Repurposing Toronto's Office Spaces: Embracing Life Science Facilities
Toronto's downtown office market, once bustling with lease deals, is facing a new challenge. High vacancies and changing work arrangements have prompted developers to explore alternative uses for their projects. In this blog post, we will delve into the transformation of office spaces into in-demand life science facilities. We will examine the factors driving this shift, highlight key developments, and explore the opportunities it presents for the Greater Toronto Area (GTA) and its thriving life science sector.
The Shift in Toronto's Office Market:
Before 2020, Toronto's office market was characterized by low vacancy rates and high demand. New downtown office towers attracted lease deals, but the landscape has changed dramatically since then. Today, the downtown core faces record-high office vacancies, currently standing at 11%. The construction pipeline in the area is six times the five-year average, and approximately 30% of the new towers' office space remains available for lease. Many of these towers were announced prior to the pandemic and signed leases before 2020, leaving over 2 million square feet of space unoccupied.
Adapting to Changing Dynamics:
The shift in Toronto's office market dynamics has forced investors and operators to pivot and explore alternative uses for their projects. The reduced demand for office space and the rise of remote work arrangements pose challenges in filling the vacancies. Some developers have seized the opportunity to repurpose their office investments into life sciences during the construction period. By capitalizing on the region's booming demand for lab space, they have found a viable solution to the challenges posed by the current office market conditions.
A Booming Sector: Toronto has a rich history of developing areas dedicated to wet lab space, such as the Discovery District in the College and University area. These districts serve as a mix of hospitals, universities, research facilities, labs, and offices. In recent years, more pockets of life sciences innovation zones have emerged and expanded across the GTA. Prominent examples include the MaRs Centre, which offers 1.3 million square feet of office, lab, meeting, and event space, and the expanding University of Toronto's Schwartz Reisman Innovation Campus, set to provide 750,000 square feet of space for AI scientists and biomedical experts.
Opportunities for Office Developers:
The pandemic's positive effect on the scientific research and development employment sector, particularly in drug development and therapeutics, has created a perfect segue for office investors. Despite existing investments by academia, the region still faces an immediate need for more wet lab space. Conversions of office developments provide an opportunity for office developers to meet this demand. Existing office buildings often lack the necessary infrastructure to accommodate conversions, making it more feasible to repurpose office spaces during the construction process.
Several significant developments exemplify the repurposing trend. The CORE at 2395 Speakman Drive in Mississauga, initially intended for office space, now offers 400,000 square feet of special-purpose research and exploration facilities. Spear Street, a U.S. life sciences developer, partnered with First Gulf and healthcare design firm Jacobs to create this custom-built life science campus. Similarly, Catalyst at 77 Wade Ave., a 155,000-square-foot development in Toronto's Junction neighborhood, switched from office use to life science development through a partnership between AIMCo and the Canadian Life Science Property Group.
As Toronto's office market adapts to high vacancies, repurposing office spaces into life science facilities has emerged as an innovative solution. The growing demand for wet lab space, coupled with the need for conversion-friendly infrastructure, presents opportunities for office developers to attract tenants and meet the evolving needs of the GTA's thriving life science sector. By embracing this transformation, Toronto can foster further innovation and contribute to the region's scientific research and development ecosystem.