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ETC... ETC... NEWS
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Strong Growth Of Life Sciences Sector Boosting Select Real Estate Markets

3/07/19

This report was provided by real estate services firm CBRE

The U.S. life sciences industry and the real estate that it occupies have ridden a wave of momentum into this year that has positioned various industry hubs, from cornerstones such as Boston to emerging hotspots like Seattle, for outsized growth, according to a new report from CBRE.

Numerous indicators point to robust expansion for the industry, including the 86% increase in venture-capital funding for U.S. life sciences companies to $15.8 bil for the year ended in September from the previous year. Additionally, life sciences lab space under construction in the industry’s five largest U.S. markets expanded by 101% last year to 6 msf.

That momentum has several markets ascendant on CBRE’s ranking of the top established and emerging life sciences hubs. Los Angeles, for example, the ninth-ranked life sciences cluster in the U.S., is experiencing growing momentum. Case in point, LA BioMed, located in Torrance at the Harbor-UCLA Medical Center, is constructing a $63 mil, 18k sf life science incubator and has permits to build an additional 250k sf of life science space on 15 acres. The vision for LA BioMed, supported by growing resources, is to become one of the nation's premier destinations for life sciences.

Reflecting the local momentum, L.A. life sciences employment has increased 3.7% between 2014 to 2017, above the U.S. average of 2.9%. The near-term outlook is for further growth, buoyed by an influx of venture capital funding to the industry over the past year.

L.A.'s life sciences industry possesses many of the critical ingredients required for rapid growth, including preeminent medical research and health services institutions, a significant source of new talent from local universities – the area is in sixth place for total number of graduates with a biological and biomedical science degree during the 2016-2017 academic year - and the 7th-largest amount of National Institute of Health funding in the country. Notably, the top-three schools are in California: University of California-Davis, University of California-Los Angeles and University of California-San Diego.

Simultaneously, a relative lack of supply has supported low lab vacancy of 4% as of the end of 2018, while asking rents increased 5.4% over the past year with top-tier lab space fetching an estimated $72 per sq. ft. gross.

“There is significant opportunity in LA for life science real estate development as we’re surrounded by a tremendous amount of talent and graduates from some of the nation’s top universities,” said Los Angeles-based Senior Vice President Andrew Riley, who focuses on clients in the life science, healthcare and healthcare technology sector, including Kite Pharma, Macrogen, Neural Analytics, Trethera and Palomar Health. “Many of these universities are currently in the process of exploring ways to expand their on-campus life science incubator space. Look at Kite Pharma. Once a startup that originated out of UCLA, it has grown into a significant office and lab occupier in our area.”

He added, “In the life sciences world, people don’t always think of Los Angeles as a go-to market. They might think of San Diego or San Francisco but this city has leading research universities, top clinical and research hospitals, a manufacturing base and, importantly, a significant and active venture capital presence.”

CBRE’s report focuses on the human life-sciences industry, which encompasses manufacturing, testing and research-and-development work in the fields of biotechnology, pharmaceuticals and medical devices. CBRE analyzed and ranked the top established life sciences hubs by weighing four main criteria for each market: number of scientists in key industry categories, industry funding for local life sciences companies, size and long-term growth of their life sciences workforce, and their inventory of industry lab space.

Per the report, the top 10 U.S. markets, ranked in order, are:

1. Boston-Cambridge
2. San Francisco Bay Area
3. San Diego
4. New Jersey
5. Raleigh-Durham
6. Washington, D.C.-Baltimore
7. New York City
8. Philadelphia
9. Los Angeles
10. Chicago





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