The growth of the life sciences sector is fuelling high demand for appropriate real estate assets according to a new report.
Cushman & Wakefield says that across the US and Canada, increased investment and employment in the life sciences space is matching a demand from a population that is living longer. And the sector needs real estate.
“Essentially the tech area of healthcare, the life sciences sector has become a broad and growing collection of everything from diagnostics, genetic reading and writing and personalized medicine to medical device technology, pharmaceutical research and development, and much more,” says Greg Bisconti, Cushman & Wakefield Executive Director and leader of the firm’s Life Sciences Advisory Group. “Those forces, in turn, drive increased demand for lab space in both gateway and secondary markets across North America,”
For the report, the firm surveyed approximately 125 million square feet of lab space in 11 key US markets with life sciences clusters. Lab space vacancy is 8.4% in these 11 U.S. markets, well below the 11.6% vacancy rate for all office space and the national office vacancy rate of 13.3%.
Across the sector in the US, average lab space rent has increased 33.2% in the past decade, compared with a 17% increase for office space.
“Life science companies have been an important driver of economic growth and commercial real estate development, and space serving this sector is in high demand,” said Ken McCarthy, Cushman & Wakefield Principal Economist and Americas Head of Applied Research. “These companies require specialized lab space for research along with office space. Life sciences’ rapid growth has generally outpaced lab-space supply despite a 10% increase in inventory over the past five years, and kept lab market vacancy rates tighter than overall office markets.”
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