Key life sciences metrics made significant gains in the third quarter from last year but year-to-date statistics show the industry's rocketing growth slowing.
Life sciences employment increased 5.4% year-over-year with 105,000 new jobs nationwide, but remained mostly consistent with April's figures, according to CBRE's Q3 U.S. Life Sciences Report.
Available space exceeded demand by 13.5M SF, partially driven by new construction deliveries, but the imbalance represents a shift in demand from 2021 and even earlier this year, when life sciences companies could not find space fast enough.
Vacancy rates for lab space crept up 30 basis points over the quarter to 5.3%, but demand for space remains strong, pushing rents up 6.8%, to $60 per SF on a triple-net basis in the 12 largest metro areas. Net absorption in the quarter topped 363K SF.
Construction in the sector has boomed, with the lab space development pipeline increasing by 4.9M SF quarter over-quarter to 34.7M SF but only 26.3% of it pre-leased, CBRE's report said.
By market, Chicago had the highest vacancy rate at 29.6% with only 281K SF of lab space under development. Following behind, Los Angeles lab space carried 10.9% vacancy, New Jersey and Philadelphia both had 8.1%, and Seattle sat at 8%.
Top average asking rents include the New York City market with $106 per SF, the Boston-Cambridge market with $99 per SF and the San Diego market at $75 per SF.
Venture capital in the industry also declined 29% quarter-over quarter to $4.1B, in line with pre-pandemic levels. Year-over-year, funding decreased by 42% in Q3.
The Nasdaq Biotechnology Index, which tracks Nasdaq-listed biotech and pharmaceutical companies' securities, has dropped 14% since the beginning of the year.
Some experts have already begun predicting a slowdown as biotech companies nationally have begun layoffs. In Massachusetts alone, over 2,000 workers have been laid off from more than two dozen firms, according to the Boston Business Journal.
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