- Life science real estate is hot, with the lab space square footage growing by almost 12% across the US in the last year, according CBRE report detailing growth in the largest biotech clusters.
- CBRE’s report highlighted the 13 largest biotech clusters and the top 10 emerging clusters, showing how record amounts of funding from the National Insitutes of Health and venture capital are translating to the real estate markets.
- Business Insider highlighted 6 clusters that are seeing large amounts of growth, whether they’re established but growing very rapidly, like New York City, or they’re emerging, like Pittsburgh and Houston.
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Real estate to house pharmaceutical, biotech, and other medical research professionals is growing at a rapid pace and rents continue to rise, a sign that tenant demand can support the increasing attention on life sciences from institutional investors and developers.
Lab space has grown by 11.9% across the US to 95 million square feet over the 18 months leading up ending on June 31 with another 11 million square feet under construction, according to a CBRE report detailing growth in the largest biotech clusters. The sector has added more than 20 million square feet of space over the last 2 years.
Life science employment is up 1% to last year, compared to a 7.6% decline in the rest of the nonfarm economy. Biotech R&D specifically is actually up 4.9% this year.
The biotech industry values proximity to institutions that do large amounts of research, like universities and medical centers, as well as proximity to other biotech companies, allowing for the easy cross-pollination of data and techniques between different biotech companies. This has created a series of clusters across the country.
The two largest clusters are the San Francisco Bay Area Region and neighboring Massachusetts cities Boston and Cambridge both of which grew out of major research universities like Stanford, Harvard, and MIT. Companies in these two clusters accounted for more than half of the $17.8 billion in venture capital funding in the year ending in the second quarter of 2020, and with the inclusion of the third-largest cluster, San Diego, the three cities made up 66% of property sales in the sector.
Read more: Booming demand for lab space is a rare bright spot for real-estate developers. But a steep learning curve means some ‘stupid money’ investors could get burned.
While these clusters are still by far the dominant ones, the sector is growing across the United States. The report highlights 23 clusters, both nascent and well-developed, that are key parts of the biotech boom. These are good signs for the economies of those local cities, as employment in the space is outperforming the rest of the economy.
We’ve highlighted six cities with rapidly growing life science sectors to showcase some of the cities driving lab space growth.