Life Sciences Market Trends Q4 2023

by Dennis Kirkpatrick and Mike Marston

Two people sitting outside a laboratory work area.

Despite economic and cautionary capital investment, the life sciences industry outlook remains strong.

The lab real estate market continues to be regionally challenged, especially regarding startups, but is underpinned by “Big Pharma” consolidation and growth plans across the country. The current lab space inventory built and in construction is creating increased competition and a surplus in supply, increased tenant leverage, and reduced rental rates.

The downstream manufacturing sector remains hot driven by supply chain resilience, in-shoring and biopharmaceutical drug approvals. The market continues to see investment in both in-house and contract manufacturing across the globe with hot pockets in the Southeast and Northeast. All this combined with an environment ripe for M&A, the outlook remains strong for the foreseeable future.

What We Are Seeing

Although we are seeing some positive shifts toward more historically normal escalation and improvements in select supply chain lead times, mitigating volatility of price and schedule uncertainty will remain a priority.

Ever-increasing demands and focus in Life Sciences on speed to market, sustainable strategies, safer installations, and competition for qualified labor, particularly on complex large-scale or more remote projects, are driving alternative approaches to project delivery and design.

Alternative Delivery Approaches

Design-assist and design build subcontracting methods are two nontraditional strategies increasingly being utilized while still providing best value market competitiveness. Mitigating long lead schedule risks, optimizing buying strategies, cost informed decisions, resource commitment, prefabrication planning, early coordination and constructibility resolution are some of the benefits of a more integrated collaborative team approach. These more integrated project approaches ensures greater opportunities to meet a project’s goals for complex Life Sciences work.

Environmental Stewardship

Sustainability has become an increasingly important trend in the Life Sciences market as organizations and consumers prioritize environmental and social impacts. Our customers are exploring ways to reduce their impact on the planet and enhance their environmental stewardship by:

Adopting Green Lab and Green Chemistry Practices
Emphasizing Ethical Research Practices
Using Renewable Energy
Embracing principles of Circular Economies and Sustainable Supply Chains
Targeting Net Zero and Zero Carbon

Predictability and Speed to Market

In an age where schedule predictability and speed to market are more important than ever, prefabrication continues to be a solution that our Life Sciences customers come to expect. From traditional and non-traditional skids, modular pipe racks, modular cleanroom systems, central utility plants and electrical rooms,controls rooms to panelized walls and ceilings, many prefabrication avenues can be explored. Not all of the methodologies are appropriate for all projects, but moving labor offsite can pay dividends by:

Creating safer working environments
Construction activities taking place concurrently
Tempering of craft labor availability issues in hot construction markets
Reduction in craft labor rates and hours in high-wage rate locations
Reduction in sitewide General Conditions and Project Requirements
Streamlining testing, passivation, commissioning and validation timelines

How Can We Help?

Our dedicated in-house subject matter expertise, capabilities, and experience uniquely allow us to deliver Life Sciences projects with greater predictability under today’s demanding market needs.

Prefabrication

Prefabrication capability to build more safely, save time, money, and meet the challenge of labor shortages while constructing high quality facilities to enhance your brand with more detail and precision than traditional construction methodologies.

Sustainability

Our teams are supported by global sustainability resources that can evaluate opportunities to optimize a project’s sustainable goals throughout the project lifecycle. Our corporate commitment to sustainable construction practices can further reduce a project’s environmental impact.

Process Equipment Procurement & OES

Our process equipment procurement team can provide purchasing services that will mitigate schedule, logistical, and coordination risks, as well as optimize skidding solutions that best fit a project’s execution plan. Combined with the power of DPR’s OES (Organized Efficient Services) organization we provide a one stop shop for construction supplies and requirements.

Systems Expertise

We have technical experts in MEP, process, and I&C/automation systems that allow us to provide critical early design and cost inputs and facilitate alternative procurement methods that ensure more predictable outcomes for schedule, cost, and constructibility.

Looking for more general market insights? Take a look at our full market conditions report of Q4 2023. Or take the full report with you by downloading the PDF.

Photo: Ryan Gobuty | GENSLER