Biotech real estate remains popular for developers, but are tenants coming?
Hundreds of thousands of new square feet of flex space is expected to hit the Boulder Valley and Northern Colorado real estate markets — particularly along the U.S. Highway 36 corridor — but experts wonder whether the demand for these facilities will materialize.
“We’re not seeing much life-science demand,” WK Real Estate broker associate Andrew Freeman told BizWest in May. Flex-industrial leases are more often being snatched up by aerospace companies and defense contractors.
The region — led by Boulder, which has a long history of supporting pharmaceutical and medical-device companies, many of which have ties to the University of Colorado — has emerged in recent decades as a life-sciences hub, but in early 2024, headlines were dominated by high-profile departures from the local market.
Biotechnology was one of the few industries that was relatively unaffected from a financial standpoint during the pandemic.
In late April, pharmaceutical giant Pfizer Inc. (NYSE: PFE) indicated that it will shut down its research and development facility in Boulder in the coming months.
The facility at 3200 Walnut St., which Pfizer took over in 2019 as part of its $11 billion acquisition of Boulder-based oncology company Array BioPharma Inc, has focused mainly on oncology drug research and employs about 300 workers, many of whom are expected to be laid off.
Compared with other life-science hubs such as the San Francisco Bay area or Boston, “Boulder is a small market,” Becky Gamble, CEO of the brokerage Dean Callan & Co., told BizWest in an April interview about the state of the Boulder Valley’s commercial real estate landscape. “So when you have a significant deal size or a notable tenant that comes into the marketplace, that can change the dynamics pretty quickly.” The same concept applies when a major tenant such as Pfizer leaves the market.
While Pfizer’s decision to stop R&D operations in the city is a blow, especially for the laid-off workers, it doesn’t necessarily reflect a diminishment of Boulder’s growing reputation as a national life-sciences hub, Boulder Chamber president John Tayer told BizWest in April.
“In the Boulder market, one of our great strengths is the wide diversity of both R&D and manufacturing” operations in the life-sciences sector, he said, and laid-off workers could be quickly recruited by other local biotech companies.
“It obviously depends on their specific skills and research focus, but we see other companies continue to grow their operations here,” Tayer said.