As research ramps up, lab space in Montreal is exceedingly scarce

“The activity level is the busiest we’ve seen in decades,” said Jeremy Kenemy, life sciences team leader in the Montreal office of CBRE Ltd.

Frédéric Tomesco 3 minute read January 28, 2022

Laboratories differ from other types of commercial real estate due to the specific needs they have in terms of cleanliness, ventilation or waste disposal. They also require emergency power generation capabilities to ensure samples can continue to be stored normally even in case of a power failure. HANDOUT / Pfizer/AFP via Getty Images

White coats are back.

Demand for laboratory space in the greater Montreal area is soaring as a new generation of biotech and life sciences companies — along with established heavyweights — looks to ramp up research and development efforts here, industry experts say. Foreign investment projects in life sciences and health technologies more than doubled last year compared with 2020, said Stéphanie Doyle, a director of business development at Montreal International who focuses on the sector.

Biologics products maker Biodextris is busy converting a Laval office building into a 26,000-square-foot laboratory. Laval-based biotech company IniXium, meanwhile, recently moved into a former barn transformed into a 7,000-square-foot facility equipped with cutting-edge electromechanical systems.

“The activity level is the busiest we’ve seen in decades,” said Jeremy Kenemy, life sciences team leader in the Montreal office of U.S.-based broker CBRE Ltd. “There’s a lot of money being injected into the space. The biggest challenge is that there isn’t enough lab space that’s ready to go.”

Demand for lab space in Greater Montreal currently exceeds 2 million square feet, said Kenemy, a 20-year industry veteran. Dedicated buildings, such as the National Research Council or St-Laurent’s Montreal Innovation Centre, are “jammed full,” he said.

With about 1,000 companies and 46,000 employees, Quebec is one of North America’s biggest life sciences hubs. About 80 per cent of the province’s industry is based in Greater Montreal.

COVID-19 “has given the life sciences sector fresh momentum,” said Montreal International’s Doyle. New investment projects currently revolve around three main areas: bio-fabrication, medical technology and artificial intelligence for health, she said.

“There’s a lot of effervescence,” Doyle said. “The federal government has put in place new funds to stimulate bio-fabrication. Quebec, too, is eager to invest in new projects.”

While pharmaceutical giants such as GlaxoSmithKline and Merck shut their Montreal-area R&D facilities over the past two decades to outsource the work elsewhere, new players have increasingly picked up the slack. They include oncology company Repare Therapeutics, which completed the largest initial public offering for a Canadian biotech firm in 2020 when it raised US$253 million on the Nasdaq market.

“There was a time when landlords had these labs that nobody wanted,” Kenemy said. “Now, more and more biotech companies are emerging, often out of a university setting. I represent tenants and people who want to buy buildings for the purposes of life sciences, and we’re having a hard time finding space.”

To meet the demand, several property owners have begun turning office buildings into laboratories. Recent examples include Alexandria Real Estate, North America’s biggest lab owner, which is converting space in Laval’s Biotech City into R&D facilities.

Conversion doesn’t come cheap, often costing “hundreds of dollars” per square foot, depending on tenant needs and the type of space involved, Kenemy said.

Laboratories differ from other types of commercial real estate due to the specific needs they have in terms of cleanliness, ventilation or waste disposal. They also require emergency power generation capabilities to ensure samples can continue to be stored normally even in case of a power failure.

“There will be more announcements in the next year of lab offerings in Greater Montreal that don’t exist right now,” Kenemy said. “It’s very different from office space, where you have millions of square feet in the city that can easily be retrofitted to meet the needs of a company.”

Unlike office space, labs aren’t in any danger of remaining empty if the pandemic drags on.

“This industry is somewhat pandemic-proof,” Kenemy said. “You’re not coming up with the next cancer treatment in your basement.”

ftomesco@postmedia.com

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our community guidelines for more information and details on how to adjust your email settings.