June 29, 2021

Driven by biotechnology and other advancements, the U.S. life sciences industry continues to shatter records for employment and venture capital funding. As a result, demand and pricing for lab space are increasing. This report provides insights into the trends influencing demand for lab space nationally and in the top life science markets.

Key Takeaways

 

Big Picture Trends

  • The U.S. life sciences industry continues to shatter records for employment, venture capital funding and laboratory/R&D space demand and pricing.
  • Life sciences employment reached a record high in March 2021, driven by biotechnology and other industry advancements.
    • The industry’s 16% total job growth since April 2017 when CBRE first produced this annual report has surpassed that of the technology sector.
  • Venture capital funding to life sciences hit a new quarterly record of approximately $10 billion in Q1 2021, more than double the amount of Q1 2020. Funding to emerging markets also increased.
  • The outlook for 2021 remains positive as the national economy rebounds and capital is plentiful for expansion.

 

Real Estate Trends

    • Lab/R&D market fundamentals have never been stronger:
      • Boston, the San Francisco Bay Area and San Diego remain the premier markets, experiencing the strongest demand and tightest space availabilities.
      • Demand across all major markets has grown by 34% since mid-2020.
      • The more than 15.6 million sq. ft. of speculative construction underway as of Q1 2021 is still not enough to meet current tenant requirements for space. Preleasing of this under-construction space increased to 29% in Q1 2021 from 22% in mid-2020.
      • The prospect of oversupply from conversions of other property types to lab/R&D space has not materialized through early 2021.
      • Rents continue to grow quickly, particularly in ascendant markets like Philadelphia and Washington, D.C.-Baltimore. New records were hit in Boston, San Francisco and San Diego.
    • Development of Good Manufacturing Process (GMP)/Biomanufacturing space is growing, especially in East Coast markets, as this property subtype increases in prominence and importance.

    Biotech Revolution Underpins Demand for Labs

    U.S. Biotech R&D Employment

    US-LS-Assets-Fig1Source: US BLS, CBRE Research, Q2 2021.

    Top U.S. Life Sciences Clusters

    Q1 2021 Market Indicators

    US-LS-Assets-Fig9-v2

    Source: Source: CBRE Research, Q1 2021.

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