Bio Boom: Dallas-Fort Worth Is Emerging As A Hub For Biotech And Life Sciences

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Dallas-Fort Worth leads the nation in population and job growth, and the region was No.1 in both categories for 2019 and for the entire 2010 decade, for good reason.

Considered a premier location in the U.S. for headquarters, manufacturers, and logistics, DFW is home to an enviable roster of companies across major sectors like aerospace, automotive, data, energy, engineering, insurance, finance, food and beverage, retail, semiconductors, telecommunications, and transportation.

Eight Fortune 500 companies have decided to move headquarters to DFW since 2004. The most recent is Charles Schwab, whose move to Westlake from San Francisco will take effect Jan. 1, 2021.

DFW is also out front with new and emerging sectors. Artificial intelligence, augmented reality, autonomous vehicles, big data, cybersecurity, and distributed ledger technology companies and jobs are here, and growing. DFW has it all. Almost.

You have not seen Dallas at or near the top of any list of “best cities” or “best places for” when the ranking is based on life sciences or biotechnology.  Chances are the City is not on the list at all. Boston, San Francisco, San Diego, Washington D.C., Raleigh-Durham, New York, New Jersey, and a few others share that spotlight.

More than most sectors, biotech companies cluster when choosing where to build facilities, invest and create jobs, even if costs are higher. Boston, San Francisco, and the others offer the established and branded aggregate of great research universities, existing and significant biotech and life science companies, a big talent pool, lab space, patent generation, and funding from venture capital firms or the National Institutes of Health.

Yet in recent years, the Dallas Regional Chamber has led bids that advanced DFW as a finalist for new biotechnology manufacturing facilities by Genentech, Novartis, and a few others. DFW was in the game on the strength of overall attributes as a great place to do business and a few stellar centers of biotech excellence like Alcon in Fort Worth and UT Southwestern Medical Center in Dallas, the only academic medical center in the world to serve as home to six Nobel Laureates.

With a funding level of about $470 million annually, UT Southwestern Medical Center is a shining star. UT Southwestern conducts research and launches companies across a variety of fields including cancer, heart disease, and neuroscience; as well as training 3,600 medical professionals each year. Yet DFW was not selected. The biotech ecosystem was not as deep or evident compared to the winning locations. Now that’s changing quickly, for the better.

On Sept. 22, 2020,  biotech industry leader BioLabs announced that it is locating its first central U.S. location in  Dallas. BioLabs provides lab space and wrap-around services to incubate and accelerate biotech. BioLabs will operate in a 37,000 square-foot flexible life science coworking facility at Pegasus Park, developed by J. Small Investments, partnering with Lyda Hill Philanthropies. Pegasus Park is just north of downtown Dallas and is within walking distance of UT Southwestern Medical Center, a collaborator on the Park. BioLabs’ other locations are in hotspots like Boston, New York, San Diego, and Raleigh-Durham; places where, for years, Dallas entrepreneurs, scientists, and researchers sometimes had to go to launch their enterprises.

Companies like Alcon, Astra Zeneca, Peloton Therapeutics, Reata Pharmaceuticals, and Taysha Gene Therapies are in Dallas-Fort Worth, working on eye care, hyperkalemia, cancer, kidney disease, and diseases of the central nervous system. Other science in the region is focused on HIV, muscular dystrophy, brain research, and more. The University of North Texas Health Science Center in Fort Worth is conducting research in forensic genetics and Alzheimer’s. Texas A&M’s College of Dentistry in Dallas is nationally recognized for oral health and craniofacial research. As the region grows in population and diversity, researchers will be increasingly attracted here for clinical trials.

There are more than 60 companies and 27,000 jobs in biotechnology and life sciences in DFW. McKesson, a Fortune 10 company and the nation’s largest pharmaceutical distributor, is now headquartered in Irving, for good reason. Dallas Fort Worth International Airport boasts a new 37,000-square-foot cold chain storage facility. It allows the refrigerated storage and rapid delivery to and from the region of temperature and time-sensitive pharmaceuticals and therapies.

There is a lot of runway in the biotechnology sector in DFW, and the assets and reputation are building in a positive direction. Objective third parties are taking note. In an October 2020 life science cluster report by CBRE, DFW was ranked 6th on a list of top ten emerging life science clusters in the U.S. Biotechnology is alive and growing in DFW.

 

Source: Dallas Innovates

 

How Should CRE Bring In Healthcare Expertise?

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When The Connell Co. was looking to add new tenants to The Park, the development firm’s 185-acre live-work campus in Berkeley Heights, New Jersey, earlier this year, it felt that the moment demanded more than the usual marketing messages or amenity packages.

To be competitive, commercial real estate needs to offer future tenants assurance that any new space takes employee health and healthcare access seriously. The firm’s solution was to look for a medical partner of sorts to help offer healthcare as an amenity.

Eden Health, a telemedicine startup that focuses on primary care, will soon open an office on-site. For a small membership fee, tenants can become Eden patients, with access to same-day appointments with on-site physicians and therapists via the provider’s mobile app (the fee is “nominal”; representatives wouldn’t get any more specific). The Connell Co. will sponsor these memberships and pay a portion of the fee, viewing this investment as a step toward what it believes will soon be recognized as an essential amenity for all Class-A commercial properties — comprehensive healthcare.

“This is a holistic approach to wellness and lifestyle,” Connell Co. Senior Vice President of Hospitality and Marketing Stephen Kilroy said. “Employees can get access to primary care doctors right in the building, as well as simple things like flu shots.”

Having a medical tenant as a selling point, or even the cornerstone of a mixed-use development, isn’t anything new. Mosaic Development Partners has long made healthcare tenants a focal part of its strategy to finance and build community-focused commercial and residential projects. And the so-called wellness real estate trend has grown into an industry estimated to be worth more than $134B, with developers chasing new building standards such as WELL and integrating all manner of chemical-free fixtures and environmental amenities as selling points.

But Connell’s desire to make the advice and assistance of healthcare professionals part of its offering to clients is different. It speaks to the ways CRE is looking at how to make health access and awareness a best practice and amenity. Other companies have embraced different means of providing such expertise, often by hiring outside consultants: expensive HVAC upgrades focused on UV light and bipolar ionization, focusing on new cleaning routines, putting faith in new technology to encourage social distancing and even having medical professionals on staff.

Crocker Partners, a Boca Raton, Florida-based CRE firm with properties across the Southeast, made news earlier this year when it hired Dr. Walter Okoroanyanwu to be its director of environmental health. Earlier this summer, Okoroanyanwu, an epidemiologist with a CRE background, said that while many companies had talked about implementing health initiatives, Crocker sought to implement real changes, charging him with developing strategies and procedures to improve safety and wellness amid the company’s 11M SF portfolio. His main goal was figuring out how to stop the spread of COVID-19.

“Above all, we want to create a safe and healthy workplace,” Okoroanyanwu said in July. “Every day, COVID virus information is fluid, it’s ever-changing. You need somebody with my background who’s able to follow new information and research and convey it to the employees.”

While news of new vaccines provided a needed boost of optimism to real estate interests fearful of extended lockdowns and work-from-home directives, it is clear that reopening will be an extended process, vaccine rollouts may take months and months to filter through the population, and even on the other side of the crisis, there has been a fundamental shift in the way tenants think about health and infections risks. CRE firms are and will continue to adjust to this new reality. It raises the question of how firms acquire talent in these fields, and perhaps how they approach marketing that talent, or healthcare amenities, to customers.

“Connell Co.’s approach is a good fit for the current moment,” said Kilroy. “Hiring a specialist to be in your office is an interesting approach, but the real differentiator as workers slowly return to the office will be offering healthcare as an amenity.”

The idea is already being adapted quicker for residential settings. In Denver, a high-end wellness-focused residential project, Lakehouse, will feature a “wellness concierge” for residents, and in Miami developer CC Homes is partnering with Baptist Health’s Care to provide on-demand virtual healthcare services to a pair of new developments.

“Having a real professional at your properties is a great investment, and a cool shared asset,” Kilroy said. “In addition, it’s nice to be at arm’s length when it comes to liability.”

Connell Company has worked with Eden Health to develop reopening plans that the startup has signed off on. But Kilroy sees the idea of outsourcing and amenitizing health access to be much more palatable.

Earlier this year, a McKinsey analysis of the CRE world’s response to COVID suggested that the pandemic would create long-term behavioral changes, especially around health and wellness and perceptions around safety and work. Investments in sanitizer stations, HVAC and ventilation, and outdoor spaces will be commonplace.

“The Park hopes to make that a key selling point, installing jogging trails, outdoor workspace, playing fields and outdoor gyms as part of a push to portray their new development as a wellness campus,” Kilroy said. “The potential new clients considering space at the Park are very interested in this option.”

 

Source: Bisnow

Wall Street Analysts Laud Medical Office Building Sector During BOMA MOB Conference

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With medical office buildings (MOBs) continuing to show their resiliency amid the COVID-19 pandemic, it would only make sense that the product type continues trading at strong pricing and attracting an even wider range of investor types.

MOB sales volume in the first half of 2020, was $5.5 billion, “which was 10 percent higher than in the same period in 2019,” according to Mindy Berman of JLL. “This is really a ratification of medical office, and our sentiment at this point is (the volume) we will equal or exceed the 2019 level.” (PHOTO CREDIT: HREI)

Perhaps left out of the MOB buyer’s market of late have been the country’s healthcare-focused, real estate investment trusts (REITs). While their stock prices have rebounded in recent months from large drops at the outset of the pandemic, the REITs haven’t been as big of a buyer group as they normally are.

“But you know that puts the REITs undervalued right now, in our in our opinion, relative to their net asset value,” said Todd Stender, a senior equity analyst with Wells Fargo Securities. “That also is going to contribute to them maybe not growing externally as fast, if they don’t have access to the equity market. HTA (Healthcare Trust of America, NYSE: HTA), for example, does have some forward equity that they can tap, and they prudently tapped that market recently and I believe they have until June of next year to tap that equity.”

 

Source: HREI