Press Release

Gap Widening Between Supply and Voracious Demand for New US Life Sciences Real Estate: CBRE Report

December 9, 2021

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Cole Mortland

Sr Corp Comms Specialist

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Demand for new life sciences lab space is outpacing speculative construction in the top 12 U.S. life sciences hubs as the industry rapidly expands amid a global race for new drug development, according to a new report from CBRE. And with the U.S. vacancy rate for existing lab and research & development space at a record low of 4.9 percent—including just 1.1 percent in the Boston-Cambridge market and New York City—average asking rents are skyrocketing in the top 12 markets, jumping 7.5 percent in September compared to March 2021.

In only five markets has life sciences employment has grown faster than the U.S average over the past 1, 3, 5, 10, and 15 years: Boston-Cambridge, the San Francisco Bay Area, San Diego, Raleigh-Durham, and Seattle. Venture capital funding in San Diego has grown the fastest among all the top life sciences clusters over the past three years, at 248 percent. The San Diego lab R&D vacancy rate currently sits at 2.2 percent, tighter than the Bay Area.

“We are currently tracking life sciences tenant demand in San Diego at 3.5 times historical averages,” said Ted Jacobs, vice chairman and leader of CBRE’s regional Life Sciences Practice. “Due to the pandemic, we have seen approximately 4 million sq. ft. of Class A and B office slated to be converted to lab and office space. Rental rates have been on the climb since 2010, with the overall Central San Diego asking rate having grown 133 percent. More recently, we have seen rates increase approximately 20 percent across all the core markets over the last 12 months.”

Life sciences companies collectively sought nearly 23.8 million sq. ft. of new lab space across the top 12 U.S. life sciences markets in this year’s third quarter. That exceeds the amount of lab space under spec construction – meaning space being built without a tenant already signed – by nearly 2.8 million sq. ft. That gap has widened steadily since last year; Even as construction has ramped up considerably, growth in demand continues to outpace it.

“Life sciences labs quickly have quickly become a highly sought-after property type for both tenants and investors,” said Ian Anderson, CBRE’s Americas Head of Office Research. “This intense demand for lab space is the natural result of a global push for new medicines begetting strong funding and hiring in the life sciences sector.”

Many factors are fueling the life sciences market, including global demand for vaccines for COVID-19 and viruses like it. Initial public offerings for life sciences companies in the U.S. are on pace for a record year of raising roughly $13 billion. Venture-capital funding for U.S. life sciences companies exceeded $30 billion, the most on record, in the 12 months ended in September. Job growth in U.S. biotech and research & development sectors registered a 12.1 percent gain in September from a year earlier.

Those factors have boosted the lab-space market in U.S. life sciences hubs to varying degrees.

To read the full report, click here.

About CBRE Group, Inc.
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 2022 revenue). The company has approximately 115,000 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