Wet Lab Space Wanted: Maryland Leads Way in Renovating Existing Space to Meet Demand
The biopharma industry has seen a surge of growth over the past several years with an increase of venture funding that supports the expansion of existing companies and the launch of startups aiming to develop next-generation therapeutics and devices.
According to a recent industry-wide analysis by Pitchbook, the year 2020 saw approximately $23.2 billion venture capital funds invested into biotech and pharma. That was a significant increase over 2019, which saw $17.2 billion in investments. Some of that increase was undoubtedly fueled by the ongoing COVID-19 pandemic. Despite that funding that fueled company-wide growth across the industry, one area that seems to have been left behind in multiple biopharma hubs, including the BioHealth Capital Region and Cellicon Valley, is the availability of wet lab space.
During the 2021 Association of University Research Parks meeting earlier this month, Ian Anderson, Senior Director of Research at CBRE Americas Research, said the search for available wet lab space remains a challenge across the industry. Over the past seven years, Anderson said CBRE data shows a 79% increase in the demand for wet lab space.
“The biotech revolution underpins the demand for labs,” Anderson said during his presentation.
Anderson said a flood of venture capital over the past several years is one of the key reasons for that increasing demand. For a time, particularly between 2014 and 2017, the lion’s share of venture funding went to companies in the top U.S. pharma markets, Boston, San Francisco, and San Diego. From 2017 to 2019, the capital began to spread to secondary markets, including the BioHealth Capital Region, the Research Triangle Park, Philadelphia, and similar regions. Over the past two years, Anderson said data shows that VC funding is spreading to even smaller markets, which signals significant growth opportunities across the country.
Still, with all the growth, there is a shortage of wet lab space, particularly in growing markets like the BioHealth Capital Region and Philadelphia, which rank at five and six in the CBRE market analysis. CBRE data shows there’s less than 5% vacancy of wet lab space in the Maryland area. Philadelphia is slightly better, with a 17% vacancy, Anderson said. According to the analysis, areas like Boston and neighboring Cambridge, the Bay Area, and parts of San Diego have less than 3% space. Anderson said there’s virtually no space for smaller companies to grow in.
While there is not as much available wet lab space as growing and emerging companies demand, Anderson said there may be some relief on the horizon, particularly in the BioHealth Capital Region. New data assessed during the first quarter of 20201 shows here are more existing properties currently being converted to wet lab space in comparison to new wet lab space than in any other hub, Anderson said. Philadelphia leads all hubs in new wet lab space construction, the CBRE data shows.
Anderson said CBRE predicts that converting existing space into wet lab space will remain a popular option given the rising costs for newly leased space across the country. CBRE data shows the per square foot price in Cambridge, Mass. is nearly $100, with prices even higher in the Kendall Square area. The price is about $90 per square foot in neighboring Boston, $70 to $75 in San Francisco, and about $65 in San Diego. Average rents have increased in the Washington, D.C./Baltimore area by about 25% and in Philadelphia, about 25%.
“Even as you see an increase in space, demand for that space is actually keeping up and in some markets, exceeding the demand,” Anderson noted. “We’ve seen some big upticks from owners asking for higher rents as those markets change pretty rapidly.”
Anderson predicted the demand for wet lab space will continue. He pointed to the “fascinating correlation” between the increase in venture funding and the growth of life sciences jobs. Looking at the first quarter of 2021, Anderson said there has been a spike in financing during the first three months of the year. That will lead to more jobs and, of course, the need for more space.
Latest posts by Alex Keown (see all)
- Infectious Disease Focused Zalgen Labs Opens New HQ in Frederick, Eyes Clinical Trial for Lassa Fever Therapeutic - January 10, 2022
- Precigen UltraCAR-T Technology Flexes its Muscles at ASH Meeting - December 21, 2021
- “There’s Gold in Them Thar Hills!” – VC Funding Floods BioHealth Capital Region in 2021 - December 16, 2021
- Emergent BioSolutions Expanding Quality Assurance Team - December 14, 2021
- CvilleBioHub Builds a Thriving Life Sciences Ecosystem in Charlottesville - December 14, 2021