Canada is well positioned to become a global competitor in this arena
The life sciences sector is poised to significantly propel commercial market activity in Toronto, Montreal, and Vancouver during the post-pandemic era, according to a new analysis by Avison Young.
This stems from the increased public awareness of the central role that this sector – which includes small to medium-sized to global companies involved in the development of diagnostics, biopharmaceuticals, pharmaceuticals, and medical devices – plays in economic and social continuity.
“Canada is home to a large pool of highly skilled life sciences professionals with a broad range of expertise and offers an ecosystem for life sciences companies to thrive which includes first-class academic institutions, research networks, partnership opportunities, and an increasingly favourable funding environment,” Avison Young said.
Among the most noteworthy developments during the pandemic year were the three largest IPOs ever filed by domestic life sciences companies in Canada. Avison Young cited this as indicative of the substantial potential that exists “to grow other companies and turn Canada’s life sciences sector into a global competitor.”
In fact, “across the country, unprecedented investment by the federal government is already being deployed to help expand, finance, or build new lab space,” Avison Young added. “Most early-stage life sciences work is project-driven and done in a lab (wet or dry) and once at the proof-of-concept or trial stage, the need for premises can change quickly. In addition to lab space for ongoing research, life sciences companies’ needs will shift to mass-manufacturing and distribution capacity.”
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Avison Young stressed that unlike most industries, life sciences installations involve levels of complexity that make them costly and difficult to retrofit, build, and operate, thus “creating barriers to entry for both new premises development and conversions.”
However, the long-running scarcity of commercial-use space that can be reasonably utilized as life sciences facilities “may become so compelling that some owners may start to convert traditional office buildings into lab premises,” Avison Young said. “This could be fuelled by the uncertainty in the office – and even retail – markets, which is making it more and more appealing for building owners to consider the possibility, despite the specific requirements and costs associated with this type of space.”
The cost issue might prove daunting for many, but life sciences structures are uniquely positioned for long-term yields.
“Undertaking such an investment means these extraordinary costs often need to be amortized over a longer period, so owners may not receive an immediate return with their first tenants,” Avison Young explained. “On the plus side, higher fit-out costs than for traditional office space mean these specialized facilities will attract significantly higher rents down the road.”
