The U.S. life sciences industry and the real estate that it occupies have ridden a wave of momentum into this year that has positioned various industry hubs, from cornerstones such as Boston to emerging hotspots like Seattle, for outsized growth, according to a new report from CBRE.
Numerous indicators point to robust expansion for the industry, including the 86 percent increase in venture-capital funding for U.S. life sciences companies to $15.8 billion for the year ended in September from the previous year. Additionally, life sciences lab space under construction in the industry’s five largest U.S. markets expanded by 101 percent last year to 6.0 million sq. ft.
That momentum has several markets ascendant on CBRE’s ranking of the top established and emerging life sciences hubs. Minneapolis, for example, is the fourth ranked emerging life science cluster, which takes into account life science employment growth, the concentration and number of key scientists, National Institute of Health (NIH) funding, universities providing life science graduates and research and health services institutions, and the number and concentration of high-tech workers.
Currently, Minneapolis/St. Paul ranks second nationally in medical device industry employment with more than 300 establishments and 28,000 employees. Minneapolis/St. Paul also boasts the most medical device patents per capita when compared to the top 30 largest metro areas in the country. Many of these employees reside in the 494/694 interstate loop known as “Medical Alley,” which is home to many of the world’s top health technology innovation companies.
“Minneapolis/St. Paul continues to emerge as a highly sought-after investment market for life science related real estate driven by our deep medical technology industry,” said Judd Welliver, senior vice president at CBRE. “Investors view the asset class as mission critical to the tenancy with high barriers to entry for new development. There is tremendous durability in the cash flow with strong tenant retention and growing rents.”
CBRE analyzed and ranked the top established life sciences hubs by weighing four main criteria for each market: number of scientists in key industry categories, industry funding for local life sciences companies, size and long-term growth of their life sciences workforce, and their inventory of industry lab space.
Top 10 Established Life Sciences Markets
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6.) Washington, D.C.-Baltimore |
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7.) New York City |
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8.) Philadelphia |
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9.) Los Angeles |
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10.) Chicago |
Beyond the established hubs, CBRE analyzed the next tier of emerging hubs to determine which are climbing quickly up the national ranks, which again is where Minneapolis falls into.
Top Emerging Life Sciences Hubs
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“Multiple indicators point to sustained, strong growth for the life sciences industry, which makes life sciences labs and offices an ideal focus for developers and investors,” said Steve Purpura, Vice Chairman leading CBRE’s Life Sciences business. “Few industries offer this much expansion potential, but much of the activity happens in a select number of special markets.”