Life-science lab space has emerged as a coveted sector of commercial real estate as hefty increases in funding and employment have fueled both demand for lab space and construction of it in leading U.S. life-science markets, according to a new report from CBRE. One of the top life science clusters in Q1 2021 was in New Jersey, which boasts 20.4 million square feet of lab and R&D space.
According to the report, net lease pricing (tenant agrees to pay rent and any additional cost associated with the property) for lab space in New Jersey increased between 10% and 15% since mid-2020, showing the tremendous demand for space.
There is virtually no new construction currently underway in the suburban markets to meet this growing demand, but the market is starting to see the conversion of older office to lab space take place.
“Biomanufacturing in New Jersey has been the dominant driver of activity with approximately 800,000 sq. ft. of demand,” said CBRE Senior Vice President Tom Sullivan. “Its position as one of the country’s largest life sciences markets, as well as being home to many of the world’s top universities, make New Jersey one of the most sought-after states for both venture capital investors and premier pharmaceutical companies.”
The $10 billion in venture capital awarded to U.S. life sciences companies in the first quarter marked a record, exceeding the previous high in last year’s fourth quarter by roughly 60 percent, according to the PwC Moneytree Explorer survey. U.S. life-sciences employment has risen by 15.6 percent since April 2017, outpacing the growth of the larger tech industry.
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