Is This L.A.'s Hottest Office Niche?

LOS ANGELES—Life sciences may be Los Angeles most under-the-radar office sector—but it shouldn't be. With ample universities and research centers, the niche is thriving with a 2.9% vacancy rate and tightening supply, according to a recent market report from JLL that focused on the sector. This has always been a booming sector, though. It was down to a 2% vacancy in 2007, and is heading in that direction again. To find out about the sector, we sat down with Shaun Stiles, EVP at JLL, to get an inside look at the market.

GlobeSt.com: What is driving the life sciences market in Los Angeles? 

Shaun Stiles: The Los Angeles life science market is driven by three things: One: the presence of our 25 research institutions and universities; two: the presence of our large biotech firms; and three: the huge base of early stage life science companies that continue to grow in the area.

GlobeSt.com: Has Los Angeles always been popular for life sciences users? 

Stiles: Los Angeles has always been popular for life science users because of our local research institutes, our universities and our lifestyle.  The trick has been trying to keep these firms here as they continue to grow.  Because Los Angeles does not have the presence of large pharmaceutical companies (like San Diego) and because Los Angeles does not have as much Venture Capital presence (like San Francisco/Bay Area), there is sometimes pressure from companies to relocate to those markets.  Also, the Life Science market in Los Angeles is very spread out into many smaller clusters and is therefore sometimes hard to quantify and understand.  Because there is not one large cluster of submarket, the market sometimes does not get the attention it deserves.

GlobeSt.com: How does this niche compare to activity in the office market? 

Stiles: The activity in the life science niche is actually very strong.  Demand has been good and there is virtually no vacant lab space available with a current vacancy of 2.9%.  The reason it may not get as much attention is that it is a much smaller market compared to the overall office market and it is a very specialized niche with very specialized improvements and needs.  The life science market is 2-3 million SF compared to 200-300 million SF of office product.

GlobeSt.com: Why hasn't the market still fully recovered from the previous peak as other niches have?

Stiles: The market has improved to levels last seen at the peak for Los Angeles in2006/2007.  Again, with good demand and a vacancy of 2.9%, the market is very strong.  The key to this market is that each submarket or cluster across the region is somewhat different because of each cluster's local market fundamentals.  The key for continuing this success is to build additional lab facilities so that we can capture the demand from the region rather than lose tenants to other markets.

GlobeSt.com: What are these users looking for in a space?

Stiles: The type of space that life science users are looking for varies greatly depending on the use.  There are many different types of space such as wet lab, clean lab, GMP or manufacturing space, vivariums, clinical labs, research labs, etc.  Each has different needs but some to the typical needs are heavy power, heavy water and plumbing requirements, heavy HVAC needs and different levels of moving air through the space, venting, etc., typically high floor loads for equipment, higher ceiling heights for equipment, venting, HVAC, etc.

GlobeSt.com: What is your outlook for this sector? 

Stiles: My outlook for the Los Angeles Life Science Market if very optimistic.  Demand from life science firms is strong and picking up. There is very little existing lab space available and not much currently under construction.  This demand will continue and much will be driven by early stage life science firms on fast growth trends.  The key will be the ability for owners to develop and/or renovate buildings into suitable lab space and or connect users and owners together to develop and/or finance such facilities in the future.

LOS ANGELES—Life sciences may be Los Angeles most under-the-radar office sector—but it shouldn't be. With ample universities and research centers, the niche is thriving with a 2.9% vacancy rate and tightening supply, according to a recent market report from JLL that focused on the sector. This has always been a booming sector, though. It was down to a 2% vacancy in 2007, and is heading in that direction again. To find out about the sector, we sat down with Shaun Stiles, EVP at JLL, to get an inside look at the market.

GlobeSt.com: What is driving the life sciences market in Los Angeles? 

Shaun Stiles: The Los Angeles life science market is driven by three things: One: the presence of our 25 research institutions and universities; two: the presence of our large biotech firms; and three: the huge base of early stage life science companies that continue to grow in the area.

GlobeSt.com: Has Los Angeles always been popular for life sciences users? 

Stiles: Los Angeles has always been popular for life science users because of our local research institutes, our universities and our lifestyle.  The trick has been trying to keep these firms here as they continue to grow.  Because Los Angeles does not have the presence of large pharmaceutical companies (like San Diego) and because Los Angeles does not have as much Venture Capital presence (like San Francisco/Bay Area), there is sometimes pressure from companies to relocate to those markets.  Also, the Life Science market in Los Angeles is very spread out into many smaller clusters and is therefore sometimes hard to quantify and understand.  Because there is not one large cluster of submarket, the market sometimes does not get the attention it deserves.

GlobeSt.com: How does this niche compare to activity in the office market? 

Stiles: The activity in the life science niche is actually very strong.  Demand has been good and there is virtually no vacant lab space available with a current vacancy of 2.9%.  The reason it may not get as much attention is that it is a much smaller market compared to the overall office market and it is a very specialized niche with very specialized improvements and needs.  The life science market is 2-3 million SF compared to 200-300 million SF of office product.

GlobeSt.com: Why hasn't the market still fully recovered from the previous peak as other niches have?

Stiles: The market has improved to levels last seen at the peak for Los Angeles in2006/2007.  Again, with good demand and a vacancy of 2.9%, the market is very strong.  The key to this market is that each submarket or cluster across the region is somewhat different because of each cluster's local market fundamentals.  The key for continuing this success is to build additional lab facilities so that we can capture the demand from the region rather than lose tenants to other markets.

GlobeSt.com: What are these users looking for in a space?

Stiles: The type of space that life science users are looking for varies greatly depending on the use.  There are many different types of space such as wet lab, clean lab, GMP or manufacturing space, vivariums, clinical labs, research labs, etc.  Each has different needs but some to the typical needs are heavy power, heavy water and plumbing requirements, heavy HVAC needs and different levels of moving air through the space, venting, etc., typically high floor loads for equipment, higher ceiling heights for equipment, venting, HVAC, etc.

GlobeSt.com: What is your outlook for this sector? 

Stiles: My outlook for the Los Angeles Life Science Market if very optimistic.  Demand from life science firms is strong and picking up. There is very little existing lab space available and not much currently under construction.  This demand will continue and much will be driven by early stage life science firms on fast growth trends.  The key will be the ability for owners to develop and/or renovate buildings into suitable lab space and or connect users and owners together to develop and/or finance such facilities in the future.