Jena's life sciences need more space for growth

Jena Economic Development Agency publishes first nationwide laboratory market report

The most important facts in brief

• The Jena Economic Development Agency has published the first laboratory market report in Germany
• The aim is to create transparency for this submarket and provide valid information for investment decisions by companies and research institutions as well as for municipal location development
• A sharp increase in demand, particularly from the growth sector of life sciences with very specific requirements in terms of location and construction, meets a limited supply of rental properties and investment opportunities
• Growth can only continue if the city develops additional space in line with the needs of companies and if there are sufficient incentives for (future) skilled workers

Growth sector life sciences

The figures are impressive: Jena companies in the life sciences sector - i.e. the sub-sectors of medical technology, biotechnology, analytics and bioanalytics as well as health technology - generate over one billion euros in turnover per year. Many of these companies have experienced an enormous growth spurt in the last three years, driving up demand for laboratory space in the City of Light. The reasons for this are general demographic changes with an ageing society that requires medical products and services. The coronavirus pandemic has also acted as a catalyst. And: companies want to become less dependent on geopolitical events and avoid supply and storage bottlenecks as far as possible. To do this, they need the right space on site. The Jena Economic Development Corporation (JenaWirtschaft) has now published the first laboratory market report for Jena - and, according to its own research, for the whole of Germany - to provide a comprehensive overview.

Jena's first laboratory market report

According to the study, Jena's laboratory market currently comprises over 100,000 square meters. More than half of this is accounted for by universities and institutes; a further quarter by research-based companies. Around a fifth of the space is used for production. The relevant institutes and companies are mainly located on the Beutenberg Campus, in Jena-North and in the Göschwitz and Jena21 industrial estates. According to the report, the most dynamic users are institutes and companies from the life sciences cluster, but also from optics and photonics as well as precision engineering.

According to Patrick Werner, project manager at JenaWirtschaft, start-ups and young companies are primarily concentrating on rental space, while research institutions and established companies are building for their own needs. And: the demands on the space are high:

"The laboratory market often has special requirements. These range from specific exhaust air filters and clean rooms to genetic laboratories."

Accordingly, a rental price range in the segment cannot be determined; however, the net raw rent in 2022 will be EUR 10 per square meter, according to the report. A shortage of space, high construction and energy costs, a difficult global economic situation, inflation and rising interest ratesare currently creating uncertainty for the local economy.

Challenges and opportunities

Dr. Eike Dazert, Managing Director of the Thuringian industry association medways e.V., is also aware of these challenges, but also the opportunities for companies in Jena:

"We have around 130 life sciences companies in Jena, from innovative start-ups to strong SMEs and global players. With around 12,000 employees, the industry is an absolute driver of innovation."

The spectrum ranges from analytics and diagnostics to classic drug production, laboratory automation and laser therapy. According to Dazert, the companies generate a turnover of over one billion euros per year, around two thirds of which comes from exports:

"In the last three years, supply chains have been disrupted or cut. This means that companies not only have to find new suppliers, but also qualify them and integrate them into the approval process. The regulatory framework conditions are particularly strict in the medical sector and care should be taken at EU and federal level to ensure that innovations are not slowed down or even prevented."

According to Dazert, not only should factors such as production in Europe or the fulfillment of sustainability criteria be desired or required, but these requirements must also be reflected in the award criteria for tenders.

Local challenges also need to be overcome. Thuringia and Jena are often still too little known internationally among skilled workers and the earning opportunities are more lucrative elsewhere in the world.

However, according to Dazert, hard facts, soft location factors and the "people with problem-solving skills and a hands-on mentality" who work here speak in Jena's favour: "The community here is very well networked; and the proximity to the university, the colleges and the hospital stimulates the life sciences players."

Jena is also cosmopolitan and international, which is particularly important for specialists from abroad. Culture, nature and leisure activities as well as good childcare are also arguments in favor of Jena as a location.

Actively supporting start-ups

BLINK AG from Jena has itselfgone the way from the start-up "in the letterbox" to the tailor-made laboratory building. The team led by CEO Eugen Ermantraut has developed a novel bioanalytical process and is currently setting up production for the necessary reagents - i.e. detection agents.

"This allows clinical parameters to be detected quickly and precisely in the laboratory and also in close-to-patient use," says Ermantraut.

The company started at the end of 2015 in the Bioinstrument Center (BIZ) on the Beutenberg; BLINK now employs more than 60 people and has built a bespoke laboratory, administration and production building with a total of 4,500 square meters in the JenA4 industrial estate in 2021.

"We opted for a new building because rental space is often only available to a limited extent and the basic equipment requirements for laboratory space were not always met," says the company boss.

According to Ermantraut, actively supervised incubators - i.e. facilities that actively accompany and support start-ups - are also needed outside of academic structures with a clear focus on the life sciences so that other founders can also successfully follow this path. This could help to stabilize and accelerate the existing growth in the sector.

Increasing demand for space

Growth that can be measured in figures:There are currently 8,7000 square meters of laboratory space under construction; over the next five years, companies will need to expand by around 12,000 square meters.According to Patrick Werner, in order to meet this demand,reserved commercial areas in the land use plan mustbe developed quickly. It is crucial that the areas are large enough and easily accessible for employees. Laboratory space cannot be built somewhere on a greenfield site, but must be developed sensibly in locations with good infrastructure.

Background: Methodology and data collection for Jena's 1st laboratory market report

In July 2020 , JenaWirtschaft was asked by external partners with an investment project for specific figures on Jena's laboratory market. At that time, however, only data on the office space market was available. In the fall and winter of 2020, JenaWirtschaft researched reliable data across Germany; at the same time, demand for laboratory space rose sharply from 2021. The economic development agency therefore decided to carry out its own data collection and analysis.

To this end, a proprietary survey methodology was developed in 2021 in close cooperation with the Gesellschaft für immobilienwirtschaftliche Forschung (gif). The JenaWirtschaft team developed data sources and determined market indicators to be surveyed and identified potential laboratory space users for a survey.

Implementation began in 2022: owners, administrations and real estate agents were surveyed using a comprehensive questionnaire on holdings, investment intentions and space turnover, and laboratory space users were interviewed on construction activities and planned construction measures. At the same time, information was collected from official registers. The 1st Jena Laboratory Market Report was generated from this data collection.