Investors pour $10B into life sciences real estate this year

Rising rents have not been slowed by pandemic

National /
Jun.June 02, 2021 09:45 AM
Asking rents for labs or research buildings have been on the rise (iStock)

Asking rents for labs or research buildings have been on the rise (iStock)

The future of the office sector remains largely uncertain at this point post-pandemic, but there’s one segment that continues to see huge gains.

Investors have spent more than $10 billion on buying life sciences buildings this year, Bloomberg News reported, citing data from Real Capital Analytics. That’s about 4 percent of all global commercial real estate transactions through May, twice what was recorded at the same time last year.

And those numbers don’t even include new life-science developments, such as Boston’s massive Fenway Center, which broke ground in 2017.

Last year, life science building sales and refinancings totaled about $25 billion, a massive jump from $9 billion in 2019. In one huge deal, Blackstone received a $6.5 billion profit from refinancing BioMed Realty Trust, the largest life science offices REIT in the U.S.

Some of this can be attributed to the push to develop Covid-19 vaccines. But the sector was booming even before then: In some area where new projects have popped up — such as San Diego or Boston — asking rents for labs or research buildings have been on the rise. Rents in and around San Francisco have increased 90 percent in the past five years, while conventional office space has seen rents rise just 20 percent over the same period.

“The pandemic only amplified the demand growth, but it’s a trend we think will continue for years,” Nadeem Meghji, head of Blackstone’s Real Estate Americas group, told Bloomberg News.

Still, there’s some hesitancy surrounding the sector. Construction can cost 15 percent more than conventional offices and a risk of an oversupply remains possible as developers rush to break ground.

[Bloomberg News] — Sasha Jones





    Related Articles

    arrow_forward_ios
    Salesforce CEO Marc Benioff and Amazon's Jeff Bezos are backing the startup (Getty, Arrived)
    Bezos-backed Arrived Homes is latest startup to expand real estate investment
    Bezos-backed Arrived Homes is latest startup to expand real estate investment
    Josh Baumgarten (left) and Adam Schwartz, co-CEOs and co-Chief Investment Officers of Angelo Gordon with 2 Huntington Quadrangle, Melville, 6 and 8 Corporate Center Drive in Melville (Angelo Gordon, We're Group)
    Angelo Gordon, We’re Group score $350M refi for Long Island offices
    Angelo Gordon, We’re Group score $350M refi for Long Island offices
    NYC’s office sublease surge slows as tenants move to reoccupy space
    NYC’s office sublease surge slows as tenants move to reoccupy space
    NYC’s office sublease surge slows as tenants move to reoccupy space
    The Roger New York hotel at 131 Madison Avenue, Larry Korman of AKA Hotel Residences and Joe Lubeck of Electra America (Google Maps, Getty, Electra)
    Electra America JV nabs Roger hotel for $71M discount
    Electra America JV nabs Roger hotel for $71M discount
    Oceanwide’s US business is sinking. Can it right the ship?
    Oceanwide’s US business is sinking. Can it right the ship?
    Oceanwide’s US business is sinking. Can it right the ship?
    Demir Sabanci and 41-47 West 57th Street (Sedesco, Google Maps)
    Sedesco seeks rezoning for new Billionaires’ Row skyscraper
    Sedesco seeks rezoning for new Billionaires’ Row skyscraper
    Brookfield Property Partners CEO Brian Kingston and 300 Vesey Street, at far left (Brookfield)
    Brookfield scores $224M refi on Battery Park office tower
    Brookfield scores $224M refi on Battery Park office tower
    From left: Alvin Dworman, 155 East 55th Street, 65 West 55th Street, and 210 East 58th Street (Getty, Google Maps)
    Alvin Dworman Sells 3 Manhattan Buildings for $65M
    Alvin Dworman Sells 3 Manhattan Buildings for $65M
    arrow_forward_ios

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

    Loading...