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Canada's life sciences nodes slated for growth: Colliers

Toronto's demand for life sciences space has led KingSett to add four storeys of custom-built space at its 700 University tower. But a Colliers report indicates the sector is expected to continue expanding, both in the Greater Toronto Area and other Canadian nodes. (Courtesy KingSett)
Toronto's demand for life sciences space has led KingSett to add four storeys of custom-built space at its 700 University tower. A Colliers report indicates the sector is expected to continue expanding, both in the Greater Toronto Area and other Canadian nodes. (Courtesy KingSett)

Market fundamentals for the development of Canada’s life sciences sector have never been greater, according to a report from Colliers.

“No question it’s a nascent sector, however, one that is emerging as significant in terms of the level of interest, but also momentum,” Matthew Johnson, Colliers’ senior vice-president and Canadian lead of its life science practice group, told RENX. “We view life sciences as a sector poised for tremendous growth that we haven’t seen.”

Indeed, in the past 12 months, life sciences has soared to the top rank of alternative assets — which include data centres, self-storage, student and seniors housing — for a few reasons.

One is clearer funding avenues as Canada looks to compete with the United States and induce growth in certain sectors of its economy. 

The private sector, too, is showing more interest following a confluence of economic uncertainty and dwindling confidence in key commercial sectors like office, the latter of which has been upended by hybrid work configurations. 

COVID-19 also revealed how ill-prepared the country was during the pandemic – forced to rely largely on vaccines developed and produced abroad rather than domestically – delaying deployment to the detriment of the economy.

Expansion is coming, but there are challenges

To avoid being caught flat-footed should another such crisis occur, the Canadian government invested just over $199 million in the expansion and modernization of Resilience Biotechnologies Inc.’s Mississauga facility, creating 205 new jobs in the process.

AstraZeneca is expanding a research facility in Mississauga large enough to create 500 new jobs, strengthening its capacity for clinical studies in — as one of Canada’s approved vaccine manufacturers — COVID-19, as well as kidney disease and breast, prostate and lung cancers.

However, growth comes with its own set of challenges. For one, life science facilities are notoriously expensive to develop, requiring up-front capital which the report said leads to “feast or famine” outcomes.

"At end of the day, the capital required to create a facility to do what these companies are doing is substantial,” Johnson said. “If the outcome of an experiment or research doesn’t support further investment, it will be hard to find groups to continually invest in something that doesn’t have an upward trajectory when the capital requirement is so high.”

An additional concern is that suitable real estate can sometimes be difficult to find, forcing some companies to compromise and lease retrofitted spaces.

That, however, could affect the integrity of research, necessitating purpose-built life sciences real estate whenever possible.

“It’s hard to deliver a best-in-class product without a best-in-class facility,” Johnson continued.

“Our marketplace has been characterized by a lot of compromise, by which I mean companies housing themselves in inferior facilities that were converted office buildings, or whatever they may be, that were not built for the use and not characterized by other tenancies performing a similar function.”

He added there’s strong need for “custom facilities that deliver the ability for companies to build and thrive based on their own needs, rather than companies being forced to convert or fit themselves into an existing environment.”

Life sciences nodes across Canada

Purpose-built life science development is emerging, though — and in urban areas, too, breaking with the suburban office park trend.

As part of a life sciences growth strategy championed by municipal officials, Vancouver’s Mount Pleasant neighbourhood will be home to a 400,000-square-foot life sciences campus, Colliers’ report notes.

Vancouver, according to the report, has had eight recent leases for spaces larger than 10,000 square feet, while the Island of Montreal has over 100,000 square feet leased across the centre-east, centre-west and the old city in the north of the port. 

Although Vancouver and Montreal offer formidable opportunities for life sciences to grow, Ontario remains a larger cluster of activity than anything found in either of those cities, Johnson noted.

In Southern Ontario alone, York University is building a medical school, as is Toronto Metropolitan University, and the University of Toronto is building dedicated facilities for artificial intelligence and medical life sciences.

University of Toronto at Mississauga is building a dedicated chemistry building, including an incubator facility.

Hamilton is another key growth region in Ontario’s Greater Golden Horseshoe. OmniaBio, a subsidiary of CCRM, plans to occupy 400,000 square feet at the McMaster Innovation Park. The first phase of this project, 90,000 square feet, is under construction and expected to be ready for occupancy in Q3 of this year.

A concentration in Ontario, Toronto

Life sciences is well-established in several major U.S. cities including Boston and San Francisco, but in Canada it’s comparably in its infancy.

That could mean a boon for investors who, as early entrants, could realize greater returns on their investments.

Still, while highly developed markets like the aforementioned American cities average around 300-plus square feet of lab space per employee, Toronto averages only a third of that, signifying the need for more purpose-built investment.

Downtown Toronto’s Discovery District along University Avenue is a major growth area, and in the metropolitan region, Mississauga’s Meadowvale district has emerged as a life sciences hub.

In the latter case, indications are it could continue to expand.

Johnson said the best is yet to come for the Toronto region.

“Toronto will be more and more recognized as a North American centre for life sciences,” he said. “This will happen over the next decade.”

EDITOR'S NOTE: This article was updated due to incorrect information about the size of the OmniaBio facility which is being constructed at the McMaster Innovation Park. RENX apologizes for the error.

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