CPPIB, Greystar to Form Joint Venture in US Life Sciences Development

The Canada Pension Plan Investment Board (CPPIB) and Greystar Real Estate Partners are collaborating to fund life science real estate development opportunities in the United States, earmarking an initial $1.2 billion for the joint venture.

The investors are starting with an office and lab development project called 74M in Somerville, Massachusetts, that will start construction this year, CPPIB said Thursday. The 18-story property near East Cambridge will be built to LEED Platinum and WiredScore Platinum standards, certifications for sustainability and digital connectivity. CPPIB will own a 90% stake in the development, while Greystar will take the remaining 10%.

“The US life sciences sector continues to grow and evolve, with increasing demand for purpose-built lab and office space that is designed to market leading technical specifications,” said Peter Ballon, managing director and global head of real estate at CPPIB. “The acquisition of 74M expands our global life sciences strategy into the US market and provides a solid foundation to this new program with Greystar.”

Life sciences properties belong to a niche real estate sector that has recently been growing in popularity among investors who are looking for assets that offer downturn protection, while also generating cash flow.

Other real estate sectors have taken a hit during the pandemic, but life sciences offices and laboratories have experienced less turnover. More often than not, tenants have to physically travel to laboratories and life sciences offices to take advantage of the specialized spaces for health work and research.

Plus, the health care sector is a growing one in the US. Authors of a recent Willis Towers Watson study say they are “very excited” for life sciences properties, since an aging demographic is expected to boost demand for innovative medicines and equipment.