February 13, 2020
Industries ranging from genetic engineering, to medical technology development and manufacturing, to pharmaceutical research are broadly categorized as “life sciences.” Companies within these industries need places to work. And, according to Cushman & Wakefield’s recently released “Life Science: Great Promise & Rapid Growth” report, inventory of life sciences is increasing two times as fast as overall inventory. High demand for the space, on the other hand, is keeping vacancy rates low.
In targeting the top 11 U.S. metropolitan areas that received substantial funding for life sciences, the Cushman & Wakefield report indicated that the inventory dedicated to this industry increased nearly 10% since 2014. Meanwhile, total office inventory rose by 4.7%.
Furthermore, vacancy is declining, averaging 8.4% in the 11 markets. In Cambridge, MA, for example, vacancy was at 0.7% at the end of 2018. New York and Research Triangle, NC did have higher vacancy rates, at 22.3% and 19.9%, respectively. But in these areas, inventory has increased drastically.
Analysts who put the report together shared two forces driving growth in the sector:
- Increasing demand for health services in line with an aging population.
- Technology, which has led to a greater supply of new products which, in turn, has led to more investment in the sector. In 2018, venture capitalists invested a record $16.2 billion into the healthcare sector.
The question is whether the industry (and the space from which it operates) is recession-resilient. Cushman & Wakefield indicated that the aging population is driving demand for life-science services. Additionally, technological change continues to propel product development. Both of these trends are expected to continue in the near-term.
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