LA Leads U.S. In Office-To-Life Sciences Conversion Growth
Los Angeles made the biggest gains of the top 12 U.S. life sciences markets in terms of office-to-life-sciences space conversions, a report from CBRE has found.
Los Angeles was the busiest market for conversions to lab or R&D space, with just over 667K SF in the process of being repurposed in Q1 2022 — a 339% increase from the first quarter of 2021, according to CBRE data.
Conversions for life sciences tenants are costly and complex, as the infrastructure that life sciences tenants need is far beyond that needed for traditional office tenants. Clean rooms, negative pressure rooms, vivariums and other necessities are expensive and are not necessarily able to be installed in every office building. Still, when compared to the barriers facing ground-up projects, conversions can pencil out.
“Conversions are an easier option as compared with ground-up development in a high-barrier-to-entry market such as Los Angeles, especially in dense population centers where many of these are happening, such as Culver City and Pasadena,” CBRE Executive Vice President Andrew Riley said in a statement.
The majority of Los Angeles’ office space is still waiting for the return of the workforce. The latest data from Kastle Systems indicates that just under 40% of office users in the buildings it serves in the Los Angeles metro were in the office last week. Office deals have been hampered by the trend, and a Q1 2022 report from JLL pegs the city’s office vacancy at 20.8%.
Though Los Angeles posted the greatest gains by percent, it was fourth in total SF under construction, behind Boston, San Diego and Raleigh-Durham. Boston has a whopping 3.3M SF of office-to-lab conversions under construction.
Nationally, there was 9.9M SF of office-to-life-sciences conversions underway in the country’s 12 largest life sciences markets at the end of 2021. CBRE found a 49% increase over the start of the year. Ground-up lab construction also saw a rise, up 42% to almost 18.8M SF by the end of 2021.
