Lab vacancy across 12 largest life sciences markets increased in third quarter but remains well below pre-pandemic level
November 4, 2022
The U.S. life sciences real estate market showed signs of normalizing in this year’s third quarter after setting records in 2021, according to a new report from CBRE. Still, the market’s latest measures handily exceed those from before the pandemic.
The average lab vacancy rate across the top 12 U.S. life sciences hubs increased to 5.3 percent in the third quarter, up 30 basis points from the second quarter. In comparison, the vacancy rate in the first quarter of 2020 before the COVID-19 pandemic struck was 6.2 percent.
The vacancy rate rose partly because developers completed 2.1 million sq. ft. of space last quarter in the 12 markets, outpacing new absorption of 363,047 sq. ft. Labs under construction now total 37.4 million sq. ft., of which more than a quarter is under lease.
“We’re seeing a normalization of the market after multiple quarters of breakneck growth,” said Matt Gardner, CBRE Americas Life Sciences Leader. “It’s important to keep in mind that the pandemic set a new floor for the life sciences industry. Funding remains at high levels, and job growth continues. Life sciences real estate is a valuable asset.”
U.S. life sciences employment increased by 5.4 percent in the third quarter from a year earlier. Venture capital funding declined by 29 percent in the third quarter from the second, though funding volume remains on course for the third-highest annual total on record after 2021 and 2020.
Average lease rates across the 12 markets increased by 6.8 percent to $60.28 in the third quarter from the second.
Top Life Sciences Markets: Select Q3 Stats
|Market||Market Size*||Vacancy||Sq. Ft. Under Construction||Sq. Ft. of Current Tenant Demand|
|New York City||2.7M||7.2%||866,013||2.1M|
|San Francisco Bay Area||33.8M||7.4%||9.1M||5.3M|
*In square footage of existing lab space.
To read the full report, click here.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
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