Life Sciences 2020: The Future is Here

Real Estate Market Dynamics: Find the jobs and you have the demand for space With rising capital and employment driving growth, the life sciences sector is a small but rapidly growing commercial real estate product type. In the 12 major U.S. life sciences markets covered in this report there is a total of 154 million square feet (msf) of lab space, or 8.8% of the total 1.75 billion square feet of traditional office inventory in these markets. Over the next two years that share is projected to increase marginally to 9.3% as an estimated 12.0 msf of new lab space is expected to be delivered.

Even though the total amount of lab space is small in the aggregate relative to the size of the U.S. office market, in some markets, lab space is a significant and important driver of market demand and pricing.

LAB INVENTORY AS A SHARE OF

40%

2019 2021

30%

20%

10%

0%

The largest markets are Boston/ Cambridge and the San Francisco

New York City U.S.

Philadelphia Boston

Chicago

Research Triangle

East Bay

Baltimore

Maryland

Oakland /

Suburban

Peninsula, both with 21.8 msf of space, followed by San Diego with an estimated 19.6 msf.

San Diego

Seattle /

New Jersey

San Francisco Peninsula

Puget Sound

Source: Cushman & Wakefield Research

TOTAL SPACE There are six markets in the U.S. in which the total lab space accounts for 10% or more of the total office inventory. Any developments in life sciences will have an important impact on these markets. Because in the San Francisco Peninsula life sciences space accounts for one-third of the total inventory, what happens in the life sciences industry is the critical driver of that market. On the other hand, in New York City lab space accounts for less than 0.5% of the total office inventory. Nevertheless, approximately 1.7 msf of lab space is expected to be completed there in 2021 making it the third-largest pipeline in the nation, only behind the San Francisco Peninsula (+3.9 msf) and Boston/Cambridge (+2.3 msf) markets.

CITY

SF

SAN FRANCISCO & PENINSULA

21,849,813

BOSTON

21,778,822 19,579,248 17,686,153 11,250,326

SAN DIEGO NEW JERSEY

SEATTLE/ PUGET SOUND

SUBURBAN MARYLAND RESEARCH TRIANGLE

10,676,361

10,156,683

PHILADELPHIA 9,741,755 OAKLAND / EAST BAY 8,256,469 BALTIMORE 6,500,000 CHICAGO 5,400,000 NEW YORK 1,558,335

/ 11