Virtually no vacant laboratory or research and development space exists in the metro Denver market, according to first-quarter data compiled by CBRE.

Across the metro area, the vacancy rate for lab or R&D space was 1.7% in the first quarter, with the only vacancies located along the eastern edge of the metro area. In the submarkets popular with life sciences companies, like Boulder and the northwest corridor, the vacancy rate is 0%.

“The vacancy rate is driven by the specialty use of these spaces,” CBRE First Vice President Erik Abrahamson said.

Lab and R&D space typically include specialized HVAC systems, backup generators, and coolers and freezers where experiments can take place over weeks, months or years, Abrahamson told Bisnow.

“It’s a highly specialized space that takes a longer time to build and has costs associated with that. And until recently, landlords weren’t really interested in building these out on a speculative basis, so demand surged without any true supply,” he said.

The life sciences industry has expanded in metro Denver in recent years, with acquisitions bringing major players like Pfizer and Eli Lilly to the area. Growing the sector is also a priority of local economic development bureaus like the Metro Denver Economic Development Corp.

But the lack of existing lab space has hampered efforts to turn life sciences into one of Colorado’s economic powerhouses. Companies seeking to relocate or expand operations here usually have to build their own space or convert an existing facility to meet their needs, which is a costly and often time-consuming endeavor, especially in light of shipping delays and increasing materials costs.

There is some relief in sight, however, in the form of new speculative lab construction and conversions. Four conversion projects were underway in the first quarter, with 93K SF of that expected for delivery this year, according to CBRE’s data. And last month, Lincoln Property Co. announced that it would build 450K SF in a speculative project called the Colorado Research Exchange.

Abrahamson said most of the speculative space coming to the market is likely to be pre-leased by the time construction is finished, meaning it will do little to move the needle in terms of vacancy rates overall.

One recent change that could have the ability to make significant change is the recent announcement by Blackstone-backed BioMed Realty Trust to acquire 22 buildings totaling 1M SF near the University of Colorado’s BioFrontiers Institute, with plans to invest $200M to redevelop the campus.

Blackstone’s interest in the market is likely to draw attention from other major players, and Blackstone itself indicated that it would probably make more investments in Denver-area life sciences facilities.

When it comes to rents, metro Denver falls roughly in the middle of the pack compared to other cities, according to CBRE’s report.

The average asking rate for life sciences space in metro Denver is $50 per SF, on a triple-net basis. Meanwhile, in the Boston-Cambridge area, rents reach $99 per SF on average. And in California’s popular life sciences markets, like San Francisco and San Diego, rents are in the $70 to $75 per SF range.

But in other large cities, like Chicago, Philadelphia and even Raleigh-Durham, a nationwide life sciences hub, rents are lower, lingering in the mid-$40s per SF.

Denver’s place on the lower end of the rent spectrum, combined with its talent pool, places it in a sweet spot for life sciences companies looking for space, with steady demand from tenants over the last 18 months, Abrahamson said.

“Demand has always stayed above 1M SF for the past 18 months,” he said.