Blackstone company BioMed Realty was formed to target life science investments, and for years the firm has built a premier portfolio in the sector, valued at more than $22 billion. But, the last two years have provided even more opportunity in the asset class.
“At BioMed, we’ve long known the importance of the life science sector, even before the pandemic, but the past two years certainly increased public awareness of the essential work these companies do—I mean the entire world witnessed firsthand the potential of the industry! We see life science as a key driver of local, national, and global economies, and remain bullish on the industry,” Bill Kane, president of East Coast and UK markets at BioMed Realty, tells GlobeSt.com.
The data supports the firm’s fervor. According to Kane, the fundamentals are strong in the major life science hubs where BioMed has a presence. “We have strong data that backs up this sentiment — in the Boston market, for example, where over half of BioMed’s platform is concentrated, we’re seeing market rents up 15% with a less than 1% year over year vacancy average and tenants pre-leasing 76% of the pipeline of active life science developments in competitive locations,” he says.
These fundamentals illustrate the strength of the current market and indicate long-term stability, according to Kane. “These numbers are just a few of the many indicators that suggest that the industry remains strong and will be resilient for quite some time,” he says.
Boston isn’t an outlier, either. Kane is seeing similar trends across the country. “Beyond Boston, demand for lab space continues to outpace supply in our core markets, and we’re playing our part by creating and maintaining high-quality, flexible R&D spaces that enable our portfolio companies to keep innovating and scaling,” he says.
Venture capital funding is helping to support growth in the industry, and BioMed is keeping tabs on spending. “Through our relationship with Blackstone, we carefully track VC funding activity and broader trends in the capital markets,” says Kane. “This naturally allows us to maintain a robust business model that is directly correlated to capital and tenant trends within each submarket. Right now, we’re seeing a large influx of VC-backed companies entering all of BioMed Realty’s core markets and absorbing space quickly.”
However, VC-spending isn’t the only indicator of strong market growth. “Large, well capitalized tenants, the more established, blue-chip type companies, still occupy the majority of our spaces and weigh pretty heavily on our income,” says Kane. “One of the amazing attributes of this industry is the diversity of capital sources that drive its growth. As portions of it are sourced from the federal government, public and private investment and inter-company relationships we see our tenants draw from a broad set of options to fuel their growth.”