)
Money continues to flow heavily into the life sciences, and as it flows into private companies developing new medicines and technologies, so does it flow into the balance sheets of the companies that provide them with office and lab space.
Venture capital firms invested a record $26B into life sciences companies in the first six months of 2021, according to Newmark's 2021 Mid-Year Life Sciences report, shattering last year’s record pace when $33.1B was raised over 12 months. Between coronavirus delta variant scares and weaknesses in other markets, life sciences “remains at the top of the list of secular growth sectors of the economy that will continue to expand in the future, regardless of economic cycles or changes in monetary and fiscal policy,” the report says.
The major domestic policy proposals on the table, including the Innovation and Competition Act and large increases in federal grants for research, would only accelerate this growth. In the first half of this year, IPOs for biotech firms have hit a record pace of 59, a crucial growth step that typically leads to physical expansion for a firm. Eighty-four firms went public in all of 2020.
Much like the concentration among the top three markets — Boston, San Francisco and San Diego represent 16.6M SF of lab space under construction or renovation and 54.5M SF of proposed development, a major increase from 33.3M SF at the end of 2020 — there is similar concentration among ownership, according to the Newmark analysis.
While the top 10 firms own 100M SF nationally, roughly two-thirds of that is held by three firms: Alexandria Real Estate Equities (40.1M SF), BioMed Realty (16M SF) and Healthpeak Properties (11.3M SF). Even with established CRE players creating their own life sciences initiatives, such as Tishman Speyer and Bellco Capital’s Breakthrough Properties, the big players still exert significant influence.
Other highlights from the report underscore the growth of some emerging markets. LA and Orange County, for instance, now have more square footage devoted to lab space than Philadelphia, Puget Sound or North Carolina's Research Triangle. New York City has a 27.7% vacancy rate after ending 2020 with just 7.6% vacancy, highlighting challenges in attracting out-of-town tenants despite having enough proposed square footage to more than double the market’s total lab space footprint.
)
)
)
)
)
)
)
)
)
)
)
)