While the demand for traditional office spaces has waned, niche interest from developers and investors in the life science sector (also known as biotech) is experiencing remarkable growth. Over the past five years, life science-related completions have increased annually, with nationwide projections for 2024 reaching almost 22m square feet, six times more than the 3.3m square feet completed in 2019. What stands out today is that life science developments account for 27% of all U.S. office projects expected to be completed this year.
As of March 1, The Registry reported there were 81.4 million square feet (about the area of Philadelphia Airport) of office space under construction slated for completion by the end of 2024. While general office makes up 53% of all office space underway, total deliveries in 2024 are forecasted to be 37.5% below 2019 levels. Meanwhile, in the niche life sciences sector, Boston, the San Francisco Bay Area, and San Diego are the cities that lead construction in 2024. Seattle, coming in at number five in the top 10, has a 3% share of national life sciences developments under construction for 2024, representing approximately 706,481 square feet.
As reported at the beginning of the year in Puget Sound Business Journal, Greater Seattle boasts a robust life sciences ecosystem that shares a symbiotic relationship with health care. According to LSWI, more than 1,100 life science organizations in the state employ almost 44,000 people and represent an economic impact of more than $35 billion. The same article cites health services as a major regional economic driver. Data that PSBJ shared from Greater Seattle Partners states that “healthcare and social assistance” accounts for morse than 262,500 jobs at the metropolitan statistical area level, with 8% projected growth during the five-year period from 2022 to 2027 (Lightcast, 2023).
Site Selection noted that three Seattle-based biotech businesses secured billion-dollar buyouts from leading life sciences corporations starting last year. Pfizer purchased Seagen (formerly Seattle Genetics), for $43 billion. In June 2023, Swedish Orphan Biovitrum (Sobi) acquired CTI BioPharma for $1.7 billion. Novartis completed its acquisition of Chinook Therapeutics, which totaled $3.2 billion, in August. Along with those acquisitions comes the need for space to grow, and the greater Seattle area has plenty of room to offer.
Dexter Yard is one such new life sciences campus with two 15-story towers in South Lake Union, boasting 528,000 sq. ft. of office and lab space. Tenants include Shape Therapeutics, Parse Biosciences, and Monod Bio and Outpace Bio. Right next door is another (almost three-acre!) site also penciled to become a life sciences campus.
Other multiple life sciences campuses throughout South Lake Union are underway. Trammell Crow Company and Washington Capital Management collaborated on an 11-story life sciences building that spans 282,700 sq. ft, with 124,000 sq. ft. already pre-leased to the Seattle Children’s Research Institute with completion expected later this year. Vulcan Real Estate also has a 362,000-square-foot research lab facility in the works.
Washington State’s life sciences developments reach well beyond Seattle. Spokane, with more than 500 healthcare and life sciences companies representing about 36,150 employees, had a 2022 win when Jubilant HollisterStier signed a $149.6 million contract with the U.S. government to expand its COVID-19 vaccine and therapy manufacturing plant there. Other grant programs offered to life sciences interests by the Life Science Washington Institute and co-funded by the Washington State Dept. Of Commerce were offered last year to help bolster research in other parts of the state and among diverse life sciences sectors.
With over 2,400 area employers competing for talent in this sector, and deep pockets ready to help advance scientific breakthroughs through investment, accelerators and incubators, the life sciences are thriving in the region—and its need for space is picking up where traditional office use has left off. What an exciting time!
If you’re seeking quality commercial real estate investments throughout the Pacific Northwest, we’re here to help. Juniper Capital provides private real estate financing, including hard money loans for commercial, construction, multifamily residential opportunities and more. If you would like more information on this topic, call us today.
