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Boston Maintains Top Spot on JLL’s 2015 List of Top U.S. Life Sciences Clusters

JLL’s annual Life Sciences Outlook Report reveals growth in pharmaceutical and biotech industries despite rising labor and real estate costs

BOSTON, July 22, 2015 – The Greater Boston area retained the top ranking in JLL’s 2015 Life Sciences Outlook as the U.S. life sciences cluster with the highest weighted score of several key industry metrics, including employment concentration, employment growth and levels of funding. Boston possesses the largest concentration of life science researchers in the U.S. and has over 3.7 million square feet of requirements. The region ranked #1 in patent ownership per capita, #2 in venture capital funding and #2 in number of IPOs.

These trends, along with a ranking of the top U.S. life sciences cities and the global industry landscape, are revealed in JLL’s fourth annual Life Sciences Outlook Report released today.

Despite over three million square feet of new construction being delivered in the Cambridge marketplace, companies competing for talent continue to drive Kendall Square lab vacancy to an all-time low. “Cambridge and core suburban lab markets have seen approximately 20% rent growth year over year and cannot add product fast enough,” says Don Domoretsky, Senior Vice President and head of JLL’s New England life sciences practice. “Companies are being forced to lease defensively. Research results, M&A activity and partnership agreements have forced an immediate need for space.”

The lack of Cambridge supply has given the overall Greater Boston lab market a chance to mature, with research sub-clusters in West Cambridge and core suburban markets of Waltham and Lexington benefiting from the high demand and dwindling supply.

Companies need space tomorrow,” said Domoretsky. “For the first time Class-A suburban asking rents are hovering in the low forties triple net, and developers are focused on delivering quality suburban product as quickly as they can.”

There is no sign of the market slowing down,” added Domoretsky. “There are over eighty active tenants representing 4.8 million square feet of requirements, all competing for less than one million square feet of existing product throughout the Greater Boston market, and large blocks of space are at a premium.”

Top U.S. life sciences clusters
Collectively, U.S. biopharmaceutical innovation is thriving, with areas like Boston, Raleigh-Durham and San Francisco dominating the U.S. life science activity. However, a scarcity of laboratory space in Kendall Square in particular and in the Greater Boston area in general is pushing biopharmaceutical companies to seek locations in suburban markets where space is available or can be constructed, while still providing proximity to talent and resources.

“In their U.S. operations, biopharmaceutical companies are being squeezed by rising costs for highly trained talent, more expensive real estate markets and a shrinking supply of available laboratory space,” said Roger Humphrey, Executive Managing Director and leader of JLL’s national Life Sciences group. “Many are willing to pay a premium for proximity to the leading research institutions and scientists, but the lack of space is compelling companies to look at secondary sites that are a little less conveniently located.”

High-volume mergers and acquisitions continue to reshape the biopharmaceutical sector as global pharmaceutical giants seek greater operating efficiencies through consolidation. Investment in start-ups and mid-sized companies developing new products is also playing a key role in industry dynamics. The report found that this burgeoning innovation has driven a space crunch for laboratories in cities such as Boston, Los Angeles and the San Francisco Bay Area.

Below is the 2015 ranking of the top 10 U.S. life sciences clusters:


Rising labor, real estate costs spur emergence of new life sciences clusters
Along with the strong dollar and competition from generics, biopharmaceutical operations in the U.S. are facing rising labor and real estate costs. While the average rent for laboratory space rose by an average of three percent nationwide in the past year, rents grew dramatically in the top clusters—by 16.9 percent in San Francisco and 15.5 percent in San Diego. The national average rent per square foot (PSF) for lab space is $24.30, but has skyrocketed to $47.40 PSF in Boston and to $37.30 PSF in San Francisco.

Rising rents are one reason small and mid-sized biotech companies are heading to Philadelphia, Denver and other more affordable locales, and saving their dollars for talent recruitment. As rent growth increases, low interest rates make construction a reasonable option in some locations, such as Minneapolis or Indianapolis, and those locations with available land and few life sciences facilities for rent.

Rapid growth of generics sales counteracted by emerging market opportunities for branded products
Demographic shifts continue to shape the market for life sciences products, and globalization is a key strategy for Big Pharma companies looking to compete against growing generics sales. These companies are finding opportunities in emerging markets, such as China and Indonesia, with significant economic growth, an expanding middle class and the increase in chronic diseases that tends to accompany increased purchasing power. For example, medical sales are expected to reach $175.8 billion in China, and $57.3 billion in Brazil by 2020.

Central and Latin America are increasingly becoming hotspots for Big Pharma manufacturing. Brazil is the top medical device producer in South America. As Brazil and other countries in the region continue to stabilize their economies and liberalize their markets, life sciences firms will likely move more production south to take advantage of low-cost land and labor.

About the Report
JLL’s annual Life Sciences Outlook tracks geographic shifts in life sciences innovation, operations and facilities investments, including analysis of countries and cities most actively investing in their life sciences sectors. It includes a ranking of the top U.S. life sciences clusters, a look at top global cities to watch, as well as analyses of global trends. The complete findings of the Life Sciences Outlook are available in a dedicated microsite here.

JLL offers a team of real estate and facility management experts dedicated to helping life sciences companies optimize and manage their real estate portfolios. The firm provides a comprehensive range of facilities management services to the life sciences community, providing services for 100 million square feet of research, manufacturing and office space, including GxP operations. Its industry-leading full-service platform includes: integrated facilities management, engineering and operations, energy and sustainability, transaction advisory services, lease administration, project management and comprehensive laboratory services.

A leader in real estate outsourcing, JLL’s Corporate Solutions business helps corporations and public institutions improve productivity in the cost, efficiency and performance of their national, regional or global real estate portfolios by creating outsourcing partnerships to manage and execute a range of corporate real estate services. This service delivery capability helps corporations improve business performance, particularly as companies turn to the outsourcing of their real estate activity as a way to manage expenses and enhance profitability.

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About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $55.3 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit