The U.S. life sciences market continues to set records for discoveries and growth. “The pace of innovation and discovery in life sciences has been unmatched for five to ten years. This resulted in significantly more opportunities to treat diseases. For the built environment, that excitement transferred to developers, and now, the supply of space exceeds demand,” says Ian Anderson, senior director of research and head of national life sciences Americas research for CBRE. Lab and R&D inventory has grown 47% over the past five years to 181.7 million sq ft. A record 40.2 million sq ft of new construction is in progress, and total inventory is expected to grow another 22% in two years, according to the 2023 U.S. Life Sciences Outlook Report from CBRE.
This balance of space and need varies by region. “Developers and landlords are tracking which areas need space. For example, Seattle has a surplus of lab space. San Diego has high demand but not enough space. Boston is catching up to the constant demand. Texas has an increasing demand. Some projections say the life sciences sector may slow in three to four years, but I remain bullish long-term, based on the continued acceleration of therapeutics and the need to improve human health,” says Pat Toner, vice president Life Science sector leader, STO Building Group.
Other activities also affect the market. “A considerable number of companies now are expanding product development. COVID was a boost to research, and life sciences took center stage for investors looking for a growth industry. The latest growth was spurred by new initiatives from the Biden administration that put billions of resources into improving bio-science infrastructure to produce more pharmaceuticals in this country,” says Anderson.
The CBRE report notes major growth areas in Atlanta, Dallas/Ft. Worth and Nashville, based on funding for construction and labor pool. Atlanta secured $708 million in NIH funding for life sciences employment, putting its job growth at 20% from 2019 to mid-2022. Dallas/Fort Worth’s life sciences labor pool grew by 17% since 2019, and the area received $406 million in NIH funding and attracted $1.6 billion of life sciences venture capital funding between 2018 and 2022, the eighth largest amount of any U.S. market. Nashville’s life sciences labor pool has grown by 19% since 2019, and the R&D sector had an 81% growth rate over the same period. Last year, the market also secured $521 million in NIH funding, one of the nation’s highest per-capita amounts.
“Government incentives are stimulating investments...”
—Pat Toner, Vice President, Life Science Sector Leader, STO Building Group
The push for more on-shoring may also accelerate life sciences’ growth. “There is broad recognition of the need to bring more pharmaceutical product supply and manufacturing back to our shores, and now we see more customers investing in domestic manufacturing of their products. Government incentives are stimulating investments to manufacture and supply goods here. Research grants from institutions like the NIH and CDC also promote discovery, investment, and product manufacturing,” says Toner.
Government rulings also help. “One market driver has been the FDA 2022 Modernization Act that reduced the time for drugs to get to market from 12 to four years. As a result, companies have been more willing to invest in research facilities, where they build a core and shell and find start-ups to fill the space. Typically, this concept has not been used for life sciences companies, but when the cost of some of the facilities was reduced, smaller companies began to take advantage of it. As for construction, we use prefab for spaces that are on a tight schedule. Module labs and clean rooms are also fabricated off-site, built, and certified before final installation,” says Joseph Torcivia, Jr., principal of Torcon, Inc.
Age-related actors play a role in this and other markets. "By 2030, over 70 million people in the U.S. will be over 65 years old. This means a greater demand for drugs and medical treatments. The construction workforce is also aging. To mitigate this, we maximize prefab to help alleviate jobsite workforce needs and create a more controlled construction process for manufacturing facilities. This also helps LEAN construction because the building comes in containers and is assembled as delivered, including interior finishes and equipment,” says Jose Jimenez, VP of Life Sciences Center of Excellence leader at Gilbane Building Company.
Lab operators are also using space more efficiently. “During COVID, labs used technology to allow staff to remotely perform some work. They now use this technology to integrate lab areas on one floor with offices on another and have different research areas work alongside each other. This encourages collaboration, which helps generate new ideas,” says Jim Stephanou, CEO of IPS-Integrated Project Services LLP. He identifies a big benefit of being in this market: “This is a really good industry, where we can do things to help provide people access to medicine in the most efficient way.”
This article was previously published in the ENR Life Science and Pharmaceutical Building Today.
