In the aftermath of the COVID-19 pandemic, there’s a ballooning demand for medical research laboratories, particularly in the Greater Toronto and Hamilton areas. But the region is facing an acute shortage of lab space, according to a first-ever Toronto Lab Market H1 2022 report from real-estate services company CBRE.
Lab vacancy in the Toronto region is virtually non-existent, at only 0.2 per cent of the 12.3 million square feet of inventory in the region. Demand from domestic and international companies could immediately fill an additional 3.5 million square feet, CBRE estimates. “Put another way, demand for lab space exceeds currently available space by a factor of 141,” the study found.
Most existing lab space is in small-sized, owner-occupied facilities, which limits the ability for tenants to expand or grow at scale. And even that inventory is in short supply across Canada, says report author Daniel Lacey, a CBRE associate vice-president. “The result is that life sciences occupiers lacking the expendable upfront capital or the ability to wait for years before occupying spaces have often been compelled to look to U.S. markets for available lab space.”
When life sciences entities are seeking to place infrastructure into older buildings, it’s often like fitting a square peg into a round hole.— Matthew Johnson, senior vice-president in the life sciences group of Colliers Canada
Toronto developers are gearing up to meet the need, with a trio of large, dedicated lab complexes in development.
McMaster Innovation Park in Hamilton has commenced construction on the first phase of two research and development lab buildings for anchor tenant OmniaBio. The new 120,000-square-foot building that will also have 26,000 square feet available for third-party leasing, and is scheduled for delivery in the third quarter of 2023. The first building is part of nearly 2.8 million square feet of planned construction, bringing the total lab campus size to roughly 3.5 million square feet.
Meanwhile, The Core, an entire campus dedicated to life science research, is about to break ground at the Sheridan Research Park in Mississauga, with an aggressive goal of having the first two of five buildings ready for tenants by the end of 2023.
The Core is a 24-acre greenfield site, with the potential for up to 1.2 million square feet of purpose-built wet lab and life sciences facilities, says Todd Cooney, senior vice-president and broker for CBRE. As a new build, The Core can deliver custom envelopes tailored to tenant specifications. “It’s a very complicated sector with very specialized infrastructure and there is no one-size-fits-all solution.”
Toronto-based First Gulf and San Francisco-based Spear Street Capital are partners in the project, which is drawing interest from potential tenants across Canada, as well as the United States, he says.
“The pandemic raised questions around whether we are able to develop and manufacture vaccines in Canada and grow Canadian health care and pharma research and development,” says Matthew Johnson, senior vice-president in the life sciences group of Colliers Canada. “We’ve seen tremendous growth in the lab sector south of the border. It is clear the smart thing to do is to encourage Canadian capabilities and expend capital into the Canadian pharma sector to keep the talent here,” he says.
“When life sciences entities are seeking to place infrastructure into older buildings, it’s often like fitting a square peg into a round hole, whereas The Core is a purpose-built best-in-class envelope within an innovation campus, the first of its kind in our region. That’s why there’s so much interest.”
Meanwhile, KingSett Capital plans to add four storeys of dedicated research labs on top of its 20-storey office building at 700 University Ave., across the street from the Medical and Related Sciences (MARS) Discovery District. The original intention was to build offices, however, while office leasing remains robust in Toronto, lab space became the best use of these four new floors in the midst of the research zone, including hospitals and the University of Toronto, says Jamie Petch, KingSett’s senior vice-president, office.
“There’s plenty of interaction between professionals in the public and private research communities, so having all these facilities and workers in close proximity is important and attractive.”
While this is KingSett’s first life sciences project, “there are definitely opportunities for more in the GTA, as life sciences is a sector with significant growth potential,” Mr. Petch says.
The addition will total 187,000 square feet, with floor plates between 35,000 and 50,000 square feet. The building at the southwest corner of University Avenue and College Street was built in 1975 for Ontario Hydro and was last renovated in 2000. The rebuild will start in early 2023, with completion due in 2026. The design team includes KPMB Architects in collaboration with Adamson Associates Architects. The life sciences practice of architecture firm Gensler is designing the laboratories.
Compared to offices, lab layouts require broader column spacing for flexibility to rearrange equipment and taller floor heights for ventilation equipment as well as more electrical and water supply and different waste and liquid handling facilities, says Erik Lustgarten, principal in the sciences practice at Gensler. An office building will typically have 12-foot ceiling heights while lab ceilings require about 15 feet because air recirculation needs are two to three times higher than for offices.
“The other thing we’re generally looking for is more robust floors, because experiments are more sensitive to vibration that you might not notice in an office environment and the necessary equipment is also heavier,” he explains. “We’re seeing more and more robotic equipment and having extra floor strength allow us to accommodate different types of lab equipment.”
There is significant need for more purpose-built lab science clusters in the Toronto region, Mr. Lacey found in researching the CBRE report. It’s not a matter of if you build it, they will come – the talent is already here, he says.
“Canada is a tech leader and innovation leader and a magnet for talent, but unless we move quickly, we could miss the opportunity to shine on the world stage and [we could] see life sciences talent leave.”