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LIFE SCIENCES

With thriving neighborhoods and more affordable real estate, Chicago is emerging as a life sciences hub.

Investment in life sciences was at an all-time high in 2021. As a result, demand is quickly growing for research and development space in Chicago which is emerging as a major life sciences market. Three experts in commercial real estate development, design and construction, shared their insights with Crain’s Content Studio on the trends that are shaping the future of life sciences in Chicago.

Life sciences companies are rapidly evolving, and they need spaces that can accommodate that. What factors most influence the commercial real estate, design and construction decisions companies face?

Andy Halik: Labs typically need more technically sophisticated structures with more complex mechanical systems—particularly power and HVAC—than a typical office building. Structurally, they’ll need more risers and shafts; the good news is, if the building doesn’t have these structural needs, they can usually be installed to accommodate the lab-specific needs. Access to adequate power is critical. Life sciences tenants use an average of seven times more electricity than office tenants, because their lab and systems like HVAC, exhaust and electrical load systems need more finely tuned environments.

Suzet McKinney: To meet the evolving needs of life sciences tenants, real estate developers serving the sector must broaden their vision beyond merely functional, purposebuilt laboratory facilities of decades past. That journey begins with a collaborative relationship between the developer and the life sciences tenant to ensure an adequate understanding of the needs of life sciences companies, not just for their current business needs, but also for their growth needs as well.

Some of the unique building needs

laboratories don’t make scientific breakthroughs–scientists do. By creating lab environments where research and the exchange of ideas is easy, enjoyable and seamless, we increase occupant satisfaction and set the stage for innovation.

Brett Taylor: Fundamentally, there are a few building requirements that are unique to life science tenants to accommodate their lab needs. The structural grid for a lab building consists of 11-foot modules, a timetested and universal approach that takes lab bench width and other attributes into account. Floor-tofloor height is 1-1.5 feet higher than a typical office building to accommodate additional building service requirements. Additionally, some lab tenants may install sensitive equipment that require low building vibration, therefore the structural system may need to be modified to accommodate those specific requirements. Collaboration space is critical. As such, lab buildings typically have higher collaboration / amenity ratios than typical spec offices, especially multi-purpose areas that are often used for hosting lectures and other industry presentations.

Vice President Skender ahalik@skender.com 312-607-4499

bleeding to the coasts and the departure of talented scientists and entrepreneurs that come out of the universities here.

Our government has awakened to this fact as well. We now have a more cohesive effort that is centered around the goal of growing Chicago’s life

SUZET MCKINNEY, DRPH, MPH

Principal & Director of Life Sciences Sterling Bay smckinney@sterlingbay.com 312-202-3492

sciences ecosystem and raising the city as a major life sciences market.

Halik: There are two main factors driving this industry’s growth.

One is an increase in Chicago-area universities and local incubators

BRETT TAYLOR, AIA

Principal Gensler Chicago brett_taylor@gensler.com 312-456-0123

developing young talent and providing them with pathways and resources to start companies. The idea of setting down roots in Chicago is appealing to this talent pool. The second main factor is the pandemicrelated needs for more life sciences

What factors are driving the industry’s interest in Chicago?

McKinney: Most of the key demand drivers that make for a successful life sciences market already exist in Chicago. Namely, top-tier research universities and healthcare institutions, STEM talent, National Institutes of

“AMID THE WAR FOR TALENT, LAB SCIENCES TENANTS WANT BUILDINGS THAT PRIORITIZE PROXIMITY TO TRANSPORTATION, CONVENIENT AMENITIES AND ADAPTABLE LAYOUTS THAT CAN BE REARRANGED AS COMPANY NEEDS EVOLVE.” — ANDY HALIK, SKENDER for life sciences companies include a flexible lab footprint and space design to accommodate workflow, efficiency, size of equipment, and traffic flow throughout the lab, as well as proximity between labs and offices. Human-centered architecture and amenities are important because, at the end of the day, buildings and

ANDY HALIK

Health funding and venture capital funding. However, Chicago has never had sufficient lab space to keep entrepreneurs and their companies here. At Sterling Bay, we’ve recognized the damage this exodus has done to our economy for decades. We think by providing quality lab spaces and full life sciences ecosystems, we can stop the

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LIFE SCIENCES

With thriving neighborhoods and more affordable real estate, Chicago is emerging as a life sciences hub. research. Both factors are resulting in demand for more specialized lab space in Chicago. Higher vacancy rates in traditional office space have also caused many building owners to consider converting office space to lab space.

Taylor: There’s a desire to invest in Chicago for lab space because it is an emerging market compared to coastal cities where the industry is more established. At the same time, many adjacent industries, including tech, education and health have large presences in Chicago. The talent and important points of connection are already here. There are opportunities to build synergy with nearby universities and hospitals, and that creates huge benefits. We’re seeing life sciences buildings being designed for various users who require a mix of dry labs, wet labs and office space.

These new buildings are dynamic enough to accept a variety of users, which is another reason why the Chicago market is so desirable. Many life sciences companies are used to having to adapt an existing building to a lab use rather than working with a developer who can accommodate their specific needs.

The cost of building new lab space in Chicago is considerably lower than on the coasts. How can life

sciences firms apply that fact to smarter real estate decisions in Chicago?

McKinney: I think it’s important for life sciences companies to consider the cost of living in Chicago versus that on either of the coasts. Chicago is also a very family-friendly city, with lots of diverse neighborhoods and communities where the employees of life sciences firms can benefit from the rich cultural and artistic benefits that Chicago can offer. Giving thought to these considerations will assist life sciences companies with making smarter, more economically sound decisions not only for their companies, but also for their employees.

Halik: All construction projects nationwide are feeling the supply chain crisis and material pricing volatility. The life sciences sector is not immune. However, Chicago real estate prices are less expensive than the coasts boasting major life sciences hubs like San Diego and Boston, which drives the overall project cost down. In Chicago, it’s useful to consider submarkets like Fulton Market and Lincoln Park where there is room for expansion and existing lab-friendly space. Plus, new buildings built for lab use will be more cost-effective than adapting

Sterling Bay is proud to support Dr. Suzet McKinney at the Crain’s Roundtable

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an unspecialized office building. In addition to the cost of the real estate, other cost variables include the lead times and availability for special lab equipment and furniture. However, savvy teams will order early and lock in prices to meet budget and timeline.

biohazard-labeled materials in and out of common spaces. Because they work with specialized equipment and sensitive chemicals, lab sciences tenants need a private way to get in and out of their space without running into other tenants. This often

integrate the life sciences industry in Chicago.

McKinney: Life sciences clusters are innovation districts. As defined by the Brookings Institution, innovation districts are “geographic areas where

“AT THE END OF THE DAY, BUILDINGS AND LABORATORIES DON’T MAKE SCIENTIFIC BREAKTHROUGHS. SCIENTISTS DO. BY CREATING LAB ENVIRONMENTS WHERE RESEARCH AND THE EXCHANGE OF IDEAS IS EASY, ENJOYABLE AND SEAMLESS, WE INCREASE OCCUPANT SATISFACTION AND SET THE STAGE FOR INNOVATION.” — SUZET MCKINNEY, STERLING BAY Office conversions to lab space is one of the hottest topics in commercial real estate today. Are there important pitfalls to avoid?

Halik: The mixing of traditional office activities with clinical research can create some unexpectedly tricky scenarios that must be carefully managed. For example, a traditional office environment would not need to think carefully about the path of waste removal. One major pitfall to avoid in these mixed-use environments is accidentally moving orange

includes a loading dock, a dedicated service elevator, and private storage areas. Other pitfalls include ensuring the proper installation of HVAC and power. Ensuring that HVAC infrastructure is segregated so fumes are carefully managed is important for health and comfort. Adequate power, with back-ups, is also critical so the laboratory component of a building is properly supported, and therefore does not cause outages or other problems in the more standard office component.

Taylor: Developments aimed at attracting life-science tenants need to be specific about their target tenants; this is true of any spec office. Identifying a range of target tenants and determining which range of requirements the building will accommodate is key to the development of the initial pro formas.

If the target tenant consists of wet lab uses or has more lab-specific base building requirements, that should be discussed and determined in initial planning phases. Design can mitigate many pitfalls as long as it’s addressed from the beginning.

Public health researchers have noted a correlation between life science services and transportation. How does that factor into the analysis of market opportunities?

Taylor: A sense of community is very desirable in the life sciences industry.

It’s common for lab users to prefer to be near hospitals or universities with adjacent uses and talent because of the synergy between the lab and practical application of science. In Chicago more broadly, there is a rise in the development of mixed-use campuses that support all aspects of the live, work, play lifestyle. We strive to incorporate life sciences into these environments to build communities that don’t just have labs, but also have medical, education, residential, entertainment, dining, etc. Being able to combine all of these overlapping human needs and business interests into one district can meaningfully

leading-edge anchor institutions and companies cluster and connect with startups, business incubators and accelerators. They are physically compact, transit-accessible, and technically wired, and offer mixeduse housing, office and retail.”

Recent trends are showing that an emerging generation of life-science companies are flocking toward dynamic, geographically compact industry ecosystems that embrace the clustering effects that can magnify the speed and quality of discovery and innovation. These trends, along with the ability of a development to cater to the larger quality of life needs for workers, such as healthcare, basic services, and childcare, are all important factors to consider when evaluating a potential site.

How does the design and location of life sciences buildings impact recruiting and retaining talent?

McKinney: The design and location of life sciences buildings can greatly assist in recruiting top talent and retaining them. The presence of likeminded people in trendy, up-andcoming areas is always a large draw for younger, top talent. The availability of a large selection of residential options and top-tier, world-class restaurants, shops, retail options and business facilities are also key to recruiting and retaining top talent.

Halik: Both design and location are key to recruitment and retention for life sciences firms. For those reasons they often favor real estate options in a bustling market, preferably in cities with active universities and medical campuses, and where life sciences innovators may be able to rub shoulders with other leaders in the field. In general, locations that are attractive to traditional tenants and their employees are attractive to life sciences companies as well. For example, our team recently built out Hazel Technologies’ 54,000-squarefoot office and laboratory space, the largest private chemical lab in Chicago, in an office building in the

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exciting Fulton Market neighborhood.

The neighborhood was not previously known as a destination for life sciences companies, but it is now.

Taylor: Current research and surveys indicate that places of work should be amenity-rich spaces that provide talent with an experience that can’t be found at home, which includes collaboration spaces, indoor/ outdoor work options, and access to neighboring amenities. Using ALLY at 1229 W. Concord as an example, the building is centered around wellness—an attribute humans are putting greater importance on now than ever before. The design itself prioritizes natural light and access to outdoor space, and the interiors program includes a fitness and wellness center. And the building is situated alongside the Chicago River, allowing access to the Riverwalk. Workplaces should provide lifestyle support, which includes access to public transportation and the surrounding community, outdoor space, spaces of respite and much more.

In addition to labs, life sciences firms need office space, too. What do life sciences companies look for?

Halik: Amid the war for talent, lab sciences tenants want buildings that prioritize proximity to transportation, convenient amenities such as nearby restaurants and retail and adaptable layouts that can be rearranged as the company grows and its needs evolve. A location that’s easily and equally accessible via car, public transit and bike is often preferred.

Within the workspace, they also tend to value flexible design that facilitates collaboration and engagement, with easy access to shared spaces as well as comfortable, inviting break rooms where employees can relax and socialize. Additionally, these tenants might look favorably on

more important is the availability of amenities, transportation, healthcare services, residential areas and other basic services such as childcare— essentially trendy areas where top talent will assemble and congregate in large quantities. The proximity to other innovators is also an important consideration.

Taylor: When looking at an existing building and space, it’s about how well it can accommodate their specific needs. That’s because they are unique compared to a typical commercial tenant. When it comes to speculative space, we focus on developments that are purposefully designed with high levels of flexibility. The factors life sciences companies are considering are based on location or rent structure and not adaptability. Life sciences tenants require a mix of office and lab space. Flexibility is key with all workplace environments, but this is particularly true in lab buildings.

Collaboration is critical in research, and the office should support that by providing spaces that naturally support exchange and ideation, such as lounges, conference rooms and transitional spaces that can be reconfigured based on function.

How can the life sciences contribute to a company’s environmental, social and governance (ESG) efforts and how can ESG be factored into life sciences spaces?

McKinney: While life sciences developments, like all developments, must consider ESG issues and disclose potential problems to communities, ameliorating the environmental impact of a building is often a starting place for developers. This is particularly important in life sciences buildings that will be home to tenants working to better our lives as it is a foundational way to create substantial, long-term

“THERE’S A DESIRE TO INVEST IN CHICAGO FOR LAB SPACE BECAUSE IT IS AN EMERGING MARKET COMPARED TO COASTAL CITIES. AT THE SAME TIME, MANY ADJACENT INDUSTRIES, INCLUDING TECH, EDUCATION AND HEALTH, HAVE LARGE PRESENCES IN CHICAGO, SO THE TALENT AND IMPORTANT POINTS OF CONNECTION ARE ALREADY HERE.” — BRETT TAYLOR, GENSLER

secure parking lots and/or showers and locker rooms for their biketo-work contingent. Overall, lab sciences employees want to enjoy the same office amenities as traditional knowledge workers. A building that offers a premium workplace experience in addition to fitting the requirements for labs is ideal.

McKinney: It’s important for the office spaces to have close proximity to the lab spaces. What’s

change. Another way developers can improve their ESG postures is to have diverse, equitable and inclusive teams and consider how DE&I must be accounted for in the structures they develop. Finally, an issue for life sciences developers that has been accelerated by the pandemic and the deplorable condition of the built environment in many neighborhoods is consideration of a locale’s social determinants of health. This means not only a neighborhood’s access to

ABOUT THE PANELISTS BRETT TAYLOR is principal at Gensler and has deep expertise in managing complex mixed-use, office, and multifamily residential projects. He has been instrumental in the delivery of numerous largescale, award-winning development projects in Chicago, the United States and internationally. He has worked on Lincoln Yards South and 333 N. Green in Chicago, Ford’s Book Depository repositioning in Detroit and the United Nations headquarters in Geneva. He is project director on ALLY at 1229 W. Concord, a 320,000-squarefoot building in Chicago.

ANDY HALIK is vice president at Skender, a full-service building contractor with strong expertise in the life sciences arena. Halik has 20+ years of experience in the construction industry and his work includes significant laboratories for Google, Motorola and Milwaukee Tool. He leads the Interiors group, focusing on market strategy, client service and motivating the team toward continued growth. Halik works closely with Skender’s project teams to maximize value for clients and deliver the premier construction experience.

SUZET MCKINNEY is principal & director of life sciences at Sterling Bay and has made it her goal to expand the company’s national life sciences footprint and to raise Chicago to a Tier 1 life sciences market. Her work with Sterling Bay includes overseeing the groundbreaking of Ally, a 320,000-square-foot life sciences center. An expert in emergency preparedness and response, McKinney was tapped by Gov. J.B. Pritzker in 2020 to lead operations on five alternative care facilities for potential COVID-19 patient overflow.

quality health care, but also to quality housing, schools, transportation, jobs, grocery stores and other amenities.

Taylor: Life sciences companies historically have played a pivotal role in ESG. The social benefits their products offer patients is an intrinsic mission

and outcome of these companies.

Acting in support of their mission and vision, life science tenants demand and require a higher level of wellness in the design of their spaces. These systems and cultures tend to propagate into the types of buildings they desire to reside.

These requirements work downstream

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to challenge the design, development and construction industry to raise the bar of baseline delivery. These baselines, in turn, tend to drive governance and local authorities changing the baseline codes. This symbiotic relationship drives a better ESG solution for everyone.