Apr 3, 2023 - Health
Record growth in U.S. life sciences real estate footprint
The inventory of U.S. life sciences laboratories and R&D sites jumped by nearly 50% in five years to 181.7 million square feet as of the fourth quarter of 2022, according to a CBRE report provided first to Axios.
- CBRE forecasts the properties will consume 220 million square feet by 2025 as new construction is completed, with nearly a third of the future space already pre-leased, according to the 2023 U.S. Life Sciences Outlook.
Why it matters: While there's been plenty of pessimism hanging over commercial real estate since the SVB failure — something that's certainly impacted the life sciences — the report points out multiple reasons to expect the sector will endure, the report says.
- Though bank turmoil is likely to slow venture capital funding, initial public offerings, and job growth, there's still a bevy of clinical trials for new drugs, federal funding, and ample cash reserves — at least for biotech's bigger players.
- The industry's vacancy rate, which rose to 5.7% in the fourth quarter from 5.1% in the third quarter of 2022, is still low compared to many other sectors.
By the numbers: Boston and Cambridge, Mass. remain hubs with 52.7 million square feet of inventory and 15.3 million square feet of life sciences space under construction.
- Only 3% of that space is vacant after booking the largest leases of 2022. Both Takeda and AstraZeneca leased about 600,000 square feet of space, respectively, in Cambridge.
- The San Francisco Bay Area, which has about 33.7 million square feet of space, also has among the fastest-growing inventories with 9.3 million square feet under construction.
- Chicago, which has less than 2 million square feet of life science inventory also has the most space available with a nearly 30% vacancy rate.