Life Sciences Development Boom Brings Some Room To Move In Denver

Just over one year after BioMed Realty announced a landmark investment in the Denver-Boulder life sciences market, new data shows the area’s biotech real estate scene is growing, supported by swelling companies hungry to expand.

The area’s lab vacancy rate is up to 5.6%, according to new data from CBRE, allowing for much more wiggle room than a year ago, when that figure hovered around 1.7%, with hot spots like Boulder and the northwest corridor hitting zero. That increase relates back to the development push that took place in 2022 as the region sought to seize on a burst of popularity among life sciences companies.

“Denver-Aurora-Boulder is a growing market,” Erik Abrahamson, a senior vice president with CBRE’s life sciences practice in Boulder, told Bisnow. “There has been a strong life sciences presence here for decades, evident by Amgen’s presence in Boulder for years, along with the Fitzsimons Innovation Community campus adjacent to Anschutz, but we are still very much in the growth phase.”

In April 2022, BioMed made one of the biggest nationwide life sciences purchases of the year when it bought a 22-building, 1M SF business park near the University of Colorado’s BioFrontiers Institute for a reported $600M. The company said at the time that it would invest more than $200M toward redeveloping the property as well. 

“Boulder has always been a market to watch, driven by highly educated talent, robust capital flow, an existing base of life science and tech pioneers and great quality of life,” BioMed Vice President of Leasing Mike Ruhl said in a press release at the time. “As demand for office and lab space in the region continues to grow, we believe BioMed's integrated platform and expertise is uniquely suited to support companies as they continue to scale in this key market.”

Chris Wiley, principal at Colliers International’s Denver office who specializes partly in the life sciences industry, said the transaction “brings another level of sophistication to our market.”

That momentum continued when Dallas-based Lincoln Property Co. announced it was building a 450K SF life sciences campus in Broomfield. Dubbed the “Colorado Research Exchange,” or CoRE for short, the campus will include three tenant-occupied buildings and an amenity building with a food hall. 

Lincoln Property Senior Vice President Scott Caldwell said the project is “shovel-ready” and is expected to be complete by late 2024. The property is also being marketed for potential tenants, although Caldwell said that none have signed leases yet. 

Caldwell said Lincoln Property chose Denver instead of other markets like Seattle or Houston because of the metro area's strong talent pipeline and the relatively limited competition for new life sciences developments. 

“We took a hard look at Denver’s northwest corridor to see if we could do this type of project outside of Boulder proper,” Caldwell told Bisnow in an interview. “And we really gained a lot of support for it because of the lack of available properties in the area.” 

Other companies like Beckman Coulter Life Sciences, which specializes in laboratory innovation, are expanding their operations in Colorado. In January, the company opened a $10M, 56K SF office complex in Loveland and announced plans to build a 37K SF manufacturing facility in town. Groundbreaking for the manufacturing plant is expected in Q2 2023, and the facility should be up and running by early 2024, according to a press release. 

“We continue to be impressed by the talent community that exists in greater Loveland, which has fueled our growth in Colorado since we came here in 2018 with nearly three-dozen associates,” Suzanne Foster, president of Beckman Coulter Life Sciences, said in a press release. 

Of course, Denver has competition with other fast-growing life sciences markets.

Houston, for example, has more life sciences properties in the development pipeline, with 854K SF under construction, compared to Denver's 834K as of Q4 2022, according to CBRE. Another up-and-comer, Chicago, has about 456K SF under construction. 

And turbulence in the financial markets threw a big wrench in the plans of many developers that might have been considering starting new projects in Denver and elsewhere. Not only is the greater economy struggling with high interest rates, but venture capital funding has taken a big drop from its record year in 2021. Venture capital funding in the Denver-Boulder market has declined by about 50% since 2019, which means there is less money for startups that might lease space in new developments.

Abrahamson pointed to the area’s lack of incubator space as one reason Denver has struggled to secure more VC funding. Incubators are spaces where startup companies can create exhibits of their work for other companies or investors to see. It is one way that many early stage life sciences companies market their work as well. 

There are a couple of incubators along the Front Range like the Fitzsimons Innovation Community in Aurora and Innosphere in Fort Collins. But both of these spaces are full, according to Abrahamson, which makes it difficult for new startups to take advantage of the benefits. 

Adding incubator space could also help Denver expand its pool of local life sciences talent. Despite having a strong talent pipeline for life sciences companies, Denver’s life sciences employment growth has been lower than emerging markets like Atlanta and Houston, according to data from Cushman & Wakefield. Over the last decade, Denver’s life sciences employment has grown by about 26%, while Atlanta’s has grown by more than 111% and Houston’s has grown by about 50% over the same period. 

“As tenants continue to expand and tenants continue to come into the market, the employment cluster will grow,” Abrahamson said.