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Illustration: Brendan Lynch/Axios

Office occupancy rates remain deflated across industries, but one type of workplace is in high demand: labs.

The big picture: A number of trends — in public health, American demographics and venture capital funding — are colliding to supercharge the life sciences industry.

Driving the news: U.S. office vacancy rates are at 17%, but lab vacancy rates are at 5%, according to a new report from the commercial real estate firm CBRE.

Money is pouring into life sciences companies. Venture capitalists are throwing money at gene editing and other promising therapies, at the same time that an aging American population is driving up health care spending.

  • The annual amount of venture capital flowing to life sciences companies has roughly doubled since 2019 to a whopping $32 billion, per CBRE and CB Insights data in the report.
  • Federal health care spending made up around 4% of GDP in 2006, but that's expected to swell to over 8% by 2040, according to the Congressional Budget Office.

What's happening: "This was a sector that was white-hot prior to the pandemic," says Jon Varholak, a vice chairman at CBRE who specializes in life sciences real estate. "The pandemic poured more gasoline on the fire."

  • "People now more than ever are realizing we may need to be at the ready for something like this," he says.
  • That's goading established life sciences companies to come up with innovative therapies and vaccines, and giving rise to startups that bring a fresh perspective to public health issues.

Biotech job openings are growing at their fastest pace on record, outpacing the notoriously hot tech sector, per a CBRE analysis of Bureau of Labor Statistics data.

Certain metro areas are benefiting from this boom more than others, according to the CBRE report.

  • In Boston, lab vacancies are at 1.7%. Demand for lab space is so high that the city's "office market has become the envy of landlords across the country," the Wall Street Journal's Peter Grant writes.
  • New York's lab vacancy rate is 1.1%, and San Francisco's is 2.6%.

And here's another new trend: Even though life sciences jobs have traditionally been located outside of cities — where there's ample inexpensive space for big labs and campuses — the strongest demand for lab space is actually in urban areas, says Ian Anderson, CBRE’s head of office research in the Americas.

  • Employment growth between 2017 and 2020 was 25% in Middlesex County, Massachusetts — which is composed of the Greater Boston suburbs — but 35% in Boston proper.
  • Growth was around 18% in San Mateo County, California, but nearly 92% in San Francisco.
  • There's nearly 0% growth in Suffolk County, New York — which encompasses the Long Island suburbs — but over 25% in Manhattan.

The bottom line: "The whole industry is moving closer to where the intellectual capital is," Anderson says.

Go deeper

Miriam Kramer, author of Space
Dec 14, 2021 - Science

The space industry's monumental 2021

Illustration: Annelise Capossela/Axios

The space industry's tremendous year of huge investments, major human launches and hundreds of satellites sent to space also laid bare just how far the sector has to go before it fully matures.

Why it matters: Years like 2021 help bolster predictions the space industry could be worth more than $1 trillion by 2040.

Updated 2 hours ago - Energy & Environment

Bomb cyclone prompts blizzard warnings from Virginia to Maine

Computer model projection showing the intense storm off of Cape Cod on Jan 29, 2022, with heavy snow and strong winds lashing the coastline. (Weatherbell.com)

Blizzard warnings are in effect for 11 million people from coastal Virginia to eastern Maine as a potentially historic winter storm is set to slam the Mid-Atlantic and Northeast beginning Friday.

Why it matters: The storm will bring hazards ranging from zero visibility amid hurricane force wind gusts and heavy snow, to coastal flooding that will erode vulnerable beaches and threaten property from the Jersey shore to coastal Massachusetts.

Updated 2 hours ago - Politics & Policy

Swastikas found outside Union Station in D.C.

People walk through Union Station on Jan. 16 in Washington, D.C. Photo: Spencer Platt/Getty Images

Drawings of swastikas appeared etched around the entrance to Union Station in Washington, D.C., on Friday morning.

Driving the news: "An investigation is underway with Amtrak Police and the Metropolitan Police Department after swastikas were reported on the exterior of Washington Union Station on Friday," Amtrak spokesperson Kimberly Woods said in a statement to Axios.

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