The life sciences industry, and its real estate demand, had been particularly strong during the pandemic because it was in such high demand. Vaccines, treatments — the world wanted solutions.
Now, things have slowed, as CBRE noted in a new analysis. But demand for lab and R&D space is still stronger than in pre-pandemic times.
At the beginning of 2023, life sciences employment hit an historic high, though the rate of growth has been slowing. From June 2020 to June 2022, the average monthly job additions were 11,144. The average over the last six months has dropped to 3,378. Last year, life sciences became 1.4% of all employment in the country. Those are people who by and large are not working at home. There have been layoffs this year, but unemployment rates for biological scientists, biomedical engineers, and medical specialists are well below national averages, and all these people are probably not in specifically life sciences companies.
Recommended For You
"In each of the past three recessions, job losses in the life sciences were much more limited and of a shorter duration than overall U.S. job losses," CBRE says. "We expect this same trend if a recession takes hold this year."
The relative life science employment standings of most metro areas are mostly the same as in 2019, only larger. San Francisco, Boston/Cambridge, New Jersey, San Diego, and Washington, D.C./Baltimore are the top five regions.
Those are overall markets. Rankings change in particular subsectors, like Indianapolis, Chicago, and New Jersey being the top three in pharma. Or Boston/Cambridge, Washington, D.C./Baltimore, and San Francisco in R&D. Minneapolis-St. Paul, Orange County, and Cleveland for medical devices.
Venture capital funding is down from the understandable high of the first quarter of 2021, again because of the pandemic. Most of the VC money goes into Boston/Cambridge, San Francisco Bay area, and San Diego. Some CRE investors told CBRE that they plan to focus only on those areas. But funding in those markets fell by a third year over year in 2022, compared to a 31% decline in other markets the firm tracks, which is out of keeping with CBRE's observation that VC investments closely mirror growth or fall of industry employment. It could be that a drop in IPOs, critical for VC exists and profit taking, by 27% below the pre-pandemic average between 2015 and 2019 could have had an effect.
However, for CRE, the good news is that laboratory and R&D space inventory grew by 47% over the past five years to 181.7 million square feet and 40.2 million square feet in construction currently underway. Things have slowed, with core submarkets showing 40% average growth since 2022 versus 90% in 2018 and 2019, but still, as CBRE notes, "history shows the life sciences industry is more immune" to recessions and stability of financial markets — think bank turmoil — than other sectors.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
