February 4, 2019
Increased investment and employment in the life sciences sector has driven life sciences related real estate to new heights, according to Cushman & Wakefield’s new report, Life Science: Great Promise & Rapid Growth. The report delivers a big-picture overview of the sector and its impact on commercial real estate, as well as more granular insights into 13 top life sciences markets in the U.S. and Canada.
An influx of venture capital, as well as billions of dollars in funding from the National Institute of Health, has pushed growth in the life sciences sector to nearly five times as fast as the economy since 2000, adding 85,000 jobs, with roughly 70% of that job growth (61,000) in the past eight years.
The report notes this rapid expansion is primarily a response to an aging population with increased longevity. By 2030, there will be 73 million Americans aged 65 or older, equating to 20.6% of the population, compared with 40.5 million Americas in this cohort in 2010.
Cushman & Wakefield’s Greg Bisconti says, “Life sciences has been, and will continue to be, a major growth driver for the U.S. economy for decades. Essentially the tech area of healthcare, the life sciences sector has become a broad and growing collection of everything from diagnostics, genetic reading and writing and personalized medicine, to medical device technology, pharmaceutical research and development, and much more.”
Bisconti adds, “Those forces, in turn, drive increased demand for lab space in both gateway and secondary markets across North America.”
Key findings include:
- Lab space vacancy is 8.4% in 11 key U.S. markets, well below the 11.6% vacancy rate for all office space and the national office vacancy rate of 13.3%.
- In Cambridge, MA, the vacancy rate has fallen below 1.0%, while in San Francisco and Oakland, vacancy also has plunged.
- In most cases, markets that have experienced an increase in vacancy, such as New York, are adding substantially to inventory. San Diego, for example, has added more than two million square feet of space (+14.5%) in the past four years.
- Across the sector in the U.S., average lab space rent has increased 33.2% in the past decade, compared with a 17% increase for U.S. office space.
For comments, questions or concerns, please contact Dennis Kaiser