The life sciences sector in the U.S. is experiencing a turning point. JLL’s first U.S. Life Sciences Property Report indicates a rise in lab space demand after a period of softening. This positive trend is fueled by several factors, making the coming months bright for the industry.
Key Trends Shaping the Market:
- Demand on the Rise: The report highlights five key trends, including a nationwide surge in lab space demand. This growth is particularly prominent in the Bay Area, Boston, and San Diego.
- Quality Matters: In top markets, high-quality facilities are driving leasing success. Tenants are prioritizing Class A space, with older properties seeing less interest.
- Normalization of Supply and Demand: The supply-to-demand ratio is gradually returning to a healthy balance. As new supply stabilizes and demand grows, this ratio is expected to keep improving in most major markets.
- Post-2024 Supply Relief: The influx of new lab space is projected to slow down significantly after 2024. This decrease will provide much-needed breathing room for the market to absorb existing vacancies.
- Patent Cliff Impact: An upcoming patent cliff, where many existing drugs lose exclusivity, is anticipated to fuel further activity in the life sciences sector.
Insights:
JLL experts believe the industry is on the cusp of an exciting resurgence. Travis McCready, Head of Life Sciences, Americas Markets, at JLL, attributes this optimism to factors like continued company creation, abundant venture capital funding, and substantial resources at the disposal of big pharma companies for acquisitions.
Kevin Wayer, Division President of JLL Life Sciences, emphasizes the importance of acting now for tenants seeking space. He anticipates increased competition as venture capital becomes more readily available in 2025 and beyond.
Looking Ahead
With a positive shift in demand and improving market fundamentals, the life sciences real estate sector in the U.S. appears poised for a robust comeback.
This article was originally published on iBIO NewsBrief. Gain a head start on your day with iBIO NewsBrief. Subscribe to receive top industry headlines delivered straight to your inbox.