One of the Hottest Sectors in Real Estate Development: Life Sciences
The Need for Lab Space
The pandemic has affected real estate in a number of ways, accelerating the relative decline of shopping malls (although these venues are thinking about creative new ways to use their space) and boosting the rise of data centers. Another sector experiencing growth is biotechnology, and the related demand for lab space. While this had been happening for years prior to 2020, COVID-19 intensified the process.
Private investment and government research dollars have poured into the life sciences space since the onset of the pandemic. Real estate firm CBRE (CBRE) says 31 million square feet of life science development was underway in the fourth quarter of 2021. That’s up by 19 million from last year’s first quarter.
Property Owners Like Life Sciences
Analysts explain property owners are increasingly looking for tenants who won’t be having employees work from home. Life sciences labs fit the bill with large and specialized equipment that requires on-site work. Also, labs historically enjoy high occupancy rates.
There are signs the sector will continue to grow, even post-pandemic, due to the massive amount of research funding coming from the US government. Private investment is also targeting life sciences, with around $8 billion poured into the sector in the fourth quarter of last year. CBRE says that number is three times higher than it was five years ago.
It seems some regions of the US are better candidates for life sciences development than others. Market observers note San Francisco, San Diego, and Boston have been biotech hubs for years, and it makes sense to build labs there given available tenants.
There are a number of other US cities with large academic institutions and hospitals that are experiencing growth in the life sciences sector. These include Los Angeles, Chicago, and Houston, as well as Denver and Boulder, Colorado. Property owners may look to take advantage — especially with investment dollars flying in from both the government and Wall Street.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.