Life Sciences are booming
The drive to develop vaccines and treatments during the COVID-19 crisis brought broad awareness to the life sciences. But the sector’s growth predates the pandemic. Achievements like mRNA vaccine technology demonstrate the groundbreaking possibilities when intellectual and financial capital combine in life sciences clusters. One result is that the highly specialized properties that form the infrastructure of life sciences activity—including especially research and development labs, but also early-stage manufacturing and distribution facilities—have drawn increasing attention from real estate owners and investors since early 2020. The resilience of this essential sector, combined with lingering uncertainty about the future of traditional office, has led more than a few office landlords to pivot toward labs. What makes this specialty sector so appealing? And what are its prospects in the post-pandemic world? Driven by an aging population, steady funding sources, and the ever-present desire to improve quality of life, the life sciences show no signs of slowing down. Rather, they offer every indication that the growth will continue long after the pandemic.
Industry snapshot
$8.8T
Market
Global healthcare expenditure in 2021
(Source: IHS Markit)
$560B
Market
U.S. pharmaceutical spending in 2021
(Source: IHS Markit)
$203B
Funding
Cumulative government funding for life sciences in 2015-2021
(Source: NIH)
2.0M
Employees
People currently employed in a life sciences industry
(Source: Bureau of Labor Statistics)
Projected 10-year growth in health care using population
Employment growth
Employment across life sciences subsectors has grown steadily in the past few years, outpacing overall employment. While it dipped somewhat with the onset of COVID-19, the drop was less severe, and most jobs have returned.
Source: Bureau of Labor Statistics
Public & private funding
Tens of billions of dollars are now flowing into life sciences every year from both government and private venture capital sources. This funding drives employment and, in turn, demand for well-located lab space.
Source: NIH *Government figures reported on FY basis (10/1-9/30)
Life Sciences employment trend
Life Sciences funding trend
What is "life sciences?"
The purpose of a life sciences organization is to develop, scale, and manufacture products and processes to improve human and animal health through medical or agricultural intervention. This typically begins with research in a laboratory and is often followed by clinical trials real-world settings to prove safety and efficacy before mass production for the market. One or more of these steps are sometimes outsourced to contract research/manufacturing organizations (CROs/CMOs). Broadly speaking, the term “life sciences” includes several overlapping subsectors:
Biotechnology and pharmaceuticals
Producing vaccines, antivirals, gene therapies, and other drugs to prevent and treat illnesses or enhance wellness
Medical devices
Supplying the healthcare industry with everything from diagnostic machines to prosthetics and artificial joints
Diagnostics and testing
Creating new ways to screen for medical conditions and servicing tests to enable proper triage and personalized treatment
Life Sciences: Resilient in the COVID recession
Consistent funding
Government grants and venture capital, fund startups while steady cash flow from established pharmaceutical companies support ongoing R&D.
Strong fundamentals
An aging population projects to spend more on healthcare, and the COVID-19 pandemic has underscored the need to be prepared for a series of public health threats.
Colocation of personnel
Highly trained—and scarce—researchers and lab technicians work together to conduct life sciences R&D in a relatively small number of geographic clusters that meaningfully impact their local real estate markets.
Onsite work
The nature of early-stage lab research and manufacturing is not as conducive to remote work as the “office” work of many other industries, as evidenced by the continuing work inside labs throughout the COVID-19 pandemic.
