investment contribute to rising demand in the life sciences sector of Colorado. At the same time, the limited supply of shell or turnkey labs, coupled with recent high-priced acquisitions of assets with lab space or the abil- ity to convert to lab space, is causing an increase in rent and providing opportunities to property owners in the area. The Boulder submarket will con- tinue to see high demand for lab space in the life sciences industry, so you can expect a further increase in the associated real estate invest- ment opportunities in the upcom- ing years. n How are investment firms responding? Many forward-thinking property investment firms and out- of-market capital focused on life sciences already have begun mak- ing the most out of the opportuni- ties in the life sciences industry. Let’s take a look at a few notable instances. For instance, Graham Street Real- ty, a San Francisco-based commer- cial property investment firm, sold 2945 Wilderness Place in Boulder, the two-story, Class B lab and office building containing lab improve- ments and traditional offices. The property formed part of the three- property portfolio including 2945 Wilderness Place, 5665 Flatiron Parkway and 3005 Center Green Drive, reaching 114,862 square feet of leasable lab and office space. Despite a challenging economic environment, the company ben- efited from the strong demand for life science properties. For over 20 years, the real estate unit has maintained 100% occupancy, dur- ing which it continued to function as a life sciences building. The property was leased to a single biotechnology tenant that GSR renewed for an additional term during this period. On a similar note, in July 2021, Boston-based Beacon Capital Partners acquired the Pearl East Business Park for $392 per sf, or $190 million, and the 45,000-sf 2865-2885 Wilderness at $18.6 mil- lion for conversion to life sciences space. Even as early as December 2020, Medtronic, the Irish medical device manufacturing giant, traded its Gunbarrel campus for $36.5 million. This was when it started developing its enormous, 400,000- sf, 42-acre campus in Lafayette. It has been re-traded for $125.5 million to another group out of California as of December. Flatiron Park’s portfolio, at 1 million sf is listed at $600 million and rumored to be closing with a subsidiary of Blackstone that plans to convert several assets to life science-ready Boulder emerges as a top life sciences market Scott Crabtree Broker associate, The Colorado Group Inc. The limited supply of shell or turnkey labs, coupled with recent high-priced acquisitions of assets with lab space or the ability to convert to lab space, is causing an increase in rent and providing opportunities to property owners in the Boulder area. Please see Crabtree, Page 17