The bunsen burner under life sciences real estate has kept some parts of the market’s hot streak rolling along.
The average sales price per square foot of life sciences assets in the United States hit a record high of $564 per square foot in the first half of the year, according to a mid-year report from Newmark. The report included 14 hubs across the country.
Despite the record, overall sales in the sector cooled in the first half as the industry dealt with the same economic headwinds roiling the rest of the real estate world. Investment activity fell 33.6 percent year-over-year, only hitting $7.7 billion in 2022’s first half. Venture capital funding, meanwhile, fell 18.5 percent to $20.8 billion.
Despite those two negative barometers, Newmark research director Elizabeth Berthelette expressed confidence the gains made in life sciences during the pandemic are here to stay.
“Although we’re starting to see market conditions soften, the fundamentals are still very strong in most key life science markets,” Berthelette told the Commercial Observer.
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A number of notable leases were signed in the sector during the first half of the year. The Rensselaer Polytechnic Institute in May signed a lease for 23,000 square feet at Taconic Partners and Silverstein Properties’ Hudson Research Center in Manhattan.
In April, lab robot builder Opentrons nearly doubled its space at 45-18 Court Square in Long Island City, Queens. The firm occupies close to 94,000 square feet at the property.
New York City is coming off a banner period in the life sciences department, as tenants in the sector leased a record 433,000 square feet last year, according to CBRE. It was nearly triple the volume of leasing in the sector in 2020.
The city’s vacancy rate in the market is up to 28 percent, according to Newmark, but asking rents are still growing. After boasting asking rents between $65 and $110 per square foot towards the end of 2020, the city’s asking rents are up to $85 to $130 per square foot.
Still, the city is not one of the market leaders in the life sciences sector, despite a push to increase investments. The top markets are Boston, San Francisco, San Diego and Raleigh/Durham, which combine for more than 93 million square feet across the four regions.