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Growth of Vancouver biotech companies sparks demand for specific real estate

The cost of construction for new lab spaces runs between $585 to $830 per square foot in Vancouver, according to the Altus Group, which is much more expensive that Class A office space.

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A “second coming” of B.C. life sciences companies, led by heavyweight AbCellera Biologics, is sparking the development of expensive and custom-built commercial real estate space, according to Andrew Petrozzi, principal at brokerage Avison Young.

In the 1990s and early 2000s, B.C. biotech companies such as QLT Inc., Abgenix Biopharma and Angiotech Pharmaceuticals were in the limelight, but they later faded after being acquired or went out of business.

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AbCellera, which started in 2012 in a University of B.C. lab, raised US$555 million when it went public in December 2020, representing the largest ever IPO ever for a Canadian biotech firm. Then, in early 2021, it received almost $200 million in royalty revenue for an antibody co-developed with pharmaceutical giant Eli Lilly & Co.

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The “supercharged growth” has translated into AbCellera ordering a number of new buildings, said Petrozzi.

“These have very specific needs,” he added, listing off greater ceiling heights to accommodate heating, ventilation and air conditioning systems, as well as refrigeration, power and “clean room” options.

The cost of construction for this type of lab space runs between $585 to $830 per square foot in Vancouver, according to the Altus Group. That’s very expensive when compared to Class A office building space that costs between $270 to $340 per square foot.

Location is also a specific issue.

Two of AbCellera’s future buildings will be on 4th Avenue in Mount Pleasant for a combined 380,000-square feet. A third that was pre-leased some years ago is a block away on Manitoba Street, also in Mount Pleasant.

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The other Vancouver biotech company with a market capitalization over $1 billion is Zymeworks. It also produces antibody products and recently took up 80,000-square feet in the M2 building of Mount Pleasant’s Main Alley development.

“The zoning typically needs to have an industrial component (within the building), which is why you’re seeing a lot of it in Mount Pleasant,” said Petrozzi. “You can’t just drop a life sciences company in downtown Vancouver.”

The challenge is tight supply for up and coming companies that don’t yet have the deep pockets to fund costly developments. Many smaller firms work in labs on university campuses or use space in old buildings from the previous era of biotech companies, such as QLT’s headquarters on Great Northern Way.

jlee-young@postmedia.com


NOTE: An earlier version of this story contained inaccurate information. The nanoparticle technology that allows the Pfizer-BioNTech mRNA COVID-19 vaccine to enter human cells was developed by another company.

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