The life science industry is “changing the face of business and real estate” becoming one of the most rapidly expanding real estate markets in the US, a report by Richard Ellis has said.
The San Francisco Bay area has become a core location for life science real estate, according to the report, called “A Primer on Life Science Properties.” The area is home to more than 800 companies, totaling almost 25 million square feet of life science research-related real estate at the end of 2007 – ranking it as the largest life science market in the world. Approximately 99 percent of the Bay area’s biotech market is located in suburban markets.
Demand for life science-related property is growing in part because of an aging population and advances in biotechnology, medical devices and pharmaceutical industries, the report said.
Last year, new life science developments in the San Francisco Bay area totaled 10 million square feet. Of this total, proposed developments comprised two million square feet, planned developments total 5.8 million square feet and developments under construction comprise 2.2 million square feet.
The Bay Area has benefited from significant private equity funding for biotech projects, with San Hill Road in Menlo Park, home to billions of dollars of private equity capital specifically for discovery and progression of technology.
Another hot spot, according to the report, is the Washington DC/Baltimore/suburban Maryland region, with one of the largest concentrations of researchers in the world and home to US government agencies such as the Food and Drug Administration (FDA), the National Institutes of Health (NIH) and the US Army’s Medical Research Institute for Infectious Diseases.
The area also plays host to research universities including the Johns Hopkins University and the University of Maryland, which provide most of the infrastructure of tenant laboratory space in the area.
The Raleigh-Durham market in North Carolina, home to 460 biotech companies, is the third largest biotech market in the US. Other US markets profiled in the CBRE report include Boston, metro New York/Northern New Jersey, San Diego, Seattle, Orange County and Philadelphia.
Real estate GPs have already begun targeting the sector. In June, private equity real estate firm The JBG Companies and Scheer Partners launched a $100 million life sciences property fund, targeting real estate investments in the Washington DC area. The vehicle, the Greater Washington Life Sciences Fund, will develop and acquire life sciences commercial real estate in the Washington DC area. Most of the fund’s projects will be in the Maryland Interstate-270 corridor, Scheer president and founder Robert Scheer said at the time, comprising a combination of existing tenanted buildings along with other research and development facilities it plans to convert.