Writer: Max Crampton-Thomas
2 min read May 2021 — In an interview with Invest:, Tanner Holland, president and CEO of McDonald York Building Company, speaks to the forces driving the growth of the life sciences sector in the Raleigh-Durham area. He also touches upon the uncertainty related to the return to offices after the pandemic, as well as the move toward sustainability in construction.
How are you positioned in the life sciences segment?
McDonald York Building Company has witnessed significant growth in the life sciences sector. We have been the local contractor in that sector for the past 28 years now. We are fortunate to be here and many of the projects that we have had the opportunity to be exposed to are right in our wheelhouse. We are not having to travel to do them, we’re not having to put all our resources into a given project, because the projects have been scalable for both our resources and our talent. This market sector continues to provide us with great opportunities. When you’re talking about being on a team where you’re helping develop a treatment for a child, or perhaps some future cancer treatment, it really feels meaningful that you are part of something bigger than yourself.
How does demand for life science infrastructure compare to pre-pandemic levels?
In 2019, we continued to see the growing demand for life science space and we had our fair share of life science opportunities. Probably about 60% of our business is in that market sector. But the life science arena has attracted so much interest outside of just the space requirements. Our region’s community college and university educational programs are expanding, we have both large and small pharmaceutical-type facilities choose Raleigh-Durham and the talent pool continues to move into our region. The life science sector is just growing exponentially and our infrastructure supporting this growth has to grow with it. What we’ve noticed is the real estate market and it’s investors — both private equity and institutional investment folks — have started to increase their interest in our market and we have seen several large real estate purchases and acquisitions. There is a lot of money being invested and our region continues to support and attract life science companies. From this activity, we’ve even seen real estate conversions from office to lab, or warehouse to research space. It’s a vibrant time.
Are you seeing more concern for sustainability in construction?
Ten years ago, sustainability was a really big buzzword. With the types of projects McDonald York builds, sustainability has been integrated through the design and project specifications. Many of the sustainability initiatives from 10 years ago have now entered the energy code itself and become requirements. LED lighting is the obvious example. I can also point to the efficiency of our mechanical and electrical systems as others. What we are seeing more of is the repositioning of existing buildings for new uses.
What is your outlook for the next 12 to 18 months?
We will continue to see growth in the life science sector. I do think there’s still uncertainty at the moment in the office environment. In my opinion, this reaches up to the large corporate clients, which is about 30% of our work. These corporate companies are all trying to figure out a number of things: What did they learn from the remote working environment? What were the positives of that? How can they utilize that as they start to come back and figure out their new business operations? There are going to be some companies that move away from brick-and-mortar just as there are going to be those that don’t because they realize that the virtual way of doing business doesn’t work for them. The key for our local office environment is for us to reduce vacancy. As a contractor, people are always asking me, “What are you hearing from your clients?” Well, I’m hearing September 2021 and I am also hearing 2022. I hear it all. No one wants to be the first back. There’s no history for this. There’s no way to learn from past experience as to how to make this transition back. Somebody has got to be first, and that first, I believe, will occur late summer and as more companies return to the office you’ll see momentum pick up and then there will be more confidence in the office sector and the office sector will start to rebound.
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