Three Factors that Impact Real Estate Leasing for Life Sciences Tenants

With the world-renowned Texas Medical Center, Houston stands to benefit from booming life sciences, medtech and biologics industries. “The life sciences is one of the fastest-growing industries in the countries right now and Houston is a riddled center for that,” says Ray Perryman, president and CEO Of the Perryman Group, according to Houston Public Media.

Additionally, with the expansion of life science, medtech, and biologics companies seeking lease space across the city and surrounding area, tenants should take care to consider three major factors in evaluating real estate lease space:

Access

In most leases, landlords want access to the space for general walkthroughs, maintenance and repairs, touring with prospective lenders on the building, and, at the end of the lease, to show the space to prospective tenants.  With the use of clean rooms and other areas that should be accessible only with an appropriate employee of your company, you will want to limit this access so that the landlord cannot tour without the proper notice and cannot tour certain areas without an escort.

Additionally, in the medical industry, restricted access to certain areas of leased space is crucial to protect sensitive operations and maintain confidentiality. Tenants should carefully negotiate lease agreements to limit landlord access without proper notice and escort, ensuring that clean rooms and other specialized areas remain secure. By establishing clear protocols and restrictions, tenants can safeguard their proprietary processes and sensitive information.

Utilities and Power Redundancies

Life science, medtech, and biologics companies often have unique power needs and usually require back-up generators and/or additional power redundancies.  Who is providing and maintaining these redundancies?  If the leased space is in a building with other tenants, is your space the only one dependent on these redundancies?

Given the unique power requirements of life science, medtech, and biologics companies, it is essential to evaluate the availability and maintenance of utilities and power redundancies in leased spaces. Tenants should ascertain whether their leased space is the sole beneficiary of these redundancies in a multi-tenant building. Understanding the ownership, responsibility, and backup systems for power supply can help tenants ensure uninterrupted operations and minimize potential risks.

Assignments and Subleasing

As your company grows and perhaps gains interest of private equity or other interested purchasers, what are the assignment provisions in your lease?  Is the landlord’s consent required and can the landlord reclaim the space if you are purchased and seek the landlord’s consent?

As cutting edge life sciences companies grow and attract interest from private equity or potential buyers, understanding the assignment provisions in lease agreements becomes vital. Tenants should review the landlord’s consent requirements for assignment or subleasing and assess the conditions under which the landlord can reclaim the space. By carefully considering these provisions, tenants can anticipate future growth or changes in ownership without encountering unnecessary hurdles.

Final Thoughts

There are, of course, other factors that matter when evaluating lease space and leases that are specific to life sciences.  For example, are gasses permitted, what happens to equipment purchased in the buildout when the lease terminates and, in a multi-tenant building, when must you pay for after-hours air if, as is so often the case, you plan to have expanded hours?

While every lease should have specific considerations for each incoming tenant, these are important factors that uniquely impact tenants in the life sciences industry.