Commercial Real Estate News
New York City's Life Sciences Office Sector is a Growing Beacon of Hope
According to CBRE's Year-End 2020 New York City Life Sciences Market report, leasing of around 156,000 sq. ft. for laboratory and other science-related space reached its highest level since 2011 and was more than double the figure recorded in 2019.
"More important than the aggregate absorption is the profile of the multiple mid-stage life sciences companies that drove the absorption," said Steve Purpura, CBRE Life Sciences Practice Leader. "The large requirements of tomorrow are now deciding to stay in NYC when they graduate from the incubators -- and that is a significant step in the right direction for the NYC life sciences cluster. "
"Another factor in the rapid growth of the life sciences sector has been access to VC funding, which according to our report reached its second highest annual total ever at more than $900 million," continued CBRE's Jonathan Schifrin, who specializes in the life sciences sector. "As a result, demand for quality lab space picked up and asking rents followed suit. In fact, NYC's lab exclusive average asking rent increased 12% from one year ago to reach $93.83 per sq. ft. at year-end 2020."
In addition to higher VC funding, NYC's National Institutes of Health (NIH) funding reached roughly $2.28 billion in 2020, its fifth consecutive year of growth, according to the CBRE report.
As a result of robust leasing, NYC's lab exclusive availability rate fell to 26.2% by year-end 2020, a significant drop from the 30.5% recorded at H1 2020. Interestingly, the available lab space currently built out and ready for tenant occupancy was at 0% by year-end 2020, down from the 2.3% CBRE reported at the mid-point of the year.
"With continued strong demand, climbing asking rents and lack of new supply, NYC's life sciences sector is a true bright spot in an otherwise lackluster commercial real estate sector," noted CBRE's Joe DeRosa. "We believe that the life sciences sector will continue to grow in the city given the quality of space that can be made available, a highly educated workforce and its standing as a global investment hub."
