Life Sciences / Lab Feasibility: Conversion vs Ground-Up Economics

Office-to-lab conversion project in Thousand Oaks, California, showing a life sciences building retr

Introduction

Institutional investors, developers, and consultants in the life sciences real estate sector are increasingly weighing conversion vs. ground-up development as they strategize to deliver much-needed lab space. With strong biotech growth but also recent market headwinds, a feasibility framework is essential to compare the economics of converting existing buildings into labs versus building new ground-up facilities. This report uses a structured feasibility framework – evaluating capital costs, timelines, regulatory hurdles, market demand, and exit yields – to guide decision-making. It also provides a market outlook for Boston, San Diego, and Los Angeles, highlighting supply-demand trends, notable transactions, and pipeline constraints in these key clusters. High investor interest in life sciences and the rise of conversion feasibility analyses reflect a market seeking the most efficient path to satisfy demand for lab space.

Conversion vs. Ground-Up: Feasibility Framework Overview

The choice between converting an existing building (often an office or industrial property) to lab use versus constructing a new purpose-built lab facility hinges on several factors. During the pandemic-driven boom, lab conversions surged – at one point accounting for over 40% of new lab supply in 2021 – as developers raced to meet near-zero vacancies. Even as the market cycle has turned (with higher vacancies by 2024 in some cities), feasibility frameworks for conversion remain central to strategy, especially given the glut of underutilized offices. Owners and investors now routinely assess buildings for lab retrofitting potential as part of portfolio strategy, balancing cost and speed advantages of conversions against the design flexibility and scale of ground-up projects. Below, we compare key dimensions of feasibility:

• Capital Expenditure ($/SF) – Upfront costs for conversion vs new construction

• Timeline to Delivery – Speed to bring lab space to market

• Regulatory & Zoning Complexity – Entitlements and code considerations

• Market Absorption & Demand – How each approach aligns with tenant demand and leasing dynamics

• Exit Yields & Investor Appetite – Differences in returns and investor perceptions

A comparative summary table is provided after the detailed analysis, juxtaposing metrics for conversions versus ground-up developments.

Capital Expenditure Benchmarks ($/SF)

Converting an existing structure to lab use can significantly reduce capital expenditures per square foot compared to ground-up construction. Estimates suggest office-to-lab conversions cost on average about $300 per square foot (including tenant improvements). In practice, conversion costs vary with the building’s condition and lab specs – basic lab retrofits might range $300–$600/SF, whereas specialized facilities (e.g. those requiring clean rooms or vivariums) push higher. Industry experts note that a conversion can save at least 50% in cost vs. new development if the existing building has suitable bones. Key factors driving conversion cost include upgrading HVAC, electrical, plumbing, and structural load capacity to meet lab standards.

Ground-up lab developments require substantially higher investment. Construction of a new life sciences building in top markets runs roughly $675–$1,200 per SF (core and shell), and that’s before lab interiors are fitted out. Laboratory fit-out – installing specialized lab infrastructure and finishes – typically adds another $300–$650 per SF. In total, ground-up lab projects often exceed $1,000–$1,800 per SF in all-in costs in premier clusters. This is notably higher than standard office construction (roughly $600–$850/SF for core/shell) due to the robust mechanical, electrical, and plumbing (MEP) systems labs require. High-efficiency ventilation, 100% outside air systems, backup power, vibration-resistant structure – these add cost but are non-negotiable for lab functionality.

Despite the big price tag, new builds can incorporate state-of-the-art features and maximize rentable lab area (no need to compromise with an existing layout). Investors have been willing to foot these costs in strong markets because lab assets command premium rents and occupancy. For example, lab space can achieve 1.5× to 2.5× the rent of office space in the same location, supporting valuations that justify the higher construction cost. Indeed, the life sciences sector’s growth and resilience (labs can’t go remote) have attracted many institutional investors, who saw 11%+ annual rent growth and low vacancies in 2021 at the peak of the boom. In short, conversions offer a cheaper per-SF solution (crucial if capital is constrained), whereas ground-up projects demand more capital but yield custom-built facilities positioned as trophy assets.

Timeline to Delivery

Time is often money in real estate, and here conversions hold a clear advantage. Reusing an existing structure can dramatically shorten the development timeline. Much of the building’s envelope and structure is already in place, so work focuses on interior reconfiguration and systems upgrades. In practice, an office-to-lab conversion might take on the order of 18–36 months to deliver space, depending on scope. In fact, experts note that in high-barrier markets like California, using an existing building can cut total project duration from “five to seven years to two to three years”. This acceleration comes from bypassing lengthy ground-up processes – the site is already developed and, often, basic utilities and egress are in situ.

Ground-up developments, by contrast, require a longer lead time – often 4–6+ years from inception to occupancy (with the higher end in markets with tough permitting or large, complex projects). Starting from scratch means securing entitlements, designing from the ground up, conducting environmental reviews, and then a full construction cycle. For specialized lab projects (e.g. manufacturing plants), timelines can stretch further; some large biomanufacturing buildings have taken up to 10 years to complete, prompting government initiatives to streamline approvals.

The speed-to-market advantage of conversions can be critical when tenant demand is urgent. In the recent boom, lab tenants were growing so fast that many “didn’t have a year or two to wait for space to get built out”. Conversions allowed developers to deliver “space ready to go” more quickly. This is particularly valuable in emerging or undersupplied markets (as we’ll see with Los Angeles) where companies need lab space immediately. Faster delivery not only means quicker revenue generation (rent starts sooner), but also reduces the risk of market conditions shifting unfavorably during the development period. In today’s environment, with interest carrying costs high, a shorter project timeline also mitigates financing risk.

Of course, not every building is a candidate for rapid conversion – unforeseen structural retrofits or code upgrades can introduce delays. However, many municipalities are supporting faster lab conversions through streamlined permitting (as discussed below), further boosting the timeline edge that conversions hold over ground-up projects.

Regulatory and Zoning Complexity

Regulatory and zoning considerations can make or break a project’s feasibility. Here again, conversions often benefit from a simpler path, though not without caveats. If an existing building’s zoning already permits laboratory or R&D use (or can be tweaked), a conversion might avoid protracted land use battles. For instance, in Los Angeles County, local leaders have been streamlining permitting and revising general plans to allow more bioscience lab use in commercial zones. Conversions can sometimes be processed with “over-the-counter” approvals for interior work, rather than full discretionary reviews, especially if the exterior footprint isn’t changing dramatically. As one architect notes, reusing structures can shrink approval timelines from 2–3 years to a few months in favorable cases. This agility is a key advantage in high-barrier markets (think Boston, San Francisco, LA) where ground-up projects face intense scrutiny.

However, conversions do face regulatory hurdles of their own. The building must be brought up to current code for lab occupancy – including fire/life-safety, seismic, and specialized lab code requirements. Older structures might need significant upgrades (e.g. adding generators, fire suppression, or floor reinforcements) to comply. Zoning wise, some office districts don’t outright permit laboratory use due to concerns like chemical storage or ventilation exhaust. In such cases, even a conversion might require a variance or special permit. The good news is many jurisdictions are recognizing the public benefit of life science development (job creation, innovation) and are more inclined to grant approvals or rezone for labs.

Ground-up developments typically face greater regulatory complexity from the outset. A new lab project must secure all land use approvals, often undergoing environmental impact studies, community feedback processes, and adhering to stringent parking, traffic, and design requirements. For example, a greenfield lab campus might need rezoning if the land was industrial or commercial. High-intensity lab uses can trigger concerns (hazardous materials, neighborhood fit), which lengthens entitlement timelines. That said, a purpose-built lab can be designed to exactly meet code from Day 1, whereas a conversion sometimes has to make compromises (for instance, using existing elevator shafts or floorplates that aren’t perfectly ideal for labs).

In summary, conversions tend to have fewer zoning hurdles and faster permitting – especially in markets proactively encouraging them – but must navigate building code upgrades. Ground-up projects have full control to meet lab specs but endure a longer, costlier entitlement process. Both routes require close coordination with local authorities, yet conversions often reach the finish line faster on the regulatory track.

Market Absorption and Demand Dynamics

Matching supply to demand is a core feasibility question: Will the project lease up? On this dimension, the conversion vs. new-build decision often hinges on market context. Conversions, which are usually smaller-scale or phased, can be better aligned with incremental demand – delivering, say, one or two floors of lab space at a time. This can mitigate absorption risk. In a hot market with a shortage of lab space, a converted building can quickly tap pent-up demand. A prime example is Greater Los Angeles, which is experiencing an “unusual case of demand outstripping supply” in lab space. LA’s life science availability is a scant 3% (only ~306,000 SF of space), so any new supply – whether a conversion or new build – is likely to be snapped up. Conversions, being faster, can seize that demand early. JLL reports that Los Angeles/Orange County had twice as much demand for life science space as supply in 2024, fueling rent growth over +6% in H1 2024 even as national lab rents fell. In such scenarios, conversions directly address the market absorption challenge by quickly providing space that growing biotech firms desperately need.

Ground-up projects, conversely, typically add large blocks of space in one go. In bull markets, this is fine – tenants will pre-lease or rapidly fill new campuses. But in softer markets, a big delivery can face slow absorption, leaving a developer with high vacancy carrying costs. The past year has illustrated this in markets like Boston/Cambridge and San Francisco, where a wave of new deliveries hit just as demand cooled. Those two top clusters now have availability rates around 30% – a dramatic oversupply situation. Boston, with ~49.5 million SF of inventory, now has roughly six times more supply than demand at present. Likewise, San Diego’s availability has climbed to ~26%. Much of this is due to speculative ground-up development launched during the funding-fueled boom of 2020–2022. As these big projects complete, absorption has lagged – JLL noted that tenants are taking much longer to make decisions amid venture funding pullbacks. New buildings delivered vacant have pushed vacancy to record highs in the top three clusters (Boston, SF, SD). This dynamic puts ground-up economics under pressure in the short term: it may take several years for absorption to catch up in oversupplied markets.

Conversions can be a more demand-responsive strategy. Developers often target conversions in clusters where fundamentals are still tight or in emerging submarkets where a little new supply goes a long way. Additionally, because conversion projects are often smaller scale, they can be more easily paused or adjusted if the market shifts during the project. Some developers have indeed tapped the brakes on speculative ground-up construction, waiting for pre-leases before proceeding. Conversion activity itself has pulled back from its 2021 peak – it fell from 35% of all lab projects in early 2022 to about 20% in 2024 – as developers reassess demand. But importantly, the long-term demand drivers for life sciences (aging population, biotech innovation, reshoring of pharma manufacturing) remain robust. A whitepaper by Hines forecasts 33–50% growth in life science space demand over the next decade (45–65 million SF of new demand). Markets will eventually re-balance; in fact, recent data shows lab space demand picking up in late 2024 after a soft stretch.

In summary, conversions excel at quickly delivering space in undersupplied or rapidly growing niches, thereby capturing demand with lower lease-up risk. Ground-up developments offer scale and long-term positioning but carry higher absorption risk if timed poorly (as current oversupply in Boston/SF demonstrates). Successful developers carefully study market absorption dynamics – venture funding trends, tenant pipelines, and cluster-specific supply – when choosing between conversion or new construction.

Exit Yields and Investor Appetite

Ultimately, investors care about returns and exit strategy. Both conversions and ground-up labs can yield attractive outcomes, but there are some differences in exit cap rates and risk profile. Historically, stabilized, Class A life science properties in top clusters have traded at very low cap rates – often in the 4% range at the peak of the market – reflecting fierce investor appetite for this asset class. Ground-up developments, if executed and leased successfully, tend to fall into this “core” category: brand-new lab campuses with credit tenants can command premium pricing (low yields) due to their long-term income security (lab tenants often sign 7–15 year leases). Even in the current environment, well-leased trophy lab assets are sought after by institutional investors (REITs, life science funds, etc.), although cap rates have risen in the past year with higher interest rates. Investors are underwriting more conservatively, and some estimate life science cap rates have expanded by on the order of 100–150 basis points from their lows in 2021–2022, mirroring broader market trends. Still, relative to traditional offices, labs remain highly favored. One reason: labs boast far stronger tenant retention and occupancy prospects, as most R&D work cannot be done remotely. This resilience underpins strong investor appetite.

Conversions are often viewed as “value-add” investments – typically involving buying an undervalued office, investing capex, leasing at higher lab rents, then exiting at a profit. Because of this higher initial risk, conversion projects might target a higher going-in yield or require a greater spread. However, once a conversion is stabilized (fully leased as lab space), the exit cap rate can approach that of a purpose-built lab of similar quality. In other words, a successful conversion can be sold at a cap rate not far off from new construction, capturing significant value uplift. For example, in the Boston area, some converted lab buildings in recent years traded for $1,700–$1,800 per SF at strong valuations. The key is that the converted asset meets institutional quality standards in the eyes of buyers (proper floor loads, HVAC capacity, etc.). If not – if the conversion has inherent limitations – investors may discount the asset, leading to a moderately higher cap rate versus a new peer.

Investor appetite today is nuanced: capital is abundant but selective. Many experienced life science developers and investors are actively looking for conversion opportunities, especially in top clusters, as a way to enter markets at lower basis. At the same time, big players like Alexandria Real Estate (the largest life science REIT) are pruning portfolios – for instance, selling older single-tenant lab properties to recycle capital into modern multi-tenant campuses that attract today’s tenants. This suggests that newer, highly amenitized lab assets are valued at a premium, whereas older or makeshift labs (even conversions) might trade at a discount unless upgraded.

In short, both conversions and ground-up projects can achieve compelling exits, but their risk/return profiles differ. Conversions might offer a higher yield on cost and IRR if successful (due to the arbitrage of converting lower-value space to higher-value use), whereas ground-up developments offer core asset stability if leased (appealing to the most conservative investors). In the current climate, with interest rates high, investors are scrutinizing life science deals carefully – but the sector’s long-term growth story and rent premiums continue to draw significant capital. As the market stabilizes, we expect cap rates for quality lab assets (whether converted or new) to compress again, given the wall of capital targeting life sciences.

Conversion vs. Ground-Up: Comparative Metrics Summary

The following table summarizes key metrics and considerations comparing lab conversions and ground-up lab development:

Feasibility Metric	Conversion (Office/Industrial to Lab)	Ground-Up Development (New Lab Build)
Capital Expenditure  (Total Development Cost)	Lower cost: Often ~$300–$800 per SF (including lab fit-out) depending on existing building condition. Saves on structure/shell costs – estimates suggest ~50% cheaper than building new. Significant investment still needed for MEP upgrades and code compliance.	Higher cost: Often ~$1,000–$1,800+ per SF in top markets (e.g. $675–$1,200/SF core & shell + $300–$650/SF lab interior). Purpose-built labs require heavy upfront capital for specialized infrastructure (HVAC, power, etc.).
Timeline to Delivery	Faster: Can deliver in ~1.5–3 years. Uses existing structure to shortcut construction and some approvals. In high-barrier markets, can cut project duration from ~5–7 years to ~2–3 years. Allows quicker occupancy to meet immediate demand.	Slower: Typically 4–6+ years for ground-up (longer if large or complex). Full entitlement, design, and construction cycle needed. Some biotech manufacturing facilities have taken ~10 years from planning to operation. Greater exposure to market shifts during development.
Regulatory & Zoning	Generally simpler: Often fits within existing zoning (if lab/R&D use allowed) and leverages existing entitlements. Municipalities may fast-track lab conversions (e.g. over-the-counter permits). Must still retrofit building to meet lab codes (fire, structural, hazmat). Some older assets require variances or significant code upgrades (e.g. seismic, ventilation).	More complex: New entitlements and zoning approvals usually required. Subject to full design reviews, environmental impact assessments, and community input. Must meet all modern lab code requirements by design. Greater regulatory risk and longer approval timelines, especially in dense urban markets.
Market Absorption  (Lease-up dynamics)	Incremental supply: Conversions often smaller-scale or phased, aligning with incremental demand. Can fill urgent needs quickly in undersupplied markets (e.g. LA’s 3% vacancy – conversions can immediately capitalize on unmet demand). Lower vacancy risk per phase. In softer markets, conversion projects can be paused if needed.	Large block supply: Ground-up projects deliver big chunks of space; profitable if met with strong demand, but riskier if demand falls short. In 2024, oversupply in Boston/SF (30%+ availability) from speculative new builds led to rent declines. Absorption can take time if multiple projects flood the market simultaneously. Pre-leasing is key to mitigate risk.
Exit Yields & Investor Appetite	Value-add appeal: Higher initial yield on cost due to lower basis; upon stabilization, converted labs can approach core valuations if done to high standards. Lab rents are ~1.5–2.5× office rents, bolstering value. Investors with life science expertise are actively seeking conversion opportunities in top clusters. That said, buildings with inherent limitations may trade at slightly higher cap rates. Overall investor interest is high for well-leased lab conversions, but financing is more selective in 2024.	Core asset appeal: New Class A lab facilities in prime locations attract institutional investors and can trade at low cap rates (mid-4% range at peak market). Provides long-term, stable cash flow (lab leases ~7-15 years). Investor appetite remains strong for trophy lab assets, though cap rates have risen off historic lows amid high interest rates. Established players (REITs, funds) favor modern campuses and may pay a premium for best-in-class new builds.

Market Shortlist: Boston, San Diego, Los Angeles

To ground this feasibility discussion in real-world context, we examine three important life science clusters – Boston (Cambridge), San Diego, and Greater Los Angeles – each with different supply-demand dynamics in late 2024/early 2025. These market snapshots highlight how conversion vs. ground-up strategies are being applied (or avoided) based on local conditions, including recent trends, notable transactions, and pipeline constraints.

Boston: Mature Market, Recent Oversupply

Boston-Cambridge is the nation’s most established life sciences hub, home to biotech giants and top research institutions. It boasts roughly 50 million SF of lab inventory, but after years of breakneck expansion, the market hit a wall in 2023–2024 with oversupply. Availability spiked to about 27–30% – a stark shift from virtually full occupancy a few years prior. This glut was driven by a development wave: new state-of-the-art lab buildings delivered just as venture capital funding slowed and big pharma pulled back post-pandemic. Landlords have had to get aggressive on leasing, and Boston led major markets in rent declines in the first half of 2024 (rents down roughly 8% in H1).

In this context, ground-up projects in Boston have largely paused unless significantly pre-leased or specialized. Some planned developments were put on ice or even re-evaluated for other uses as the vacancy climbed. Conversion opportunities still exist – especially for well-located obsolete offices in Cambridge or along Route 128 – but they face competition from the surplus of brand-new space. Notable recent transactions include investors selectively buying or recapitalizing top-tier assets at adjusted pricing. For example, Alexandria Real Estate (ARE) has been active in Boston: it’s shifting strategy by selling some older assets and doubling down on its premier campuses. This suggests that, even for a seasoned player, quality and amenities win in a soft market. Pipeline constraints are evident: with so much space vacant or under construction, very few new projects will start in the near term. Absorption must catch up. Industry experts predict it could take several years to work through the current surplus in Boston.

Despite near-term challenges, Boston’s fundamentals (talent, funding, pharma presence) remain unparalleled. This market is likely to recover once the biotech funding cycle turns up again. When it does, conversion vs. new-build decisions will resurface: conversions might target older lab buildings or offices that can be modernized faster to meet renewed demand, while new construction will proceed more cautiously, with an eye on pre-leasing. For now, Boston exemplifies a market where feasibility frameworks tilt toward caution – focusing on absorbing existing supply and favoring only the most compelling new projects.

San Diego: Strong Cluster Navigating a Surge

San Diego is the #3 U.S. life science cluster by size, with about 27 million SF of lab/R&D space centered around Torrey Pines, University Town Center, and other submarkets. San Diego enjoyed very tight conditions through 2021 (vacancies near zero), which prompted both new construction and conversions. Between 2019 and 2024, local life science firms raised nearly $20 billion in VC funding, fueling expansion. However, like Boston, San Diego saw vacancy rise in 2023–2024 to the highest level in years – recent reports put vacancy around 17–23% and availability as high as 26%. A wave of new deliveries (over 1.5 million SF under construction as of late 2024) coincided with a demand pause, testing the market’s depth.

Even so, San Diego’s downturn appears less severe than Boston’s. Rents only dipped ~4–5% in early 2024, and there are optimistic signs: big pharma players like Bristol Myers Squibb and Eli Lilly have established or expanded sites in the area, and biomanufacturing demand (for making therapies) is rising, providing an alternate driver aside from pure R&D lab space. Developers in San Diego are still moving forward on select projects. In fact, local experts expected several new life science projects to break ground in 2024 despite the vacancy – a testament to long-term confidence. Many of these are build-to-suit or situated in innovation hubs with strong institutional support (e.g. near UC San Diego or research institutes).

Conversions have also played a role in San Diego’s growth. Numerous older office buildings in Sorrento Mesa and UTC were converted in recent years, and some industrial/flex spaces in places like Carlsbad have been repurposed for biotech. The economics were attractive when rents were surging: at one point, conversion yields were compelling given lab rent premiums. Going forward, with plenty of new vacant lab product available, conversion projects will need to be very strategic – targeting niches like incubator space or unique locations that new construction hasn’t covered. San Diego’s pipeline is moderating; after 2025, planned deliveries drop off, which should help the market regain equilibrium.

In summary, San Diego remains a fundamentally strong cluster with a highly skilled talent base and steady innovation. The current oversupply is likely a temporary imbalance. Developers and investors here are balancing ground-up projects (often backed by large tenants or institutional partnerships) with opportunistic conversions of well-located properties. The feasibility calculus in San Diego right now likely favors projects with clear demand visibility – whether conversion or new build – as the market works through the recent surge of space.

Greater Los Angeles: Emerging Hub with Shortage of Lab Space

Greater LA (including Orange County) has roughly 12 million SF of life science inventory – only a fraction of the big biotech hubs. Yet demand is on the rise, thanks to world-class research institutions (Caltech, UCLA, USC), a growing biotech startup scene, and the migration of some pharma activities to Southern California. As of late 2024, LA’s lab space availability was an incredibly low 3% – the lowest among the top 10 markets. In raw terms, just ~300,000 SF was available in the entire region. This supply-demand imbalance has meant LA is “defying national declines”: while other markets saw vacancies and sublease space balloon, LA’s tight inventory drove rent growth of +6% in the first half of 2024.

The challenge for LA is creating new lab space quickly in a market historically dominated by entertainment, media, and tech offices. Many landlords and investors are now evaluating conversion feasibility for well-located assets – be it converting office buildings in places like Pasadena or Culver City, or even repurposing industrial buildings. Local officials are encouraging this: for example, El Segundo updated its plans to allow more lab and flex uses, smoothing the path for conversions. A notable conversion underway is by Graymark Capital in Thousand Oaks (a biotech-heavy submarket): they are transforming a former corporate office into a modern lab facility to capture life science growth in that area. The largest project in the pipeline is the UCLA/Westside Pavilion project (pictured above), where a defunct shopping mall is being redeveloped into a 700K SF research hub for UCLA and other tenants. That exemplifies how creative reuse is central to LA’s lab expansion – a pure ground-up campus of that size in West LA would be near-impossible due to land and zoning, so conversion is the solution.

Currently, no new ground-up speculative lab construction is underway in LA – a stark contrast to other markets. This is partly due to the lack of existing lab stock (developers are still educating themselves on LA’s bioscience potential) and partly due to caution. Instead, activity is tilted towards conversions and a few build-to-suit projects. For instance, Amgen is investing $600M in a new R&D facility in Thousand Oaks (its hometown) – a ground-up project but for an owner-user. Investor appetite for LA life science real estate is high because of the growth story and lack of competition: even with economic headwinds, tenants leased 300,000 SF in the first half of 2024 in LA, outpacing any give-backs. Active tenant requirements exceed 1 million SF, particularly among smaller biotechs needing 5–15K SF spaces.

The pipeline constraint in LA is the limited number of suitable existing buildings and sites. Not every old office can become a lab – structural attributes (ceiling heights, floor loads) eliminate some. And ground-up development faces hurdles of land cost and entitlement in a dense region. Therefore, LA’s growth will rely on targeted conversions (like Pasadena research parks, or Orange County tech buildings being lab-fitted) and public-private efforts to unlock sites. The good news is local governments are partnering with industry to facilitate this. In sum, Los Angeles represents a case where conversion feasibility frameworks are crucial: stakeholders are actively identifying which assets can be turned into lab space to meet urgent demand, rather than waiting a half-decade for new construction. The investor sentiment is bullish – seeing LA as a high-growth cluster where early entrants can achieve premium returns given the supply-demand imbalance.

Strategic Outlook

The life sciences real estate sector remains a favored arena for investors and developers, but success demands navigating a complex feasibility equation. The conversion vs. ground-up decision is central to this equation, and it must be made with a keen understanding of capital economics, timing, regulatory environment, and local market dynamics. As seen, conversions shine in scenarios requiring speed and capital efficiency – they are often the best tactic to capitalize on immediate demand or repurpose struggling office assets in a work-from-home era. Ground-up developments excel when long-term demand is clear and an organization needs a bespoke, cutting-edge facility – these projects shape the skylines of clusters like Boston and San Diego and will remain vital for the next generation of lab space.

Investors are incorporating feasibility frameworks into their market strategies more than ever. This means rigorously evaluating buildings for lab conversion potential (structural grid, loading, location near talent), running side-by-side pro formas for conversion vs. new build, and considering hybrid approaches (partial demolition with new additions, phased conversions, etc.). The high interest in life science real estate has not waned – if anything, the current market lull is seen as an opportunity to strategize and reposition for the coming upswing. As JLL’s research suggests, the question is “when, not if” the sector resumes robust growth. When that time comes, those who have mastered conversion and development feasibility – deploying the right strategy in the right market at the right time – will be best positioned to reap the rewards in this dynamic, innovation-driven sector.

Sources: 

High-quality industry reports and news sources including Loan Analytic database, JLL, CBRE, ULI Urban Land, and Cushman & Wakefield.