Report | Intelligent Investment

Leading Life Science Clusters

The Bio-Boom Intensifies

October 5, 2020

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The life sciences industry has been thrust into the spotlight as the world faces its greatest public health crisis in a century. Investors have a heightened interest in the life sciences industry as it works to develop a vaccine and effective treatments for COVID-19, along with other medical breakthroughs. This, in turn, is creating increased demand for commercial real estate.

Key Insights

  • Boston-Cambridge, the San Francisco Bay Area and San Diego remain the nation’s top three life sciences clusters, while Pittsburgh, Houston and Austin are top new emerging ones.
  • While life science employment was down by just 1.3% in July from its peak in March, it was 1% higher than a year ago compared with the 7.6% decline in total nonfarm employment. Biotech R&D employment has been particularly strong, up by 4.9% from a year ago and outpacing tech employment growth.
  • Total venture capital funding for the life sciences industry for the year ending Q2 2020 was a record $17.8 billion.
  • National Institutes of Health funding to major universities and institutions for health-care research is forecast to grow by 6% this year to $42 billion.
  • Total commercial laboratory space has grown by 12% this year to 95 million sq. ft. Another 11 million sq. ft. is currently under construction.
  • Reflecting a broad pullback in commercial real estate investment, lab/R&D property sales totaling $9.6 billion for the year ending Q2 2020 fell by 18% from the same period a year ago. However, pricing remains intensely competitive.
  • A continued positive outlook is underscored by new growth drivers, such as government emphasis on the life science industry’s pivotal role in combating the COVID-19 pandemic, onshoring trends and rapid expansion of biomanufacturing.


Figure 1: U.S. Top Life Science Clusters   Figure 2: U.S. Top 10 Emerging Clusters

1. Boston-Cambridge

 

1. Pittsburgh

2. San Francisco Bay Area

 

2. Houston

3. San Diego

 

3. Austin

4. Washington, D.C. - Baltimore

 

4. Detroit

5. Raleigh-Durham

 

5. Phoenix

6. New Jersey

 

6. Dallas/Ft. Worth

7. Philadelphia

 

7. St. Louis

8. New York City

 

8. Atlanta

9. Seattle

 

9. Portland

10. Los Angeles

 

10. Minneapolis

11. Chicago

   

12. Orange County, CA

   

13. Denver-Boulder

   

Source: CBRE Research, Q3 2020.

Note: Ranked by size, growth and concentration of life sciences employment, concentration of R&D life sciences employment, size of laboratory inventory, and amount of NIH and life sciences venture capital funding.

 

Source: CBRE Research, Q3 2020.

Note: Ranked by size and growth of life sciences employment, concentration of R&D life sciences employment, amount and growth of life sciences venture capital funding and NIH funding.

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