The Future of Life Sciences Capital Projects Presents Risks and Rewards

The Future of Life Sciences Capital Projects Presents Risks and Rewards

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Recent headlines about a plateau in the life sciences real estate boom – citing the potential for overdeveloped clusters, increasing rates of layoffs, and rising vacancy rates – only reveal a partial picture of where the industry is and, more importantly, where it’s headed.

Despite certain headwinds, many signs point to a sector that will continue to need cutting-edge, efficient facilities. Some of the fastest growing life sciences jobs over the next decade include lab technicians, scientists, and other roles that demand the right spaces to innovate in. Aging populations worldwide will perpetuate demand for advanced treatments. The onshoring of active pharmaceutical ingredient manufacturing will push organizations to not only seek their next building location, but perhaps their next cluster.

To better understand the current and future state of life sciences capital project development, we recently commissioned a survey of over 300 project owners from across the U.S.

Graphic showing biotech, pharma, agtech, and cell and gene therapy breakout of respondents

Our findings highlight how complex and prone to risk these critical initiatives are—and the kind of support required to deliver them successfully.

Laboratory photo - 2023 State of Life Sciences Report Cover image

Growing Concerns Over Cost, Schedule Overruns

Capital projects are a vital steppingstone in life sciences organizations’ paths toward growth, but botched implementation can have material effects on their bottom line.

Nearly nine in 10 project owners agree that the design and construction of a new life sciences capital project can become a serious financial risk to their company if it goes over budget and schedule. In the current global economic climate, these risks are even more palpable.

Cost overruns, delays in permitting, and a lack of qualified contractors top project owners’ list of pain points today. A tight labor market, combined with severe delays for materials and appliances, are extending project timelines and squeezing budgets. While many of these factors are outside of project owners’ control, recruiting the right support has proven to alleviate certain challenges.

Eighty-eight percent of project owners report that having an owner’s rep who integrates every aspect of project delivery (from concept to operational readiness) is vital to the success of the project—citing cost control as the leading benefit.

Bold Ambitions for 2024 and Beyond

Even in such a turbulent environment, life sciences organizations are not shying away from kicking off capital projects.

Eighty-seven percent of survey respondents say beginning a new capital initiative is one of their company’s top priorities in the next six to 12 months. Biotech facilities are expected to be the most active for new construction over the next three years, as organizations race to find and commercialize sophisticated treatments.

New Capital Projects are a Top Priority in the Short Term
Circle graphic showing 87 percent of project owners say beginning a new project in the next 6 to 12 months

Looking further ahead, more than eight in 10 project owners report that their capital project goals will be more ambitious in 2024 compared to 2023—making it even more important to bring in expert partners to advise along the way.

Controlling the Controllables

Life sciences project initiatives are capital intensive, so seizing them (in the face of economic volatility), will require careful planning and thoughtful partnerships.

Download The 2023 State of Life Sciences Capital Project Development to learn more about project owners’ most pressing concerns and where they see owner’s reps having the greatest impact.

Ashley Chisholm, head shot

Ashley Chisholm is the director of marketing for 35 North. She is a data-driven marketer with nearly two decades of experience working in various areas of the healthcare and life sciences sectors – from research and clinical facilities to healthcare leadership consulting and end-to-end construction services.

Scott McEntee headshot

Scott McEntee is the founder of 35 North and serves as president and chief executive officer. He has 30 years of industry experience, including over $2 billion in construction experience, and is known for effective project governance and making the complex simple.