It has been just a handful of months since construction crews wrapped up work on a two-building life science campus in the Denver area, but already the property has landed a major price tag in a testament to the region's strengthening biotech market.
Investment firm Real Capital Solutions closed a $188 million acquisition for the two-building, roughly 404,200-square-foot complex in Lafayette, Colorado. The facility is leased entirely to Medtronic, the nation's largest medical device manufacturer. Chief Acquisitions Officer Adam Abeln confirmed the deal with seller Ryan Cos., the Minneapolis-based developer of the 42-acre, build-to-suit campus at South 112th Street.
The purchase marks the largest deal the firm has closed in its four-decade history, Abeln said, adding that RCS has worked with Ryan Cos. for previous acquisitions and had been tracking progress on the Medtronic campus since it broke ground in 2021.
“What interests us about Medtronic was the credit quality, the name, the fact that they're the world's largest medical device producer and the fact that it fits within our strategy today,” Abeln said in a statement. The life science company's long-term lease for the Lafayette campus made it especially attractive given the stability it provides in an otherwise uncertain real estate market.
The national life science market has cooled since its years of skyrocketing growth at the onset of the pandemic. When most traditional office workers were parked at their home desks, biotech employees were still commuting to the lab and companies were raking in venture capital funding in their pursuit of life-altering cures.
That combination fueled record leasing and demand, prompting developers to kick off major life sciences projects in top markets such as Boston and the San Francisco Bay Area. It also meant spillover demand began to spread to second-tier regions such as Denver, Philadelphia and Houston, as companies looked for comparably cheaper alternatives.
While the market is beginning to stabilize — the rate of employment growth is tapering off, and turmoil in the banking sector has resulted in a pullback in venture capital funding — some regions are still building upon their pandemic-era growth spurts.
The Denver and nearby Boulder, Colorado, area, for example, has one of the lowest biotech vacancy rates in the country at about 5.5%, according to data from CoStar and CBRE. Tenants are collectively hunting for almost 1 million square feet, outpacing the roughly 834,500 square feet moving through the region's pipeline, more than 72% of which is already preleased.
Medtronic’s Lafayette campus is one of the Minnesota-based company's largest in the United States. The medical device maker is operating on a 20-year lease for the RCS-owned property, which finished construction earlier this year after breaking ground in 2021. The campus is ultimately slated to house around 1,200 employees.