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News release

San Diego, CA

Capital Markets Drive Changes for San Diego’s Life Science Real Estate

Jones Lang LaSalle releases biotech real estate research report and video podcast with analysis of San Diego’s biotech real estate market dynamics


SAN DIEGO, May 11, 2011 — Changes in capital markets will influence the growth rate of biotech firms and the landscape of biotech real estate ownership throughout 2011 in San Diego. In order to explain local biotech market dynamics and its effects on the real estate market, Jones Lang LaSalle’s San Diego research department and biotech real estate teams have collaborated to produce a detailed research report, which summarizes biotech real estate activity during 2010 and expectations for 2011, and an insightful video podcast, which provides a current state-of-the-market assessment .
 
Report highlights
  • Employment levels held steady in San Diego’s biotech sector throughout 2010. Positive growth is expected for 2011.
  • $67 million in federal grants were awarded to 184 local biotech firms in 2010.
  • 2011 looks to be a year of continued growth among biotech investments with market experts predicting that the industry will outperform the general markets.
  • The San Diego market saw a decrease in availability for biotech real estate space and an increase in demand over the last two quarters of 2010.
“The San Diego region has evolved into one of the leading life science hubs in the United States and demand for properties to house these companies continues unabated,” said Eli Gilbert, Senior Research Analyst at Jones Lang LaSalle.

The podcast is delivered by Jones Lang LaSalle’s Brian Cooper, Senior Vice President, who provides a tenant’s perspective, and Chad Urie, Executive Vice President, who provides a landlord’s perspective.
 
Podcast highlights
  • Biotech real estate ownership has shifted from private, local developers to national REITs as financing for local developers is still constricted relative to REIT capital access
  • Biotech companies are increasingly looking to big pharma for funding rather than venture capitalists, as venture capital funding has contracted while pharma looks for strategic ties with biotech companies
  • IPO activity will drive the growth of the biotech real estate market, as early stage capital needs an IPO exit strategy. Real estate transaction sizes will likely remain small until IPO activity increases.
  • Companies are increasingly looking to Europe, China and India to bring their drugs to market as FDA approval gets more difficult. Biotech growth may occur overseas instead of domestically as a result.
  • 2010 brought a “flight to quality,” as biotech firms took advantage of favorable least terms and rates at Class A buildings.

“Capital Market activity returned with vigor to the San Diego Life Science product in 2010,” said Bob Prendergast, Managing Director at Jones Lang LaSalle. “Twenty-six properties traded in 2010, totaling nearly $475 million in sales. The trend was led by the three prominent REITs: BMR, HCP and ARE. Select acquisitions will continue in 2011 and 2012.”

Jones Lang LaSalle is a leader in the San Diego commercial real estate market. The firm employs approximately 45 of the area’s most recognized industry experts offering services in brokerage, capital markets, facility management and project development services. In 2010, the San Diego team completed more than 1.4 million square feet in lease transactions and directed $34.5 million in project management and currently leases and/or manages more than 5.5 million square feet in the market.

About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2010 global revenue of more than $2.9 billion, Jones Lang LaSalle serves clients in 60 countries from more than 1,000 locations worldwide, including 185 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.8 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with more than $43 billion of assets under management. For further information, please visit our website, www.us.joneslanglasalle.com.