By: Dana Udumulla

Key Points 

• Real estate has undergone a radical change since COVID-19 surfaced. Life sciences real estate has grown astronomically in demand.
• Corresponding properties assist in the progress of biotechnology, pharmaceuticals, life system technologies, medical devices, nutraceuticals, diagnostics, and more.
• You can leverage your Self-Directed IRA (SDIRA) to assist in funding life sciences real estate and potentially earn significant revenue in return.

Life sciences real estate is pivotal in giving researchers and developers the chance to find transformative solutions to medical dilemmas. As the world’s population increases and health becomes a focal point for many, the scientific industry has only further grown. Life sciences real estate properties are proving to be a lucrative investment, and there’s no time like the present to join its projected attainment with your Self-Directed IRA (SDIRA). The properties relevant to these endeavors must meet specified criteria, and so we’re here to unveil our findings on life sciences real estate.

Clarification: What is Life Sciences Real Estate?

When most consider real estate investments, they usually think of residential properties and rarely of buildings designated for life sciences. Regardless, this generally booming alternative investment refers to properties that contain both a laboratory and an accompanying office space. Both components are essential for experimentation, trials, and analyzation through lab work and book studies. Generally, these buildings are constructed from scratch or are converted from industrial or office buildings.  

Depending on the precise scientific research field, the necessary equipment and building requirements will vary. Because of this, each life sciences real estate property is created with a very specific science in mind, meaning lease arrangements are seldom interchangeable. Researchers in another area of science could need an entirely different setup, and so new tenants may trigger a substantial modification period to the space. This only spreads the urgency of attracting investors and getting more appropriate buildings into development. 

Some of the life science industries include: 

• Pharmaceuticals 

• Biotechnology 

• Medical Devices 

• Diagnostics 

• Nutraceuticals 

• Cosmeceuticals 

• Life System Technologies 

• Contract Research Organizations (CROs)/Contract Manufacturing Organizations (CMOs) 

Identification: What Do Life Sciences Real Estate Properties Require?

As forementioned, life science workspace blueprints contain considerable distinctions. To start, the location of said buildings is fundamental to its possible success. Boston, Cambridge, San Diego, San Francisco, and Seattle possess the largest medical hubs and purpose-built research and development facilities. Scientists typically hold the belief that closeness to major hospitals, universities, biotechnology companies, capital sources (banks, VCs, etc.), and neighboring research institutions leads to better convergence opportunities. In the life sciences real estate realm, these spots are generally called clusters.

Startups and small businesses tend to be the scientists inhabiting life sciences real estate. As this work is dire, they usually seek to recruit additional qualified employees. Some may feel enticed by the idea of joining a team if they’re offered an attractive package, including workplace amenities. This can involve niceties such as elaborate dining areas, ample parking, landscaped surroundings, and recreational areas such as a break or game room.  

Furthermore, these buildings must convey functionality. Scientific enterprises need their respective labs to have the proper buildout for their mission. Determined by their work, life sciences real estate could call for a dry lab, wet lab, chemistry lab, or biology lab. Each lab has their own set of government safety standards to adhere to. Many life science startups prefer their labs and office space to be adjacent, which can result in needed space customization. 

Granulation: Expanding on the Requirements

When it comes to developing these niche buildings, it takes much more precision and specification than a standard real estate project. These components are considered crucial for adequate life science real estate construction: 

1. Ventilation Systems 

Maintaining air quality and controlling contamination are of the upmost importance. Ensuring a proper ventilation system is installed throughout can help keep researchers safe by keeping temperature, fumes, and odor at bay. 

2. Means of Storage and Disposal of Hazardous Materials 

When not handled appropriately, some of the materials used in labs can result in harmful occurrences to both individuals and the environment. Designated areas must be established for storing and disposing of hazardous materials and waste.  

3. Safety Systems 

Safeguarding scientists’ wellness and safety is imperative in these conditions. Employing eyewash stations, emergency showers, and measures to contain accidental spills is critical in meeting OSHA and EPA regulations. 

4. Vibration Control

Some life sciences real estate may house instruments that are sensitive to vibrations. Building designers and engineers must create an environment where the vibration levels are stable and consistent. Otherwise, variability may occur between experiments. 

5. Flow and Flexibility 

Scientists should be able to move about freely in their workspace. Moreover, floor plans and infrastructure should be curated to accommodate the evolution of scientific technologies and the need to reconfigure as things change. Flexibility and scalability can lead to smoother transitions as research further develops. 

Determination: Is Investing in Life Sciences Real Estate Beneficial?

As a Self-Directed IRA owner, you may move diligently and with discernment regarding your retirement savings. Real estate is one of the largest and most popular alternative assets to date, but when it comes to the specificities aligned with life sciences real estate, there may be some hesitation. While understandable, life sciences have provided evidence of possible expansion and are predicted by some to grow substantially over the coming years.

Not only is the human population increasing, but human life expectancy has risen drastically. This, and the surfacing of new diseases and ailments, generally do not showcase any signs of decreasing. As technological advancements continue to persevere, novel treatments are being identified. Since the mass outbreak of COVID19, scientists are also working tirelessly to prevent any similar occurrence from happening again. Over the last few years, the National Institute of Health have awarded over a hundred billion dollars in funding to life sciences, indicating that there’s much more work to be done. 

Tenants of life sciences real estate also tend to remain where stationed. This is due to the specificity their workspace demands. It’s highly unlikely that scientific startups will bounce around from location to location. Additionally, much of this work cannot be done remotely. It’s required that research be done within these suitable properties. With job growth predicted in the life science field, more and more scientists will need “housing” for their studies.   

It's also worth mentioning that life sciences real estate tends to be a low-risk investment. These properties typically have half the vacancy rate of other forms of real estate.  The industry has also been generally unaffected by recessions and market patterns, signaling that it has potential to endure.  

Resolution: Self-Directed IRAs and Life Sciences Real Estate are Complimentary

Self-Directed IRAs and life sciences real estate tend to blend smoothly. As SDIRAs are created with the intention of enriching your retirement, account holders tend to adopt a long-term investing mentality. This makes life sciences real estate an amiable choice, as this investment will likely earn stable and consistent revenue. Scientific discoveries have a delayed effect due to the time it takes to solidify treatments and solutions. This means you’re likely to reap the full fiscal reward later, perfectly entwining into your retirement. 

 As your earnings compile in your retirement account, they’ll be submerged by tax advantages. Self-Directed IRAs grant you with the opportunity to decide if you’d like your gains to grow tax-deferred (Self-Directed Traditional IRA) or tax-free (Self-Directed Roth IRA). Subsequently, real estate is generally uncorrelated with Wall Street products, signifying that its worth is not likely at the mercy of the ebbs and flows of the stock market. This equates to a diversified retirement portfolio, which can possibly hedge against your overall risk. 

Are You Interested in Possibly Property Prosperity?

Our Self-Directed IRA Specialists are well-trained in real estate among other alternative investments. Our goal is to educate you so that you can feel self-empowered during your self-directed journey. Schedule a free discovery call today and learn how you can potentially safeguard your savings for retirement!