Southern California Plays Integral Role in Life Sciences Space
My wearable fitness tracker just buzzed to tell me it’s time to stand and, shortly, it will remind me that a minute of deep breathing can reduce stress. This is what our lives have become. We’ve all been told that sitting is the new smoking, and we are constantly looking for ways to be healthier and counteract the endless hours we stare at our screens. According to a recent Nielsen report, American adults spend 11-plus hours per day swiping, clicking, bingeing, reading, listening to or simply interacting with media, up from nine hours and 32 minutes just four years ago.
Technology was supposed to make our lives easier, and I suppose it has since we rely on it for everything from telling us to stand up, change the oil in the car, lock the house, turn on music, turn off lights, and track the dog walker. It can even alert us if we’re having a heart attack, in which case there’s technology to administer medicine and keep track of our vitals, which will be collected and analyzed with yet more tech applications. And technology sends the claims and bills soon after.
In lockstep with our evolving relationship to our own health and how we take care of it, the life sciences sector has been a rapidly growing industry and sub-segment of our vibrant tech space, with L.A. ranking in the top 10 leading life science markets. Venture capital funding into the sector surged 86 percent over the past year, driving employment growth, new construction and increased attention from those looking to invest. Reflecting the local momentum over the past three years (2014 to 2017), L.A. life sciences employment grew faster than the U.S. average (3.7 percent versus 2.9 percent). In 2018, in spite of a small decrease, life science companies’ venture funding in Greater Los Angeles remained above the 10-year average, fueled by startups focused on everything from technological advances to biologics and gene therapy. Diagnostics and treatments that customize medicine to people’s own biology to cure diseases with targeted solutions are progressing at a rapid rate with lower costs. These advances are long overdue. The health care industry in this country hasn’t changed significantly in a couple of decades and now critical updates are moving ahead—everything from the patient experience and personalized treatment to the use of artificial intelligence to understanding diseases and diagnose. AI is also critical to brand equity. In a recent Accenture survey, more than 90 percent of life sciences executives recognized artificial intelligence as important in driving innovation and achieving outcomes such as hyper-personalized experiences, new sources of growth, and new levels of efficiency. The life sciences are also evolving, driven by the need to provide a platform of services, products, and information to patients, something that requires collaboration among companies.
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 and the seventh-largest amount of National Institutes of Health (NIH) funding in the country. The single greatest source of graduates in biomedical and biological sciences in the nation (by a wide margin) is the University of California at San Diego. Notably, the top-three schools are all in California: University of California Davis, University of California Los Angeles and University of California San Diego.
Development reflects the demand in this space. A relative lack of supply has supported low lab vacancy (4 percent, year-end 2018), while pushing average asking rents 5.4 percent higher over the past year. Top-tier lab space is estimated to fetch $72 per square foot gross. LA BioMed, located in Torrance at the Harbor-UCLA Medical Center, is planning a $63-million, 18,000-square-foot life science incubator and has permits to build an additional 250,000 square feet of life sciences 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.
All this is to say that the importance of life sciences will only ramp up in the years to come. And the Southern California region, including the Greater Los Angeles and San Diego areas, is well positioned to play an integral part in that space.
Petra Durnin is the director of research and analysis for CBRE Southern California.