Life Sciences Trends Point to Continued RE Demand

The life sciences industry’s real estate needs in the nine key U.S. markets continue as soaring construction costs hinder the upgrading of existing office space, international players compete for the limited pool of high-end accommodations and businesses increase reliance on outside real estate services providers, according to a new report by CB Richard Ellis Inc. “This is an industry that is so intense on focusing on core business, which is R&D, new products, and healthcare–which is only going to increase as the population ages,” a CBRE spokesperson told CPN today. Additionally, growing expectations in quality of life, as well as the industry’s participation in the health of the planet through research in such fields as alternative fuels serve as drivers. The core life sciences markets in the United States are: Cambridge/Boston; Los Angeles; Metro New York/Northern New Jersey; Philadelphia/Southern New Jersey; Raleigh-Durham; San Diego; the San Francisco Bay Area; Seattle/Bellevue/Washington; and Washington, D.C./Baltimore/Suburban Maryland. Of those leading hubs, the San Francisco Bay Area tops the list and even holds a place of prominence on an international level. With 800 life sciences companies making their homes in a market with 25 million square feet of research-related real estate, the area holds the distinction of being the largest life sciences market in the world. The current vacancy level in the Bay Area, where rents vary from $24 to $60 per-square-foot, is a low 5 percent, according to the report. In San Diego, where 700 life sciences companies employ 40,000 workers, there is not much space up for grabs. While the area’s inventory encompasses 12.7 million square feet, it features a vacancy rate of 4.6 percent. The Cambridge/Boston area holds its own, with 8.5 million square feet of laboratory space, 1 million of which is available. In many of the markets, relevant educational institutions seeking to grown and cluster are a driving factor behind demand. “The life sciences industry needs particular types of space, and we have to make sure that we have the capability to house and to grow that industry,” the spokesperson said. “The aging populating alone expands the need for more space, so we still see life sciences real estate as a growing sector.”