2023 U.S. Life Sciences Outlook
Government Incentives Fueling Growth
According to CBRE’s Location Incentives Group, as life sciences companies increase spending on R&D facilities, many are seeking ways to offset ongoing operating expenses and one-time capital investments. Economic-incentive programs are one avenue companies can pursue to alleviate these costs, especially during a period of rising inflation and borrowing costs.
Despite economic turbulence, the life sciences sector is poised for expansion across the country. Recent economic growth is partially attributable to the 2022 federal CHIPS and Science Act, which includes $200 billion in funding for science, technology, engineering and R&D development.
At a state and local level, many jurisdictions are attracting life sciences companies by offering several types of incentives to improve economic vitality and create high-paying jobs.
These incentive programs include state income tax offsets, discretionary grants, property tax abatements, utility cost offsets, fast-track permitting, low-cost loans, sales tax refunds, infrastructure grants, training grants and free/discounted land.
Life sciences incentive programs have been particularly strong in three states over the past five years (Indiana, New York and North Carolina), which combined totaled $1.1 billion or almost 45% of total U.S. life sciences incentive programs. Since 2018, there have been 1,113 public life sciences incentive deals in the U.S. totaling nearly $2.5 billion for an average of $19,146 per new job or 6% of a recipient company’s total capital investment. Companies are leveraging these incentive savings to underwrite costs for real estate portfolio growth.
Figure 33: Top States for Life Sciences Incentives Over Past Five Years
Source: WAVTEQ Incentives Monitor; January 2018-December 2022; CBRE Location Incentives Capabilities.
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