NYC Life Sciences Continues To Boom Amid The Pandemic, With Leasing Activity And Asking Rents Up In The First Half Of 2020
Lab space leasing and asking rents are on the rise in New York City, and much of the sector's growth so far this year is independent of the health crisis.
A total of 59K SF of lab space was leased up in the first half of 2020, according to a CBRE report on the sector. This is just 13K SF behind the total leasing activity for the entirety of 2019, at 72K SF. Meanwhile, asking rent has increased 10% since the end of 2019 as demand for space increases, the report states.
“A lot of this momentum was on the way no matter what, whether there was a pandemic or not," the report’s co-author, CBRE Senior Research Analyst Philip Stern, told Bisnow in an interview Monday.
Much of the boost in leasing activity during the first half of 2020 came from companies who inked three-to-five-year deals on “pre-built immediate-occupancy type spaces,” as relatively young companies look for step-out spaces to move into, Stern said.
At the same time, funding from the National Institutes of Health and venture capital has reached “unprecedented levels,” as the sector grows its inventory to meet the demand, according to the report.
Venture capital funding totaled $590M for the first half of the year; NIH funding hit $1.4B during the same period and is set to finish the year above last year’s total, the report states.
New York City is on track to have 3.3M SF of lab space by 2023, a major increase from its current 1.72M SF.
While much of the growth of the sector has not been related to the pandemic, it could get a pandemic bump once the new university coronavirus research and development initiatives begin to grow, Stern said.
“We’ll see the increase a little bit later down the road when those initiatives, hopefully, try to step out and move into some sort of bigger lab situation,” he said.
Due to biotechnology’s innovative nature, it could come out of the crisis even stronger, said Corinne Packard Beasley, a professor at New York University - Schack Institute of Real Estate, who teaches a course on post-catastrophe recovery.
“During this time — a time of recession and recovery from a catastrophe — you generally have innovation, and the reason you have to have innovation is because certain aspects of normal life are changed,” she said. “To me, the sectors that will emerge will be sectors that are cutting-edge in innovation.”
Beasley named supply-chain distribution, food distribution and technology, and biotechnology as other sectors of innovation that will likely emerge stronger in the recovery.