Of the $46 billion worth of commercial real estate purchases in Boston’s Longwood Medical Area and elsewhere in 2015, nearly half were made by foreign investors, according to the report. As a result, prices are going up for competing buyers and increasing profits for sellers.
Until recently, foreign investors have avoided the biomedical research space, a niche regarded as too risky and dominated by a few local players, including Boston-based Alexandria Real Estate, Boston-based BioMed Realty and Cambridge-based Massachusetts Institute of Technology.
These established investors say new entrants must understand the business of biotech startups, which are characterized by rapid growth and typically need to relocate to larger lab spaces during drug research. And while they consume a lot of venture capital in the early phases, they most likely won’t generate earnings on such research and development for a decade or more.
“There’s a learning process that you need to have. I don’t think you can just come in, plunk down a bid, and walk away with these types of [lab] properties,” said David Begelfer, CEO of NAIOP Massachusetts, a commercial real estate trade group, according to the report.
However, this learning process isn’t deterring international investors. Investors from China, Korea, Europe and the Middle East have made bids worth millions of dollars to Boston-area lab tenants.
More articles on supply chain:
Premier reports 13% net revenue increase in Q4
Sen. Chuck Grassley to EpiPen maker: Why the 400% price hike?
Study finds AEDs inaccessible in public places: 4 things to know
