NYC Life Sciences Space Sees Record Demand in 2021: CBRE
By Mark Hallum March 7, 2022 4:12 pm
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Demand for life sciences space in New York City reached a record high in 2021, with an annual total of 433,000 square feet leased, according to a report from CBRE.
The firm’s New York City life sciences market report shows that leasing activity in the sector was 67 percent higher last year than in 2020, as labs moved into the five boroughs to take advantage of a white coat-clad talent pool.
These organizations also came stuffed with cash as venture capital funding reached a record $1.4 billion that helped get labs off the ground and into some of the city’s 1.9 million square feet of available life sciences space. The availability rate for ready-to-rent lab space remained tight, at about 3 percent, in 2021.
“Demand has grown significantly the past several years and [venture capital] funding has reached record numbers,” CBRE’s Joe DeRosa said in a statement. “As a result, some of the country’s largest life sciences developers have recently made their initial foray into the local market.”
But, while labor pools in New York City outshine other parts of the country, CBRE says that a lack of life sciences space in other cities also contributed to the influx of organizations snapping up deals in the New York metro area.
As demand has grown for this kind of space, CBRE expects the inventory to increase to 4.6 million square feet by 2025 with developers including Alexandria Real Estate Equities, King Street Properties, Longfellow Real Estate Partners and Beacon Capital Partners working on major life sciences projects.
The demand could likely increase further with the availability rate for lab-exclusive space falling 7.7 percent in 2021.
Asking rents also reached a record high of $114.02 per square foot on average for Manhattan alone, while the city as a whole saw average asking rents in 2021 reach $93 per square foot.
Venture capital money was not the only thing powering growth in this area.
The National Institutes of Health allocated nearly $2.8 billion to entities in the city in 2021 to help grow the life sciences market, an overall increase of 21 percent over 2020.
Major firms are making visible efforts to break into the life sciences industry, as well. In February, Ivanhoé Cambridge and Lendlease launched a new joint venture to develop state-of-the-art labs in major hubs such as Boston, San Francisco Bay Area and San Diego, the New York-New Jersey metropolitan region, Philadelphia, Chicago, Los Angeles and Orange County, Calif.
Nationally, investment in life sciences research and development facilities surged in 2021, reaching $21.4 billion, or 62 percent higher than the total from 2020, according to a similar report on this sector at a national level from CBRE.
Alexandria Real Estate Equities was ahead of the pack in life sciences investments with 43 million square feet in over 407 properties, while Blackstone (BX)’s BioMed Realty came in second with 14.4 million square feet spread over 91 properties.
Healthpeak Properties came in third with 11.7 million square feet in 146 properties and Ventas was fourth with 9 million square feet over 45 properties. Longfellow had 7.3 million square feet spanning 18 properties.
Mark Hallum can be reached at mhallum@commercialobserver.com.
