Research

2021 Life Sciences Lab
Real Estate Outlook 

Reinvented cluster rankings and industry trends

September 14, 2021

Life sciences industry momentum has been building for decades, but it’s recently become one of the most highly sought-after sectors within commercial real estate. We’re at the forefront of rapid change concerning modalities of drug discovery and delivery, including the prevalence of more “living” – or bio engineered, small molecules. New modalities and technologies will fuel ever evolving infrastructure and real estate requirements.

High barriers to entry are challenging both investors and occupiers, especially in key cluster markets. Secondary markets are gaining traction, but only a few clusters can boast a robust life sciences ecosystem.

Technology-enabled changes in the life sciences industry will drive more activity outside of the key cluster markets in the long term, especially as digital adoption drives greater productivity and enables new ways to conduct research. Markets that have the right mix of industry fundamentals will be better positioned to capture this growth.

Our 2021 Life Sciences Real Estate Outlook explores three key industry themes and establishes a reinvented approach to our geographic cluster rankings.

Theme 1: What’s driving the industry forward, and can it last?

  • Our basic human desire to live long and healthy lives will forever drive demand for the industry’s main product: therapeutics aiming to do just that.
  • The focus on personalized medicine will be a tailwind for the industry, enabled by gains tech-enabled productivity gains related to drug discovery and delivery. Biologics are gaining market share over conventional medicines and that will increase as new modalities are discovered through advances in technology.

Worldwide pharma sales by technology type

 

Theme 2: How much further can tenant demand sustain its current pace?

  • Demand for lab space will continue to grow if funding sources continue to flow, talent continues to grow, and commercial lab supply is available to lease. But core clusters will be immovable from their dominant positions for the foreseeable future. There will be a slow evolution of growth in secondary life sciences clusters, but markets with the key ecosystem components in place will capture the most meaningful activity.
     

 

Theme 3: What are investors doing to meet the swell of demand and will there be enough supply to support industry growth?

  • It’s nearly impossible to quantify precisely how much lab space will be needed in the next five years but suffice to say there is not enough in the top three cluster markets, and scarcity is building in the rest of the top ten clusters. Investors have been quite active in the space, exploring opportunities, but challenged by higher barriers to entry.

 

JLL’s Awaited Life Sciences Cluster Market Ranking

We’ve reinvented our approach to our annual life sciences cluster ranking, employing a new methodology that scores the key components that define the industry and predict its growth.

Not all markets can reach the bar set high by Boston, but this year we’ve benchmarked market opportunity relative to talent, industry depth, innovation, and lab real estate dynamics to provide a more robust market comparison. Indexed to 100, market scores indicate how far above or below “average” each market scores.

Sized by score for each category - Hover over squares for score and rank

 

As key clusters become too challenging for occupier growth, or too competitive for real estate investors, the question becomes, “where next?” 

Download our 2021 Life Sciences Real Estate Outlook to access our reinvented cluster rankings, diver deeper into the latest trends, explore what makes a successful life sciences cluster, and more.

 

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