Life sciences boom continues with 36M sf in works

Nearly $30B of venture capital entered the market in 2020

National /
Jan.January 26, 2021 03:00 PM
Photo Illustration of BioMed Realty CEO Tim Schoen and Alexandria Real Estate Equities CEO Joel S Marcus. (Getty, BioMed)

Photo Illustration of BioMed Realty CEO Tim Schoen and Alexandria Real Estate Equities CEO Joel S Marcus. (Getty, BioMed)

 

Demand for life sciences doesn’t seem to be letting up.

As the need for wet lab space exceeds the limited supply, more than 36 million square feet of new construction is expected to hit the top 14 life sciences markets across the United States, according to a new report by Newmark.

That comes as $29.9 billion of health care venture capital poured into the market last year, a 36 percent increase from 2019.

Major owners of life sciences space have been aggressively pursuing deals. Alexandria, currently the largest owner of such properties in the country, with about 300, closed on an estimated $3 billion in life sciences real estate last year. That’s in addition to the 2.8 million square feet that the company has under construction.

Blackstone Biomed recorded the largest deal last year with its $3.45 billion acquisition of Brookfield’s 2.3 million-square-foot Cambridge portfolio. The project is slated to close in this quarter.

Meanwhile, prices have skyrocketed. Average monthly pricing for life sciences investment sales has more than tripled from May 2020, reaching $627 per square foot in December.

The pandemic has done more than just bolster demand. Pfizer, one of the world’s largest pharmaceutical companies and vaccine manufacturers, got into the action by acquiring properties that it occupies in San Diego and Raleigh. The company now owns 4 million square feet across a dozen properties.

Traditional offices, which have been imperiled by the pandemic, have found a savior in life sciences. Life sciences investment as a percentage of total office volume reached a record high of 16.4 percent in 2020, more than double the 2019 figure, as $15 billion of fundraising and $10 billion of closed real estate transactions spilled into the market.

Still, with fitting issues and zoning prerequisites, converting some commercial spaces, such as retail, into life sciences venues can be difficult.





    Related Articles

    arrow_forward_ios
    Mack Real Estate CEO Richard Mack and one of his new hotels at 51 Nassau Street. (Getty, ING)
    Mack Real Estate takes over 7 distressed Manhattan hotels
    Mack Real Estate takes over 7 distressed Manhattan hotels
    1440 Broadway and CIM Group’s Shaul Kuba (Google Maps, Getty)
    CIM closes on $400M refi for 1440 Broadway
    CIM closes on $400M refi for 1440 Broadway
    Theaters in some cities are opening with restrictions. (Getty, Photo Illustration by Alison Bushor for The Real Deal)
    Coming attraction: Movie theaters reopen in New York, San Fran
    Coming attraction: Movie theaters reopen in New York, San Fran
    Innovo Property Group's Andrew Chung with 23-30 Borden Avenue in Long Island City (Google Maps)
    Innovo lands $155M construction loan for LIC warehouse
    Innovo lands $155M construction loan for LIC warehouse
    Restaurants and bars accounted for a majority of the gains in February (iStock)
    Leisure, hospitality big winners in February job gains
    Leisure, hospitality big winners in February job gains
    The company currently operates 761 stores, and intends to open 100 new stores this fiscal year. (iStock)
    Retailer Burlington plans to double store count
    Retailer Burlington plans to double store count
    (Getty, Photo Illustration by The Real Deal)
    Retail had its reckoning. Will subleases flood the market?
    Retail had its reckoning. Will subleases flood the market?
    Ascena owns Ann Taylor, Lane Bryant, Lou & Grey and Cacique. (Getty)
    Ascena restructuring approved post-bankruptcy
    Ascena restructuring approved post-bankruptcy
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...