Life Science: Great Promise & Rapid Growth

Cushman & Wakefield is tracking approximately 125 msf of lab space in the 11 U.S. markets. Key Canadian life science markets like Toronto and Montreal do not separate out lab space from their overall inventory. Life science space is in high demand. The vacancy rate for this space is 8.4% in these 11 markets, well below the 11.6% vacancy rate for all office space in these markets and the national office vacancy rate of 13.3%. In extreme cases like Cambridge, outside of Boston, the vacancy rate has fallen to 0.9%.

Laboratory occupancy costs have been rising significantly over the last several years, consistent with the overall

LAB SPACE VACANCY RATES BY MARKET

health of the economy and the increased funding and growth of the life sciences sector.

25%

22.3%

20%

19.3%

15%

13.6%

10%

9.8%

8.8%

6.2% 6.2%

5%

4.7%

3.2% 2.6% 0.7%

0%

Source: Cushman & Wakefield Research

RENTS In an environment of low vacancy, asking rents for lab space generally command a premium in the marketplace. Overall, asking rents for lab space in the 11 markets covered in this report average approximately $36.00 NNN, significantly above the $31.29 NNN reported for office space in the U.S. in the third quarter. Extraordinarily tight markets are experiencing extraordinary rents for life science properties, including Cambridge, MA which has reported triple net rents around $85 per square foot. On a market-by-market basis the differences between rents on lab space and office space are generally small for most markets, but because some markets have very large differences, the premium for lab space averages approximately 19%. But in some markets, like Boston, the extraordinary tightness of the lab space market has pushed rents into the stratosphere. In addition, the strong demand for space and resulting low vacancy has boosted rents for lab space faster than overall office rents. Since 2008 average asking rents in the U.S. office market have increased 17%. The average rent for lab space over this time has increased approximately twice as fast at 33.2%.

9