On the latest episode of PropCast, Montfort’s Andrew Teacher is joined by BGO’s Nick Cassaro, for an insightful discussion focused on the life sciences industry. It touches on the formula for a flourishing sector, how to best cater to tenants using real estate, the lessons the UK life sciences industry can learn from the US – and more.
BGO is a behemoth in terms of private equity real estate investment. Last year, it was ranked 7th in private equity by funds raised over the last five years. Currently, BGO has $83 billion US dollars under management with over 750 institutional clients, and boasts a history spanning over 100 years between the two companies that merged in in 2019, Green Oak and Kennedy.
The firm invests across various asset types and strategies across the globe, but as vice president of life science development, Nick Cassaro is responsible for investing in and delivering the real estate needed for one of the most innovative and productive sectors of the economy worldwide.
For Cassaro, the development of the industry in the States can be traced back to Kendall Square, Massachusetts, now regarded “the most innovative square mile on the planet”. Strategically located close to Harvard and MIT, it is now home to the largest concentration of life science companies in the world. But it had previously specialised in a different sort of industry.
“It was big for Necco wafers, it was big for the Tootsie Roll and a bunch of other types of manufacturing,” Cassaro explains, referring to the mass-produced snacks that the area’s factories were known for.
And part of the reason the square became targeted as an area for investment by life sciences and biotech companies, the first of which was Biogen, was due to the high-quality concentration of what Cassaro terms “meds and eds” – medical and educational institutions.
“They feed life into the private sector through their research,” he remarks.
This is something Cassaro believes that the UK life sciences industry can learn from. For Cassaro, it’s important to ensure that real estate is designed around facilitating collaborative relationships between research institutions, scientists, and the private sector to give the industry a platform to flourish.
“From a real estate perspective is obviously it’s best to be as close as you can to meds and eds,” he explains.
Indeed, the mix of academic research institutions and innovative private sector organisations is something that has worked to great effect in the UK’s Oxford-Cambridge Arc, the birthplace of the AstraZeneca covid vaccine. The area is estimated to contribute over £110 billion every year to the UK economy.
The relative decline of commercial real estate has been well documented, but the life sciences sector has, in contrast, enjoyed a strong period after record investment volumes post-covid in 2021.
Cassaro highlights how the physical nature of laboratory work sustains demand at a time when other employers are deciding to cut back on office and workspace costs. And he doesn’t see this changing with the increased convergence of the science and tech industries.
“Life science research cannot be done remotely,” he notes. “And that’s what makes it unique. The science and math always evolve. It will continue to do that no matter if it’s done with AI or not. So, you need to have that lab space. You must have those types of computational spaces with fume hoods and biosafety cabinets. Those are items in the physical that can never be brought to the virtual – at least not yet.”