Photo courtesy of JLL
Robert Richards
Senior managing director, New England market, JLL
Age: 66
Industry experience: 36 years
Veteran broker Robert Richards’ recent move to JLL Boston strengthens a life science team that includes industry insiders who played roles in solidifying Massachusetts’ leading role. A fixture at Boston commercial brokerages in recent decades, Richards has guided real estate expansion strategies for clients including Bristol-Myers Squibb, Dana-Farber Cancer Institute and Harvard Medical School. Richards’ arrival follows JLL’s 2020 recruitment of former MassBIO CEO Robert Coughlin and Travis McCready, a former Massachusetts Life Science Center CEO. In his move from Cushman & Wakefield, Richards joins JLL as the market separates into haves and have-nots, giving tenants a strong upper hand over landlords, and established clusters the advantage over emerging ones.
Q: What’s the busiest segment of tenant demand in today’s more conservative expansion climate for lab space?
A: There is about 1.5 million to 1.6 million square feet of demand right now, and 70 percent of that is below 25,000 square feet, so that’s the sweet spot.
Q: How are developers and landlords adjusting their leasing strategies to be more competitive and respond to that dynamic? Some new projects are advertising their willingness to break up floor plates for multiple tenants, for example.
A: Absolutely. Demand is down. We had 120,000 square feet of deals in [the second quarter] and that was the lowest we’ve had in eight years, so it is critical for landlords in today’s environment to have a shot at as many of these deals as possible. If you’re only considering 25,000-square-foot-or-larger tenants, that’s a pretty short list these days. The other big trend is landlords with new construction are developing spec suites, so they are actually building out the shell space into ready-to-be-occupied lab space. That is very much preferred by today’s tenant, due to the real challenge in raising additional money in today’s market. If you’re worried about rising additional rounds of financing, you’d rather pay a little higher rent and not come out of pocket at $200-plus per square foot to build out your initial lab. You want to move out and find a shoe that fits you pretty well.
That’s one of the most dramatic changes in the life science market over the last six-plus months. If we were having a conversation three years ago and you needed 25,000 square feet, you would have had one or maybe two options, and you would be competing with multiple tenants. In today’s market, you’ve got more than 20 options.
Q: Beyond industry financing constraints, what do you see being the biggest threats to Boston’s life science cluster competitiveness?
A: If you’re developing in the city of Boston today, that is more challenging than it’s ever been. So, I think the city itself needs to make itself as attractive to developers and world-class life science organizations, because if they don’t, not only will Cambridge and Watertown and Somerville capitalize on that, but the Research Triangle Park [in North Carolina] has done a tremendous job of attracting the GMP needs to their market. New York is trying desperately to become relevant in life science. They certainly trail Boston by a huge margin.
It’s a very long list of municipalities across the country looking to get into life science. A lot of it continues to be driven by labor. It’s competitive. A younger worker is going to prefer, most times, to be in an urban location with a plethora of amenities. We even track barstools: Where can these young workers go out and have a drink or dinner after work as opposed to going home? The collaboration and culture when you have a close-knit organization is incredible. It’s the challenge every organization is facing in getting workers back to the office.
Q: Biomanufacturing was expected to be a major component of an end-to-end Massachusetts ecosystem, but demand also has slowed. Is that funding-related or does the state not have as big of a competitive advantage as it does in R&D?
A: It’s more of the former, but some of the latter. Clearly when you think of the investment that a company needs to make within the four walls of a GMP facility, that can be $2,000 a square foot. A lot of times, there’s a real attraction to owning a facility and not just leasing it, so abundant land is important. But again, labor is a major driver.
Q: With at least six large-scale lab projects in Boston and Somerville under construction without anchor tenants, how do you predict the competition will play out?
A: It’s going to be survival of the fittest. The best-designed [projects] and most experienced developers in core locations are going to fare the best. For the less experienced groups in non-core locations, it’s going to be a bit of a struggle the next two-plus years, certainly. This is definitely a valley and developers are frankly going to have to try harder to do deals, whether it’s subdivide floor plates or deliver spec labs. Frankly, I think the city of Boston needs to figure out if they want to continue to bring world-class life science and if they want well-experienced developers to be developing properties in the city. Because it’s real hard right now. You’ve got increased tenant improvement needs, rents modifying, less demand and much more competition. Throwing additional roadblocks, whether it’s the permitting timeframe, technical requirements or cutting back on parking that can be provided: those are negatives.
Richards’ Five Favorite Songs
- “Bourgeois” by Phoenix
- “New York Kiss” by Spoon
- “Somewhere Under Heaven” by Tom Petty
- “Nobody’s Nobody” by Brothers Osbourne
- “Under the Pressure” by The War on Drugs
