Although the COVID-19 pandemic has presented unique (short-term) challenges for both CRE and life science industries, governments, investors, and society as a whole have turned to the life sciences sector for solutions.
In the first half of 2020, over $16 billion CRE capital globally was shifted to support and finance life sciences organizations, manifesting the resilience of this sector.
Real estate players now view life science spaces as an asset class within the commercial real estate industry, separated from offices or industrial spaces, with separate diversification and growth possibilities.
Biotech growth drives demand for life science spaces
As life sciences companies are working on Covid-19 treatments the expansion of their physical footprint comes naturally and is expected.
Due to the ongoing economic devastation of Covid-19, the office work and coworking community have suffered a major slowdown, with thousands of spaces being closed to an unknown time.
On the other hand, most people who work in the life sciences niches like pharmaceutical, biotech, and other medical research fields – can not do their jobs from their sofas. For them, the pandemic has only fueled a real estate scramble for laboratory space across the U.S., lifting rents even as construction accelerates.
In contrast to the general meltdown of the commercial real estate market, labs and life science spaces have proven to be a virus-proof of the commercial real estate business.
The bulk of investment resources and funding capital from the National Institutes of Health and research has gone to Massachusetts and California, where biotech employment has grown fastest, pulling some changes such as:
- Lower vacancies
- Higher rents and
- More construction
The data doesn’t lie – new headquarters that cover specific needs
Covid-19 drives historic demand for life sciences real estate because it covers the specific real estate requirements and needs of companies involved in the biopharmaceutical, medical, genomics, diagnostics, and digital health sectors.
This plan allows them to compete with big companies, helps in the process of recruitment and retention of talents desiring a dynamic, urban work address.
All of them are focused on their end-products with the use of the latest technology to improve the efficiency of healthcare delivery.
San Francisco Bay Area offering the best headquarter hot-spots
One of the top clusters for life science real estate in the U. S. is the San Francisco Bay Area. This market has become dominant as of 2019 with more than one million square feet of life science space, and without including the Oakland/East Bay market with another 500,000 square feet of space.
Labs also require the same kinds of amenities and social spaces as any millennial-friendly office, and the competition for talent drives firms to put a great effort into exposing those perks. For example, the IndieBio lab and co-working space, and life-sciences incubator where tenants in lab coats enjoy the same industrial-chic vibes familiar to other Silicon Valley tech-heads, etc.
The life sciences revolution is occurring at a record pace, and the U.S. market clusters are leading this revolution, with a selection of markets emerging as the industry’s next hot spots – Boston-Cambridge and the San Francisco Bay Area.
Keeping the biotech pace with IPG
Rents are increasing for lab locations, vacancies are plunging, while research, development, and employment are expanding further, thanks to strong venture capital investment.
In the top life sciences markets, there’s currently about 13.9 million square feet of space under construction. IPG offers up-to-date information and records on which markets have the most experts fueling innovation, and where the most qualified scientists are coming from.
The biotech sector may be the single most attractive sub-sector within commercial real estate today, not only because of the pandemic, which accelerated these trends, but because of an aging demographic, the importance of highly accessible and even personalized medicine, and of the venture capital in this sector which is only increasing.
We can help you investigate and procure emerging life science places that offer educational and medical growth sources – for increased attention from investors.