JPMorgan Is Hunting for Properties in a Sector Poised for Post-Covid Growth

Demand for lab space will probably rise over the long term due to the Covid-19 pandemic, says Anton Pil, global head of alternatives at J.P. Morgan Asset Management.

Scott Eisen/Bloomberg

Scott Eisen/Bloomberg

JPMorgan Chase & Co.’s asset management arm expects to expand its ownership of laboratories as part of its effort to position its portfolio for a post-pandemic world.

The U.S. will probably see a “re-onshoring” of pharmaceutical production and life-sciences drugs as a result of Covid-19, Anton Pil, global head of alternatives at J.P. Morgan Asset Management, told Institutional Investor in a phone interview. “To be prepared the next time around, you probably want to make sure you have a manufacturing and a laboratory capability within your country.”

J.P. Morgan Asset Management, which oversaw $2.3 trillion at the end of September, invests in traditional and alternative assets. The investment manager already owns around $500 million to $1 billion of labs in its alternative real estate portfolio, according to Pil.

“I expect that to grow quite a bit,” he said. “I can even see that growing into manufacturing areas, as well — not just pure lab space.”

[II Deep Dive: The World’s Dominant Investors in Private Equity]

The lab properties in JPMorgan’s portfolio are near the most important biotechnology centers in the U.S., including Boston, San Francisco, San Diego, and New York, according to a spokesperson for the bank’s asset management business. The assets include real estate under development.

In New York, J.P. Morgan Asset Management is redeveloping an old factory near Columbia University into lab and office space, the spokesperson said in an email. In San Diego’s Sorrento Mesa, the asset manager is developing and redeveloping existing office properties into labs.

The alternative investment manager also owns labs near Harvard University’s Longwood Medical Center and in Watertown, Massachusetts. And in San Francisco, the firm manages an upgraded, century-old office building in the neighborhood of China Basin that has substantial lab space.

In Pil’s view, the race for a Covid-19 vaccine has probably accelerated life-sciences research more broadly, which will lead to more space needed for lab work. He explained that related real estate, such as large clean rooms used for manufacturing, will also benefit as labs are upscaled to begin “doing things more industrially.”

New York-based drug company Pfizer announced November 20 that it was submitting a request to the U.S. Food and Drug Administration for emergency use authorization of its Covid-19 vaccine, which could be available to “high-risk populations” by mid-December.

The enormous work being done around Covid-19 vaccines may pay off in other areas of life sciences sooner than anticipated, according to Pil.

“All this money that has been plowed into research around Covid will result in other outcomes that are positive for society,” he said. That means demand for lab space will probably rise over the long term, he said, making that area of real estate even more attractive to his group at JPMorgan.