Why The San Francisco Bay Area Life Sciences Market Dominates All Others
The San Francisco Bay Area remains one of the top life sciences markets in the country with strong research funding, significant employment growth and access to top-tier universities and talent. The region also has the largest number of life sciences companies in the country, according to CBRE’s 2018 U.S. Life Science report.
Both federal funding and venture capital funding remain healthy in the region. University of California San Francisco and Stanford University are the two largest recipients of funding from the National Institutes of Health with more than $1B combined. For the year ending Q2 2017, the Bay Area received more than $3B in funding from the NIH.
The Bay Area boasts plenty of venture capital for future life sciences companies and the area attracted more venture capital than any other region in 2017. Fourteen biotech companies went public in Q2 and raised over $1B.
Life sciences employment grew in the Bay Area by 33% from 2001 to 2016 and in the last 10 years employment has grown about 54%, the most of any life sciences market.
The region’s research and development market is one of the prime reasons for this growth. The region added 24,000 R&D jobs since 2001, a gain of about 64%. The pharmaceutical and medicine manufacturing industry also grew over 75%, adding 7,755 jobs from 2001 to 2016.
The Bay Area has 20.9M SF of life sciences space, a 3.6% vacancy rate and rents of about $51/SF. The North Peninsula dominates the region with 9.1M SF and has a vacancy rate of 2.9%. The South Peninsula has no vacancies and has the second-highest amount of lab space with 2.5M SF. Mid-Peninsula has 2.6M SF of lab/R&D and a vacancy rate of 1.1%. Currently, 34 lab tenants are looking for space of about 1.8M SF.
Most new developments are in South San Francisco, where HCP, Phase 3 and ARE are in the process of building a little over 1M SF combined. Much of this space is getting leased up already. HCP’s 335K SF The Cove Phase 3 is 50% pre-leased and ARE’s 290K SF build-to-suit development at 213 Grand is pre-leased to Merck.
South San Francisco also had some of the biggest life sciences leases in the region in 2017 with Rigel taking 147K SF as an extension, Global Blood Therapeutics leasing 67K SF and Neurona Therapeutics taking 47K SF.