Innovation Ecosystem

When narratives collide, who’s telling the truth?

Greater Boston has a glut of empty, unleased commercial lab space, just as Providence is busy promoting the need to build out commercial wet lab space. What does that mean for the new RI life science hub?

Photo courtesy of Patrick Larkin

Patrick Larkin, founding director of the John Adams Innovation Institute, a division of the Massachusetts Technology Collaborative.

By Richard Asinof
Posted 3/18/24
The goal of creating commercial wet lab space in Rhode Island seems counterproductive to efforts to grow the life sciences industry sector here, given the glut of lab space in Greater Boston.
What lessons could be learned from the success of OrthoRI as a non-hospital centric health care enterprise, with a focus on identifying what patient wants and needs are? Does the ongoing crisis in pharmacy benefits management point to a need to better regulate the way pharmacy benefits are being managed, particularly with UnitedHealthcare and its for-profit division, Optum? How will efforts by Republicans to attack a woman’s right to make her own choices about her personal health care and reproductive health backfire at the ballot box this November?
Patients and consumers tend to vote with their feet and with their wallets and pocketbooks. An eagle-eyed consumer spotted a display of emergency contraceptive care at a local CVS pharmacy, selling for $44.99 a package. What that translates to is the fact that the market will respond to consumer needs, regardless of whatever grandstanding and speechifying occurs on the campaign trail. Consumers and patients may discover that they have far more power to influence the market than they realize. The news media needs to do a better job in how it reports the news, it seems.

PROVIDENCE – Two separate, disparate, unequal visions are being foretold about the future of the Life Sciences industry sector in Rhode Island.

On one side of the narrative ledger, there is the confident, “can do” voice of Neil Steinberg, the former president and CEO of the Rhode Island Foundation and now the newly installed volunteer chair of the R.I. Life Science Hub, underwritten with $45 million in investments of federal ARPA funds by the R.I General Assembly.

In his recent interview with G. Wayne Miller from Ocean State Stories at Salve Regina University, Steinberg described the new enterprise as follows: “The Rhode Island Life Science Hub [RILSH], is an independent quasi-public organization that was established and passed by the Legislature and Governor last May,” Steinberg began. “It is funded with $45 million of ARPA dollars to support, build and grow the Life Science sector in Rhode Island. The priorities include hiring a CEO and staff, supporting inclusive workforce development, and helping establish an incubator/wet lab space and a fund for grants and possibly investments in growing life science/biotech companies.”

The goal, Steinberg said, “is to convene all involved in and interested in this growing sector, and foster collaboration among the private sector, academia and government.”

The new Life Science hub in Rhode Island, according to Steinberg, seeks to emulate the business model developed by Massachusetts.

When asked by Miller to describe the support for the new Hub and its ambitions from the state’s industries, health care systems, and other, Steinberg said: “There is tremendous enthusiasm and commitment for the hub. Startups, existing companies and industry groups are all in and there are many opportunities. While Boston/Cambridge is the epicenter, the sector is large and growing — for example, Worcester has been very successful building a life science cluster. Career opportunities include researchers, lab technicians, and many others.”

The history of the new Hub’s origins in Rhode Island appears to include a carefully orchestrated series of investments, employing business consultants to describe opportunity. This includes a report commissioned by the Rhode Island Foundation, conducted by JLL [Jones Lang LaSalle] who conducted a quick analysis that was presented to the Governor, the House Speaker, and the Senate President.

Steinberg described the effort: “It highlighted the existing network and cohort of companies and the research resources at Brown, URI, Lifespan and Care New England, as well as the jewelry district buildings – and the gaps in the commercialization/tech transfer results at the universities and the fact that we have no commercial wet lab spaces.”

One of the initial major elements of the activities of the new RI Life Science Hub will be to build out the commercial wet lab space in Rhode Island, according to Steinberg. However, that narrative seems to stand in contradiction to the current state of commercial real estate and, in particular, a glut in commercial wet lab space in Greater Boston.

The glut
“The Boston area built a ton of lab space,” proclaimed the headline for the front-page story of the Sunday, March 17, Boston Globe. “Now many of those buildings are opening empty.”

The front-page photo displayed the barren inside of an office building near South Station that is being converted to lab space. But, as the caption revealed, “The project is nearly complete and only about one-tenth of its square footage has been leased.”

The story by reporter Catherine Carlock laid out the dilemma. “Around this time three years ago, while most of us navigated pandemic life, real estate developers across Greater Boston looked to life-science laboratories and saw dollar signs,” she wrote.

“The white-collar office workers who’d long filled downtown towers were largely staying home,” Carlock’s story continued. “The future of cities had rarely been murkier.” But many biotech companies, like Cambridge’s Moderna, Carlock reported, were busier than ever, and growing fast.

“Life-science companies, and the lab buildings that house them, looked like a sure bet for investors. Money poured in to drug companies by the billions — from venture capitalists, the stock market, the National Institutes of Health. And big real estate investors followed, launching a wave of speculative lab development all over Greater Boston,” Carlock wrote.

How big is the commercial lab space glut?  
In just two years, the amount of lab space in Greater Boston has ballooned by 57 percent, according to research from the real estate brokerage firm Colliers, with nearly 18 million square feet of new space opening from the Seaport to Worcester, according to Carlock’s reporting. By comparison, she wrote, “That is nine times as much as opened between 2019 and 2021. Lab now accounts for more than one-fifth of all office and life-science space in Eastern Massachusetts.”

One point of connection, it seems, between the vision of the development for the $45 million R.I. Life Science Hub and the current glut of commercial life sciences lab space in Greater Boston, is the role played by the real estate brokerage firm, JLL [Jones Lang LaSalle], which wrote the original study for the Rhode Island Foundation describing the potential opportunity.

One quote that stood out for ConvergenceRI in Carlock’s Globe story was this: “People were chasing that pot of gold at the end of the COVID life-sciences rainbow,” said Bob Coughlin, managing director for life sciences at the brokerage JLL. [emphasis added]

In her story, Carlock attempted to answer the question, “Why did [Boston] build so much, so fast?”

Here is how she reported on what happened: Flash back to early 2021. Office towers were largely empty. Hotel visits had plummeted. But researchers at drug labs were still coming in to conduct work that’s impossible to do from home — much of it dedicated to tackling COVID and other life-altering diseases.

Investors took notice. In 2021, biopharma companies in Massachusetts received a staggering $13.7 billion in venture capital funding, up 70 percent from 2020, according to the Massachusetts Biotechnology Council, an industry trade group.

 The companies getting that funding would need homes, and real estate investors saw life-science space as a growth area. Money flowed in. One example: In early 2016, investment behemoth Blackstone spent $8 billion to acquire life-science developer BioMed; by late 2020, a new investment deal valued the company at nearly twice that much: $14.6 billion.

Even developers who’d never built lab space before were eager to get into the game, and before long, warehouses, old office buildings, even shopping malls were being proposed for redevelopment into lab space. Communities like Somerville, Watertown, and Waltham, eager to build their tax base, happily signed off. Somerville alone approved more than 600,000 square feet of life-science projects, and has 2 million more square feet due to come online within the next year or so.

Now many of those buildings are nearing completion, and opening empty, into a very different world for the life-science industry. Investment has slowed. Cuts are more common than hiring sprees. And there’s more lab space on the market than there has been in decades — a costly reminder that economic forces often move faster than construction timelines.

To be sure, Greater Boston remains a global epicenter of the life-science industry, and developers and drug companies alike remain bullish on its long-term prospects here. But the sudden, massive overhang of supply — even as more lab buildings rise from the dirt — threatens to quickly cool one of the last remaining hot spots of Boston’s long-running building boom.

What does that mean for Rhode Island’s dreams of creating a life sciences industry hub?
A year ago, ConvergenceRI reported on what really had happened with the Massachusetts investment in the life sciences industry sector, conducting an interview with Patrick Larkin, the founding director of the John Adams Innovation Institute at the Massachusetts Technology Collaborative.

What Larkin described is still perhaps the best recipe for what Rhode Island needs to do to invest in supporting the growth of its life sciences sector. [See link below to ConvergenceRI story, “Is RI shovel-ready to replicate the MA-model for life sciences cluster innovation?”

The first step, in ConvergenceRI’s opinion, would be for Steinberg to sit down and have a conversation with Larkin.

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