Life Sciences on the Rise: 2021 North American Report

Consistently rising lease rates, a growing roster of liquidity partners and tight vacancy conditions have led many landlords to consider conversion of under-utilized office assets.

When it comes to growth, these occupations have expanded much more rapidly than the U.S. as a whole. Since 2001, U.S. employment has increased by roughly 7.7% (14% if we exclude 2020 due to the pandemic). Over the same time, the number of people with life sciences occupations has increased by 47%. In Boston, the number of people in these occupations has more than doubled (+137%). Since several of these are emerging markets, we also note that in terms of growth of the total number of people in these occupations, the top markets were led by Boston, which has seen the total number rise by more than 20,000 followed by Los Angeles +8,200, New Jersey +7,900 and the San Francisco Bay Area +7,100.

THE NEED FOR SPACE IS ON THE RISE

As the global biotechnology industry continues to grow and mature, the lab properties necessary to support new product development—in this case drug discovery—are experiencing chronic growth-limiting space shortages and rapidly rising rental rates, except for in a few key growth markets. The lack of space availability has especially been a concern to biotechnology groups, with inherently tight time frames and critical needs to get to market with revenue-generating products. This immediate need for space in the case of many biotechnology companies has prompted both traditional biotechnology developers and local developers alike to proceed on a speculative basis on numerous projects in the largest markets for biotechnology, with most new lab building starts now on a speculative basis in the Boston, San Diego and San Francisco markets. The overwhelming majority of these initial projects have delivered to market fully committed and speculative projects in emerging lab hubs, most notably Chicago. These have been spurred on by public funding in the hopes that successful development will prompt additional market support. Consistently rising lease rates, a growing roster of liquidity partners and tight vacancy conditions have led many landlords to consider conversion of under-utilized office assets. With a growing number of these projects underway in flagship markets, success remains heavily location-, and not asset-dependent, with the ability to overcome asset-level shortcomings a critical driver.

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