According to a recent Wall Street Journal article, over 31 million square feet of life-sciences space was under development in the fourth quarter of 2021
Appeared in the March 2, 2022, print edition as ‘Demand for Lab Buildings Soars.’
—By Peter Grant
The rapid growth of life-science research during the pandemic is triggering a record boom in the development of new lab space and offices serving these companies.
Development of buildings geared toward biotechnology, pharmaceutical and other laboratory firms was already on the rise before 2020. But demand for this space intensified as billions of dollars poured into research and development of a Covid-19 vaccine and other therapies for the virus.
Life-science space has also been enjoying high occupancy rates because—unlike traditional office buildings—much of the lab work requires specialized equipment and building infrastructure that cannot be easily replicated at home.
More than 31 million square feet of life-sciences space was under development in the fourth quarter of 2021, a new high in any quarter and up from about 19 million in the first quarter, according to real-estate firm CBRE Group Inc. Those projects included both ground-up construction and conversions of existing office buildings.
Developers believe this demand will continue even with the Covid-19 infection rate declining.
Developers believe this demand will continue even with the Covid-19 infection rate declining. For one, government funding of life-sciences research shows no sign of ebbing. Venture-capital funding of U.S. life sciences, meanwhile, stood at more than $8 billion in the fourth quarter. It has grown more than threefold over the past five years, according to CBRE.
Developers have been racing to meet the new demand not only in the traditional life-sciences hubs of Boston, San Francisco and San Diego but also in numerous markets where life-sciences ecosystems are growing near academic institutions and hospitals. Those markets include Los Angeles, Denver and Boulder, Co., Chicago and Houston.
These cities “were considered emerging markets five years ago but have now created substantial bases of life-sciences demand,” said Chris Bodnar, co-head of CBRE’s healthcare and life-sciences capital-markets business.
Canadian investment giant Oxford Properties Group is making its first investment in Philadelphia, joining a local joint venture to develop up to 3 million square feet for more than $1.5 billion in a former Navy yard that dates back to the Revolutionary War. The new partnership, which includes Ensemble Real Estate Investments and Mosaic Development Partners, is breaking ground on its first building in a few weeks.
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