CREJ

Page 2 — Health Care & Life Sciences Quarterly — April 2022 www.crej.com A report from the NAIOP Research Foundation from this March reminds me of the saying, “One man’s loss is another man’s gain.” The report, “New Uses for Office Buildings: Life Science, Medical and Multifamily Conversion,” addresses how people are using their office space today and predicts the mar- ket will continue to feel the pan- demic’s ripple effects in the years ahead as long-term leases expire. The report goes on to predict that life sciences, medical and multifamily conversions will be the path forward for some underper- forming properties. This makes sense because as the traditional office market is strug- gling to fill vacancies, the medical office sector is thriving and the life sciences market is exploding. The demand for these assets is a promi- nent theme in this issue. There simply isn’t enough available space of either, according to authors, and the demand will only continue to grow. The NAIOP report and articles within this issue identify reasons why this is the case – this incul- des are our aging population and more chronic health conditions that come with age, changes to the way patient care is delivered and strong migration to the area. With these drivers, investor demand is palpable. The NAIOP report focuses on how conversion of existing office proper- ties offers several advantages over new construction. As supply chain and labor shortages continue to plague the construction industry, this isn’t necessarily a surprising finding. However, several of the key advantages identified in the report are worth noting. For example, while new builds can face permitting backlogs and zoning restrictions, spaces zoned for traditional office typically can accommodate medical office or life sciences space without these head- aches. Additionally, since the basic structure is already complete, the construction time frame as well as material and labor costs are lower, which is especially true when a new construction project would require demolishing an existing building, the report notes. Further, if only certain floors are being con- verted, buildings sometimes can remain partially open and continue to collect rent. Finally, there are environmental benefits – conver- sion has a lower carbon impact and mitigates greenhouse gas emissions by reusing an asset to meet market demand. However, despite the clear demand and possible opportunities for conversions, the article on Page 10 lays out key considerations that a lab conversion from a standard office space requires – essential non-starters if the property can’t handle any of them. Anyone toying with the idea of converting a space would be wise to start there. Michelle Z. Askeland maskeland@crej.com Creative ways to meet demand Letter from the Editor Contents Population dynamics drive MOB investor demand Ben Slad Expanding health technology to its fullest potential Stacey Root Simulation-based education advances health care Charlie Slattery 6 factors for an office-to-laboratory conversion Brian M. Konczak and Paul Gibson Boulder emerges as a top life sciences market Scott Crabtree Congress passes senior housing program funding Marina Blackburn and Libby Park Taking a trip to the moon: 5 questions with a CNA Jennifer Sodo Adapting senior living communities for the future Tom Finley 4 6 8 10 12 13 14 16 Lab Conversions - Page 10 STEPHANI GASKINS +1 720 528 6346 stephani.gaskins@cbre.com DANN BURKE +1 720 528 6362 dann.burke@cbre.com ANNA HEISERMAN +1 303 583 2099 anna.heiserman@cbre.com M E D I C A L C E N T E R O F A U R O R A C A M P U S AURORA CHERRY CREEK MOB 1411 S Potomac Street AURORA ASPEN PEAK MOB 1421 S Potomac Street AURORA TIMBER RIDGE MOB 1444 S Potomac Street NORTH SUBURBAN 9195 Grant Street S W E D I S H M E D I C A L C E N T E R C A M P U S SWEDISH MOB I 601 E Hampden Avenue SWEDISH MOB II 701 E Hampden Avenue SWEDISH MOB III 799 E Hampden Avenue SWEDISH MOB IV 499 E Hampden Avenue SKY RIDGE – CONIFER BUILDING 10099 Ridgegate Parkway S K Y R I D G E M E D I C A L C E N T E R C A M P U S SKY RIDGE – ASPEN BUILDING 10103 Ridgegate Parkway SKY RIDGE – EVERGREEN BUILDING 10107 Ridgegate Parkway DENVER’S PREMIERE HEALTHCARE CAMPUSES CONTACT DENVER’S PREMIERE HEALTHCARE REAL ESTATE TEAM N O R T H S U B U R B A N C A M P U S PINNACLE AT RIDGEGATE 10535 Park Meadows Boulevard