What Recession? Life Sciences Continues To Boom
The average sale price of a life science facility is $645 per square foot, 150% higher than the overall office average.
Other sectors may be struggling amid rising interest rates and inflation, but sales and supply data for the booming life sciences sector have not yet shown cracks.
A new report from Commercial Edge reveals that the average sale price of a life science facility in 2022 clocks in at $645 per square foot, 150% higher than the overall average of $258 psf for general office buildings. Buildings suitable for conversions also command higher prices: DivcoWest, for example, bought a 138,400-square-foot property in South San Francisco from Johnson & Johnson for $164.5 million — a price of $1,188 per foot — and “immediately” began converting the building into lab space.
Developers are rushing to build space fast enough to even approach demand levels as well. Just under 22 million square feet of life science projects are underway nationally, led by Boston with 27 projects totaling 8.4 million square feet. San Diego follows at number two with eight properties at 2.9 million square feet, then San Francisco (10 properties, 2.6 million square feet). Tertiary market are also emerging as viable contenders, with PNB and Montgomery Street Partners recently announcing they’ll develop the first speculative life science property in Boulder County, Colorado, with the 365,000-square-foot Coal Creek Innovation Park. And in the bedroom community of Maricopa outside Phoenix, S3 Biotech is developing a 2.5 million-square-foot campus that includes life science, medical office and sports science facilities.
According to CommercialCafe, in 2021 life sciences employment was highest in Boston (23,900 jobs), New York (18,100) and San Francisco (14,200), while the metros with the most STEM workers last year were New York (515,540), Washington, D.C. (364,140), Los Angeles (342,870) and San Francisco (289,960).
Growth in the life sciences sector has spread beyond those cities typically regarded as “flagship markets,” according to CBRE: Nashville leads the US in terms of percentage growth of life sciences jobs while Houston offers a high percentage of PhDs and an affordable quality of life. According to the firm, growth in life sciences professions ticked up by 79% since 2001 to hit 500,000 nationally.