Resiliency, Innovation Fueling Life Sciences Growth

Despite some short-term challenges, the life sciences sector is set for long-term gains, said JLL, Chicago.

In its Life Sciences Research Outlook & Cluster Rankings report, JLL noted a new cluster model offers directional guidance for markets to focus investment efforts.

Current industry fundamentals are slowing as public capital retrenches and startups focus on capital conservation, but these are short-term challenges and the flow of private capital remains well above the historical trend, JLL said. “New therapies, innovative new modalities, increased adoption of advanced technologies and the demand for health and wellness will drive investment and growth for the foreseeable future,” the report said.

Travis McCready, Head of Life Sciences, Americas Markets with JLL, said the long-term potential of the sector remains materially unchanged since 2021. “Innovation is happening at a more rapid pace than ever before, the fruits of research into cell and gene therapy are just now being harvested, and revenue growth has taken off in the past five years as the sector becomes larger, an atypical growth track,” he said. “Additionally, three of the largest annual revenue increases in biotech R&D over the past 20 years have occurred in the last five years, as the sector accelerated into a new age of innovation.”

JLL reported the supply landscape has shifted in the past 12 months. “Demand was reaching its peak in the middle of 2021 with new lab space growth, but this dynamic created pressure in many lab markets where vacancies decreased while rents grew. Now, demand remains above historical levels and space is still scarce with vacancy below 6% across the top clusters in aggregate,” the report said.

The report looked at the key components of a successful life sciences ecosystem: access to talent, funding that leads to commercialization and real estate infrastructure to support further growth. It said Boston, the San Francisco Bay Area and San Diego continue to reign as the top three markets for life sciences commercial real estate. Emerging markets such as Salt Lake City and Minneapolis-St. Paul are focused on the future and growing their industry infrastructure to attract life sciences and biotech industry growth. “This convergence of science and technology is happening within innovation communities across several markets, with pockets of growth emerging in markets like Houston, Los Angeles and Pittsburgh, among others,” the report said.