According to Bob Coughlin, Managing Director, Life Sciences, JLL, a shifting real estate market is creating some exciting opportunities for growing life sciences companies. Over the last decade, mid-size companies scooped up available space, crowding out grad lab space. More than 1 million square feet of that space is now back on the market, giving small companies that aren’t publicly traded—many of them still in pre-clinical trial stages—access to buildings with labs already built out.
Coughlin remembers the market crash of 2008 and says some of the activity in the current market is eerily similar to what we went through then. Smaller companies turned to big pharmaceutical firms, relying on external innovation to get the money they needed to grow and continue developing. There’s a good chance we’ll see a repeat of these deals as the smaller firms partner with bigger companies to access the money in play through venture capital.
Despite the current market correction, Coughlin remains optimistic about the future of the life sciences industry. He points out that science is still science, and these companies are developing ways to change the course of—and even cure—diseases. Since people ultimately want to stay alive and healthy, they’ll continue funding the companies that make this happen.
In the face of economic uncertainty, the fundamentals of the life sciences industry remain strong. Coughlin sat down with Rebecca Willumson to talk about shifts in the life sciences real estate market and how it’s creating new opportunities for companies.
Rebecca Willumson:
Hi there. I'm Rebecca Willumson. I'm the publisher of Fierce Biotech, and I'm here today with Bob Coughlin, Managing Director of the Life Sciences Practice at JLL. Bob, thanks for joining me.
Bob Coughlin:
Thanks for having me, Rebecca.
Rebecca Willumson:
Good. So Bob, before we begin, can you tell me a little bit about your background and your role at JLL?
Bob Coughlin:
Yeah, I've been at JLL working in the life sciences practice now for about 16, 17 months. Prior to coming on board to work in the life sciences real estate space, I was actually the CEO of Mass Bio, which is the Massachusetts Biotechnology Council. And I had the pleasure of running that organization for over 13 and a half years. Prior to that, I actually served in government as an elected official in the House of Representatives here in Massachusetts.
And what got me into Biotech wasn't because I loved science or planned on being in that space. My wife and I over 20 years ago, had a child with cystic fibrosis and it became a part of our life. And I realized that good policy here in Massachusetts could help companies actually come up with a therapy for my kid. And I'm so grateful that after 18 years, they did invent a drug that's keeping him alive today.
Rebecca Willumson:
What's currently going on in the market and what challenges are life sciences companies facing?
Bob Coughlin:
It's a choppy market right now. I worked at Mass Bio. I was leading Mass Bio from '08 to 2012, and it's eerily similar to what we went through when the market crashed in '08. What we did back then is we capitalized on big pharma companies to get them to do deals with smaller companies. And this thing called external innovation came into play.
Now when you fast forward, right now, it's about 100 to 200 companies that are trading below cash right now, and that's a real bad situation for these small to mid-size companies that are publicly traded. They're not going to be able to have the money that they need to grow and continue. The good news is that there's a lot of money in play in dry powder with the venture capital firms in the large pharma companies once again will come in and try to fill that void.
Rebecca Willumson:
So as a result of the difficult market, are there any opportunities that have arisen?
Bob Coughlin:
Yeah, there are. And albeit these mid-size companies that are undervalued, not great for them. But what has happened, the real estate market was so tight for the last decade that a lot of these companies that were graduating out of incubators didn't have any what we call grad lab space to go to because it was all taken up. So these mid-size companies that took on space over the last several years that aren't growing, they've actually put, in just this Massachusetts market alone, 1.4 million square feet of available built-out lab space that these smaller companies that aren't publicly traded can get into to through a short-term lease and actually already have the lab built out that somebody else paid for.
So is it a great situation for the industry as a whole? No, it's tough for these mid-size publicly traded companies. But it has created an opportunity for small, privately held preclinical companies.
Rebecca Willumson:
So what does the future look like for the life sciences industry? Is it bright? Is it gloomy?
Bob Coughlin:
I tell people, "Keep your sunglasses on." It's a little cloudy right now, but it's really a correction. When Covid hit, and the world really puts so much credibility, and rightfully so, and credence behind science, that a lot of people were investing in things that maybe shouldn't have gotten as much funding as it did. We saw companies going public that were preclinical. This is really a correction.
So yeah, we're going through difficult times. Publicly traded companies undervalued. But the science is the science. And we're looking at things like cell and gene therapy, therapies that change the course of disease, and in some cases, cure disease. We couldn't say that 10 years ago. We couldn't say that when my son with cystic fibrosis was born.
So when you look at precision medicine, cell and gene therapy, the science will continue to get funded. One thing that we know about the human race is that they're not going to accept not coming up with therapies and cures. People want to stay alive and they want to stay healthy, and this is the industry that makes that happen.
Rebecca Willumson:
Well, that is a perfect way to close out. Thank you so much for joining me today, Bob. I appreciate the conversation.
Bob Coughlin:
Thanks for having me. Truly appreciate it.