According to a new CBRE research report, investment in U.S. life sciences real estate increased by 62 percent last year, with further growth of at least 10 percent expected in 2022.
Investment in life sciences real estate, comprised of lab and Research and Development (R&D) properties, reached $21.4 billion in 2021, a 62 percent increase over 2020. Investment in the sector has grown by 111 percent since 2018.
"The surge in investment in the U.S. life sciences market is underpinned by strong supply and demand fundamentals," said Chris Bodnar, Vice Chairman and Co-Head of Healthcare & Life Sciences Capital Markets at CBRE. "A shortage of existing life sciences space available for purchase, coupled with robust and soaring property prices, have led most real estate investors focused on this sector to pursue development opportunities."
Several new life sciences markets including Los Angeles, Philadelphia and New York are emerging to meet robust demand and many new developers have been drawn to the sector. Between Q2 2020 and Q4 2021, the number of life sciences developers in the top 12 life sciences markets rose to 64 from 45, with space under construction rising to 29.5 million sq. ft. from 16.2 million sq. ft. over the same period.
Mr. Bodnar added, "With lab vacancy rates near record lows, this new development activity should give more space options to occupiers and more opportunities for investors in this booming sector."