US Life Sciences Market Ends 2022 on Solid Ground: Report
By Greg Cornfield January 26, 2023 10:40 am
reprints
While some markets are dying for relief, there’s life in lab space.
The overall industry showed signs of slowing growth in the fourth quarter of 2022 as companies reduced job openings and cut staff. But the average asking rate for lab space nationwide hit a record high of $62.16 per square foot, according to CBRE (CBRE)’s report released Wednesday.
Developers added 1.4 million square feet of lab space in the final three months of last year, bringing the national inventory of life sciences space to 181.7 million square feet, with another 40.3 million square feet under construction, the report said. That total inventory includes 52.7 million square feet in the Boston/Cambridge market alone, which is by far the largest life sciences cluster in the country.
The nation’s lab space was 5.7 percent vacant in the final quarter of the year. That’s the same as the previous year, and lower than any quarter before 2021, suggesting a normalization in the market rather than fewer life sciences tenants, according to CBRE.
After declining for three consecutive quarters, venture capital funding grew by 18 percent in the final three months of 2022 and exceeded pre-2020 levels nationwide. Total VC funding for the year totaled $21.7 billion, down 34.4 percent from 2021, and 3.7 percent below 2020 funding, but still above pre-pandemic averages
The Boston area’s life sciences market has just 3 percent vacancy and average asking rent a dollar shy of $100 per square foot. The San Francisco Bay Area is the second largest with 33.8 million square feet of space, which is 6.3 percent vacant and comes at an average of $71.64 per square foot.
San Diego is third with 23.9 million square feet and a 4.4 percent vacancy rate, and an average asking rate of $75.96 per square foot. Oxford Properties acquired Ionis Pharmaceuticals’ 250,000-square-foot life sciences campus and corporate headquarters in the San Diego market for $258.4 million, which was the most expensive deal in the top 10 markets for the quarter.
New Jersey is the fourth largest life sciences market with 15.8 million square feet, while Washington, D.C., is fifth largest and the last market with an eight-figure inventory at 12.6 million square feet.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
