Life Sciences Real Estate in the San Francisco Bay Area Gains Ground in Q2 Against Market Headwinds

San Francisco – August 15, 2022 – Lab space in the San Francisco Bay Area remains in high demand, including above average leasing volume and lease rates, according to a new report from CBRE.

The Bay Area had the highest demand for lab space (4.4. million sq. ft.) among the 12 largest U.S. life sciences hubs, with average rents in the Bay Area commanding $67.72 per sq. ft., significantly higher than the 12-market average of $54.77 per sq. ft. Vacancy for lab space in the Bay Area was 5.8 percent, slightly above the 5.2 percent average of the 12 largest U.S. life sciences hubs.

Developers sought to boost supply in the region with 5.1 million sq. ft. of new development and conversions, 26 percent of which is pre-leased. Most of the development and conversion activity is focused along the San Francisco Peninsula and Oakland markets, while San Francisco and Silicon Valley are seeing some office and R&D facilities earmarked for future life science development.

“With rising costs of construction and inflation, we’re seeing increased competition for existing lab space, as well as developers delivering improved warm shells as tenants pursue cost-effective strategies,” said Dino Perazzo, Vice Chairman in CBRE’s life sciences practice in the San Francisco Bay Area.

Despite gains in lease rates and construction, venture capital funding has slowed this year, and initial public offerings by life sciences companies have fallen off dramatically amid a broader economic downturn.

“Few, if any, sectors are completely immune to economic cycles. Even so, the life sciences sector is buttressed by more fundamental, long-term shifts than most industries, such as advances in science and technology, expanding uses for biotechnology, and the long-term trend toward more individualized treatment,” said Matt Gardner, CBRE’s Americas Life Sciences Leader. “Indicators and market forces will shift on a quarterly or annual basis, but the underlying science continues to develop and expand.”

                            Top Life Sciences Markets: Select Q2 Stats

Market	Market Size*	Vacancy	Sq. Ft. Under Construction	Sq. Ft. of Current Tenant Demand
Boston/Cambridge	50.5M	1.2%	14.9M	4.2M
Chicago	2M	33.6%	281,000	980,000
Denver/Boulder	4.8M	4.3%	616,381	1.3M
Los Angeles	8.7M	10.8%	793,904	934,000
New Jersey	20.4M	7%	147,000	1M
New York City	2.5M	5%	860,403	2M
Philadelphia	9.3M	7.8%	1.4M	2M
Raleigh-Durham	10.6M	11.3%	236,250	800,000
San Diego	22.9M	9.7%	1.2M	700,000
San Francisco Bay Area	32.6M	5.8%	5.1M	4.4M
Seattle	9.3M	9.7%	1.2M	700,000
Washington, DC	10.7m	1.4%	1M	848,500

*In square footage of existing lab space.