Demand for Life Sciences Real Estate Soars in Seattle: CBRE Report
15 Dec 2021
Demand for new life sciences lab and R&D space is skyrocketing in the Puget Sound region and other leading U.S. life sciences clusters, according to a new report from CBRE. Life sciences companies are seeking 1.2 million sq. ft. of lab space in greater Seattle as of the end of the third quarter, an increase of 138 percent over the prior six months. Record levels of venture-capital funding are allowing new companies to build their teams faster and fueling the demand for more lab space.
Venture-capital funding for U.S. life sciences companies exceeded $30 billion, the most on record, in the 12 months ended in September. Companies based in the Puget Sound region secured $898 million in that period.
Cash infusions are spurring companies to expand their operations, but additional space is hard to come by in many markets. Greater Seattle has 1.1 million sq. ft. of new lab-capable speculative development underway, including new, ground-up construction and conversions. That is just shy of current tenant demand. Another 1.5 million sq. ft. of speculative construction is in the planning phase, but supply may still fall short of meeting demand.
“The expansion of Seattle’s life sciences sector is accelerating. Deep investment in the industry is fueling real estate growth and lab development activity. The commercialization of new technology emerging from our region’s world-class research institutions, coupled with investment into high-quality lab infrastructure, is positioning Seattle to be one of the country’s top life sciences markets,” said Marcus Yamamoto, senior vice president with CBRE in Seattle specializing in healthcare and life sciences.
Including Bothell, the Puget Sound area’s metro-wide lab vacancy is 7.1 percent. It is far lower in the region’s top life sciences submarkets, averaging 2.9 percent. Low vacancy in Seattle’s core South Lake Union submarket is creating fierce leasing competition for available lab space and driving up rents. Asking rents for lab/R&D space are up over 12 percent in the Puget Sound region over the past six months—the second-greatest gain among the 12 leading life sciences clusters. Seattle’s achieved lease rates have increased even more rapidly – up more than 20 percent over the past 12 months.
Life Sciences Real Estate Metrics By Market
|Market*||TIM** activity by sq. ft.
|| Spec construction
|| Lab vacancy
|Boston-Cambridge|| 6 million
|| 9.3 million
|Denver-Boulder|| 1.5 million
| Los Angeles
| New Jersey
|| 1.3 million
| New York City
|| 1.6 million
|| 1.6 million
|Philadelphia|| 2 million
|Raleigh-Durham||897,000|| 1.2 million
| San Diego
|| 3.8 million
|| 1.9 million
| San Francisco Bay Area
|| 3 million
|| 3 million
|Seattle|| 1.2 million
|| 1.1 million
|DC/Baltimore|| 1.8 million
|Total|| 23.8 million
|| 21 million
** Tenants in Market: A measure of the amount of new space tenants are seeking
Many factors are fueling the life sciences market, including global attention on the sector from the demand for vaccines for COVID-19 and viruses like it. The Puget Sound region’s total life sciences employment is up 3.6 percent from 2019 to 2020, now totaling 25,000 employees. By lab inventory, greater Seattle is the eighth-largest U.S. life sciences market with 8.9 million sq. ft. dedicated to the biotech sector.
To read the full report, click here.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.