COVID-19 accelerates momentum nationwide for life sciences real estate demand
With the worldwide prescription drug market expected to surpass $1 trillion by 2022, emerging life sciences hubs look to benefit from pandemic-related tailwinds.
CHICAGO, Jul. 28, 2020 – Rankings of the top U.S. life sciences cluster hubs were released today in the JLL 2020 U.S. Life Sciences Outlook, which also tracks the progress of up-and-coming life science markets that are fast becoming options of choice for life science companies and investors alike. Emerging hubs are looking to real estate to boost productivity as they anticipate growth of the worldwide prescription drug market, expected to surpass $1 trillion by 2022.
Boston, San Francisco, and San Diego retained their rankings as leaders among U.S. life sciences ecosystems and top contenders for venture capital investment, capturing 70% of all venture capital (VC) investment in 2019. Boston and San Francisco also lead the other clusters significantly with respect to development, with 2.7 million square feet (MSF) and 4.0 MSF respectively under construction.
Massive infusion of venture capital is also quick to promote life sciences employment growth. In 2019, 11 of 14 cluster markets set or approached record VC funding levels, a significant positive for the reinforcement of cluster market strength, resilience and security.
New York, Los Angeles, and Philadelphia increased their cluster scores since 2019, reaching new peaks in venture capital funding and life sciences employment. As speed to market accelerates for many pharmaceuticals, proximity to incubators at major research institutions has also supported developing clusters such as Raleigh-Durham, Houston, and Maryland, which have attracted recent interest from developers such as ARE, Longfellow and Hines. Additionally, the race for development of COVID-19-relatedvaccines is already beginning to energize demand in pharma-heavy New Jersey, a trend that should spread to more markets as 2020 progresses.
“Each cluster has a different specialty and occupies its own point along the maturity spectrum, providing a diverse range of options for investors and occupiers alike,” said Roger Humphrey, Executive Managing Director, JLL Life Sciences. “But they do a share a major commonality. Each cluster features a highly-educated workforce and ties to the research community, which in turn attracts a steady stream of multi-sourced investment that creates a need for institutional real estate.”
Beyond COVID-19’s recent acceleration of innovation in the life sciences industry, life-enhancing pharmaceuticals and medical devices have been increasingly sought out by Millennials reaching the peak of their earning potential and seeking personalized experiences. And, the upcoming expiration of a suite of patents creates an opportunity for mid-tier life sciences companies to pursue new long-term profit sources. Many new products on the market and in development are curative rather than therapeutic, increasing marketing potential and overall category growth.
“Conditions are ideal for maximum profitability arising from innovative new pharmaceuticals and medical devices,” said Audrey Symes, Research Director, JLL Healthcare and Life Sciences. “Meaningful advances within the life sciences industry, such as machine learning, are creating new sources of workflow and thus real estate demand. This combination of simulative factors sets up the life sciences industry to expand at an unprecedented pace, both in terms of manufacturing and patient demand.”
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $18.0 billion, operations in over 80 countries and a global workforce of more than 94,000 as of March 31, 2020. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.