Boston Tops National List as Pandemic Stokes Already Robust Demand in Life Sciences SectorOctober 26, 2020
BOSTON–The pandemic has accelerated momentum in the U.S. life sciences industry, particularly amid the race to produce a COVID-19 vaccine and develop other medicines for human ailments. That has meant more growth for metros like Boston, which ranks atop CBRE’s list of the largest U.S. life sciences markets in its new report on the sector.
Nationally, the life sciences sector has reached new highs this year in R&D employment and venture-capital funding. Those and other factors have resulted in a surge in demand for life sciences real estate in markets from longstanding centers like Boston and the San Francisco Bay Area to emerging hubs such as Pittsburgh, according to a new report from CBRE.
“Interest in the life sciences sector from developers, investors, and financial backers already was strong in recent years, and the unfortunate arrival of COVID-19 brought even more attention to the sector,” said Steve Purpura, a Vice-Chairman leading CBRE’s Life Sciences Practice in the Northeast U.S. “The Boston-Cambridge area remains the leading U.S. life-sciences market due to its long-established base of research universities, skilled workforce and ample supply of lab space.”
Several metrics support Boston’s top-ranking; Boston institutions receive more funding from the National Institutes of Health than any other market; Boston has the most laboratory space of any market, and more than 50 Boston-area companies can apply their science and technology to efforts and products for combatting COVID-19. Boston also is the second-fastest-growing market for life sciences jobs and the second-largest recipient of venture capital investment for life sciences, behind only the San Francisco Bay Area in both cases.
CBRE identified the top U.S. life sciences markets by assessing each market’s life-sciences job base, the size of its lab-space inventory, and the amount of funding it attracts from venture capital firms and the National Institutes of Health.
CBRE’s determined its list of emerging life-sciences markets through a slightly narrower set of criteria. Those markets are (in order): Pittsburgh, Houston, Austin, Detroit, Phoenix, Dallas-Fort Worth, St. Louis, Atlanta, Portland and Minneapolis.
According to the report, overall, the life-sciences industry is building on its momentum. Venture-capital investment in the sector grew to a rolling annual total of $17.8 billion in the second quarter, the largest amount on record, according to the PwC/CB Insights MoneyTree survey. Employment in U.S. biotechnology research and development professions exceeded 220,000 in July, extending a decade-long growth trajectory.
Investors continue to consider lab and R&D space to be slightly more valuable on average than conventional office space, a trend that began in 2015. Lab space vacancy is less than 8 percent in many top life sciences markets and rents are rising in most.
“Nearly every indicator points to increasing demand for life sciences real estate in the U.S., be it expanding R&D employment, public and private investment in combatting the pandemic, or the health needs of our aging population,” said Ian Anderson, CBRE Americas Head of Office Research. “The factors fueling this sector are great enough to support demand for more lab space in the top markets and beyond.”
To read the full report, click here.Steve Purpura CBRE Report: Largest U.S. Life Science Markets