Why You Should Have Life Science Real Estate in Your Portfolio

Why You Should Have Life Science Real Estate in Your Portfolio

The need for life science properties is growing exponentially in the United States — and not just for developing COVID-19 vaccines and treatments. Innovation in the healthcare industry has never been more active, and the need for state-of-the art properties to conduct research and development is increasing. 

In this Dec. 1 Fool Live video clip, two experts from The Motley Fool’s Millionacres real estate subsidiary, editor Deidre Woollard and Certified Financial Planner Matt Frankel discuss what investors should know about the life science real estate business. 

Deidre Woollard: The other thing I wanted to discuss too, because I think this connects as well is the growth in life sciences this year. Life sciences has just gotten incredibly huge. We’re seeing more and more companies create funds. I was reading earlier about the Breakthrough Life Science Property Fund, which just got funded for a billion dollars. That was a joint venture formed in 2019 by Tishman Speyer and Bellco. They’re going to be investing in things. We’ve seen Ventas, which you mentioned earlier, make moves, they acquired a billion-dollar portfolio of life science properties in the San Francisco area. That’s one area I think has grown. Is it this year’s industrial? I feel like it is.

Matthew Frankel: It is. Life science properties, before this, have been the realm of office REITs, because they’re technically office buildings. When you think about the type of real estate, there’s no medical procedures usually being performed in them or anything like that. Like Alexandria Real Estate (NYSE:ARE), so an office REIT that owns a lot of life science properties that you’ve mentioned before on the show. But life science, one, it’s a nice differentiator. Two, it’s a nice growth market. These properties tend to be in some of the most valuable and desirable areas in the country. San Francisco has a large concentration of life science properties. The Boston area is another big market for life science. Life science, it’s a big growth market. It’s a growing need. It benefits from the same healthcare trends, the aging population specifically, that are helping the rest of real estate. In simple terms, older people take medicine more. [laughs] There’s going to be more of a need to develop therapeutics and deal with conditions that affect the elderly more as the population ages, and there’s, like you’ve mentioned, there’s a ton of money being poured into, the COVID vaccine is not what we’re talking about here. There’s tons of money being pumped into pharmaceutical research and development and medical devices and things like that. This is a long tail growth market that I think is just starting to scratch the surface as far as healthcare rates are concerned.

Woollard: Yeah, and it’s not a COVID-19 trend, but I would say, it’s a COVID-19 awareness trend, is that we’re just all much more aware of the value of life science and why we need to keep putting money into life science and what it’s going to mean for different treatments with all the different diseases. But I think the other thing that’s really interesting too is, is there a potential for it? Because you can’t do life science work at home. It’s not like office stuff. One of the things that I’ve heard recently talking about San Francisco or Cambridge, Massachusetts or some of the other markets that had, are heavy tech centricity, biotech field, then kind of ends up being the saving grace for some of those office leases in trying to make those spaces more life science friendly because those businesses, they really can’t be remote.

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