Understanding the Implications of the BIOSECURE Act for CRE

Blog originally published on IFMA Boston Chapter's (International Facility Management Association) website. 

Recently, the House of Representatives passed a bill known as the BIOSECURE Act with a comfortable margin of 306-81, easily meeting the two-thirds threshold to pass. Its intent is to stop U.S. businesses that receive federal funds from working with four different Chinese genomics companies. The reason? A concern that those firms have ties to the Chinese government— which could lead to potentially dangerous access to the genetic data of U.S. citizens. The bill will now proceed to the Senate Committee on Homeland Security and Governmental Affairs for a vote and is likely to be added to the Senate version of the annual defense bill, the National Defense Authorization Act. While U.S. pharma and biotech companies have raised concerns about how such a law could negatively impact their business, the implications for Boston’s commercial real estate sector are slightly rosier. If the new law does force the domestic marketplace to find local contract development and manufacturing organizations (CDMO) partners, it could lead to a increased demand in the need for suitable lab space- a resource Boston’s life sciences markets have plenty of as of late.

Impact on Local CRE Market

The U.S. government has wisely amended the proposed law to give affected companies more runway when it comes to disassociating with Chinese firms like WuXi, which generated 65 percent of its revenue from the U.S. in 2023. The BIOSECURE Act would give U.S. companies 8 years to disassociate from Chinese firms and seek out new CDMO partners in the United States. It’s worth noting that a WuXi-affiliated company has already begun weighing the possible sale of some U.S. manufacturing assets. Given the proposed law has strong bipartisan support, it is expected to pass. When that happens, will U.S. pharma and biotech companies be prepared to shift key portions of their business closer to home? The potential impact of “onshoring” could spell opportunity for the local commercial real estate industry. Already, there are signs that local firms are beginning to make investments in R&D space in Boston and beyond. For instance, Berkeley Investments is exploring a 200,000 sq. ft. biomanufacturing facility in Billerica; King Street Properties is embarking on a new build in Devens; and the Davis Companies acquired new space last year just over the border in Smithfield, RI. And in June, Northeastern unveiled its building plans for the next decade which includes the redevelopment of an existing building into a life sciences research lab.

Boston: Playing to its Strengths

For the Boston area and suburbs, the impact of the BIOSECURE Act will certainly cause some heartburn for companies accustomed to the lower cost of services that is part and parcel of doing business with China. However, thanks to the deep pipeline of talent, university and research ecosystem, and availability of cutting-edge lab spaces, it stands to reason that the impact will be quietly absorbed by the region’s robust life sciences framework. Cresa Boston, a leading occupier-centric commercial real estate firm, is well-equipped to help you find your next laboratory or research space. Reach out to our team of life sciences advisors to learn more about the impact of the BIOSECURE law and how to plan for future research space needs