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Life Science Sector Expands Far Beyond the Established Clusters
When it comes to life sciences real estate, the biggest keep getting bigger. That’s to say that the leading developers in the sector, such as Alexandria Real Estate Equities and Blackstone’s Biomed Realty, continue leading the way, as do the most established clusters. Combined, Boston, San Francisco and San Diego boast an estimated 16.6 million square feet of lab space under construction and/or under renovation, and another 54.5 million square feet of proposed development.
However, a Newmark report overview report of the sector also identifies plenty of activity coming from new entrants into the marketplace, and from emerging clusters. “While groups with a proven track record for success have been the fastest to pivot to life science investment and fundraising during the pandemic, institutional investors and private equity groups have created special-purpose life science funds and platforms to compete in the space, such as Tishman Speyer and Bellco Capital’s Breakthrough Properties,” states the report, for which Newmark’s Daniel Littman was the lead author.
And while Boston and the two most-established California markets take pride of place, with other leading markets including New York City and Austin also in the mix, emerging clusters such as Chicago and Houston can offer “comparably attractive opportunities for investors to transact at more favorable pricing” as well as with less competition, the report states.
Both of these markets have mega-projects to call their own: Sterling Bay’s Lincoln Yards mixed-use development in Chicago, which has a considerable life science component; and the Texas Medical Center in Houston.
Meanwhile, Newmark reports, life science investment and leasing activity has expanded in many non-traditional life science markets such as Atlanta, Dallas, Miami, Pittsburgh and Salt Lake City. In common with emerging clusters, these nascent markets rely on top education and research institutions along with public-private partnerships to spur the establishment of life science ecosystems, often from the ground up.
In Dallas, for example, the 23-acre Pegasus Park represents the city’s first master planned project to cater to startups, including those in the life science and healthcare industries. It’s being developed through a partnership with Boston-based incubator BioLabs.
“As is the case with tertiary markets in other property types, these small life science markets offer abundant opportunities for first movers but are more speculative in nature,” the report cautions. “Investors must be keenly aware of the life science supply-demand balance.”
Pictured: Pegasus Park in Dallas.
- ◦Sale/Acquisition
- ◦Development
