San Diego Is Third Largest Bio-Tech Hub
The sector has grown five times as fast as the local economy since 2000, adding more than 85,000 jobs.
“The life sciences industry is in global expansion, and certainly in the major life sciences hubs we are seeing gradual conversion of R&D and office projects to lab and life sciences related real estate,” Greg Bisconti, executive director, national life sciences practice group leader at Cushman & Wakefield, tells GlobeSt.com. “As to the impact on the office and industrial areas, there are inherent functions within a typical life sciences user: office, lab, flex and/or warehouse space. The larger and more successful a life sciences company becomes, the more likely they are to take on conventional office and industrial space.”
This growth has had a significant impact on the real estate market, and several users occupy both office and R&D space. Companies like Illumina has gobbled up several hundred thousand square feet of class-A space, along with pharmas like Pfizer, Bristol Myers, Roche, Sanofi. “It’s significant, and will continue to be a driver in the office and industrial arena,” Bisconti. “As to the asset class, it’s almost exclusively class-A. One thing I would like to highlight is that, for both tech and life sciences, the labor market is tight, so users are especially focused on creating inspiring workplaces that retain, attract talent, and foster productivity and creativity. It needs to be cool, open, and light.” In San Diego, 2 million square feet of life science space has come to the market.
As supply becomes more limited in popular submarkets, demand has spilled into nearby markets. “We will see expansion into the surrounding markets, outside of the epicenter, as companies struggle to meet their expansion needs. As to other markets, there are some that rank quite high from an employment base standpoint,” says Bisconti. “There are countless examples, but right now I am personally watching Los Angeles and Orange County for California.”
This expansion is true in San Diego as well as in other life science markets across the country. “We’re already seeing this in Cambridge and the San Francisco Bay Area, as submarkets not historically strong in life sciences are seeing large development projects come to fruition,” says Bisconti. “As to other states, New York is in the limelight, and there is a flurry of activity and growth happening there now. Dallas, Houston, and/or Austin are striving to gain ground, and they have a good amount of foundation in place- just needs more catalysts. Then it’s probably Chicago and some other areas. Already a hub, I think the RTP/Durham area is really exciting and there’s incredible growth quietly taking place there.”