Boosted by Development and Manufacturing of New Medicines and Vaccines in the U.S.
According to a new report from CBRE, life-science lab space in the U.S. has emerged as a coveted sector of commercial real estate as hefty increases in funding and employment have fueled both demand for lab space and construction of it in leading U.S. life-science markets.
Companies actively seeking life-science real estate in the first quarter targeted a cumulative 19.3 million sq. ft. of lab space in the top 12 U.S. life-science markets, according to CBRE's Midyear U.S. Life Sciences report. This represents more than 12 percent of the total existing life sciences space across these markets--a rate of demand that is fueling ongoing construction of lab space.
U.S. lab space under construction totaled 18.9 million sq. ft. at the end of this year's first quarter. Meanwhile, tight vacancy--averaging just 5.6 percent across those markets -- is causing lab rents to rise to record levels in the leading life-science hubs of Boston, the San Francisco Bay Area and San Diego.
"Several factors have boosted the life-science industry in recent years--and even more so in the last 18 months--including keen interest from governments and capital sources in developing and manufacturing new medicines to address pandemics like COVID-19 and demographic shifts such as the aging population," said Ian Anderson, CBRE's Americas Head of Office Research. "That, in turn, has resulted in a race for more lab space. Construction of new labs, including conversions of regular offices to lab space, has ramped up significantly. But demand has grown even faster."
The $10 billion in venture capital awarded to U.S. life sciences companies in the first quarter marked a record, exceeding the previous high in last year's fourth quarter by roughly 60 percent, according to the PwC Moneytree Explorer survey. U.S. life-sciences employment has risen by 15.6 percent since April 2017, outpacing the growth of the larger tech industry.