COVID-19 Vaccine Race Stimulates Life Sciences Real Estate
Even before the coronavirus pandemic, life sciences was a growth industry in parts of the country. Now, the race for a vaccine and treatments for the coronavirus promises to spur heightened demand for space in the sector.
“Conditions are ideal for maximum profitability arising from innovative new pharmaceuticals and medical devices,” JLL Healthcare and Life Sciences Research Director Audrey Symes said in a statement accompanying the company's newly released 2020 Life Sciences Real Estate Outlook.
“Meaningful advances within the life sciences industry, such as machine learning, are creating new sources of workflow and thus real estate demand. This combination of simulative factors sets up the life sciences industry to expand at an unprecedented pace, both in terms of manufacturing and patient demand,” Symes said.
Markets that are already hubs of life sciences activity, which JLL calls clusters, stand to benefit most from pandemic-related research acceleration.
In 2020, greater Boston, the San Francisco Bay area and the San Diego area retained their 2019 rankings, in that order, as leaders among the U.S. life sciences ecosystems, the JLL report found. They were ranked by the number of life sciences workers and companies, venture capital funding and other factors.
The three clusters captured 70% of all venture capital investment for the sector last year, and their top positions make them favored contenders for venture capital investment going forward. That is a key metric for sector growth, the report says, because venture capital guarantees long-term activity in a capital-intensive industry whose R&D can take years to generate profits.
Development is also brisk in the top markets. Last year, there was 2.7M SF of life sciences construction in Boston and 4M SF in San Francisco, JLL notes.
In the No. 1 market of Boston, more than 100 area companies are working on treatments and vaccines for the coronavirus, and 17.3% of COVID-19-related National Institutes of Health funding has gone to Massachusetts-based institutions, Newmark Knight Frank reports.
The rush for a vaccine and other treatments means low vacancies and high rents for the Cambridge market, in particular, noted the NKF report, which focuses on the greater Boston life sciences market in the second quarter of 2020.
"Life goes on, and certainly death and disease do as well," Longfellow Real Estate Partners Managing Partner Jamie Peschel said during a recent Boston Bisnow webinar. "There are many more diseases that are being researched and addressed, and those companies need to expand their research capabilities as well."
Other top life sciences clusters are Maryland, the Raleigh-Durham area in North Carolina, and the metros of Philadelphia, New York, Los Angeles and Seattle, according to the JLL report.
Much of the overall impetus for a vaccine is coming from the federal government, through the efforts of the Biomedical Advanced Research and Development Authority, the Centers for Disease Control and Prevention, the Food and Drug Administration and the National Institutes of Health.
Toward that end, the government is funding clinical trials at various life sciences companies, such as AstraZeneca, Moderna, Pfizer, Johnson & Johnson and Merck. The race is also inspiring partnerships, JLL reports. For example, Massachusetts Eye and Ear and Massachusetts General have partnered with Novartis in Boston to develop a gene-based COVID-19 vaccine.
Contact Dees Stribling at dees.stribling@bisnow.com.
