Special report: In Triangle, demand for life science space outpacing supply

Editor’s Note: The WRAL TechWire “Future of Work” series, supported by commercial real estate firm JLL and other partners, continues.

Earlier this month, series took an in-depth look at the demand for land, which can now be described as “insatiable,” while developers look to shore up their land positions. That’s especially the case in the industrial sector, the topic of the special report and in-depth Q&A, and, increasingly, the life science and biopharmaceutical sector, which the series investigates this week. Join a WRAL TechWire LinkedIn Live discussion on Tuesday, May 17 at 11 a.m.

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RALEIGH – As the Triangle’s life science and biopharmaceutical sector continues to grow, demand for life science and laboratory space is increasing as well. And while demand for space nationally is at record levels, according to industry executives, it just might be even higher in the Triangle.

Building on strengths in biopharmaceutical manufacturing and emerging growth in gene therapy, the region is attracting a lot of interest—and a lot of investment.

There’s no sign of market slowdown when it comes to the current, and growing, demand for life science and lab space, Joel S. Marcus, founder and executive chairman of Alexandria Real Estate Equities, Inc., told an audience at a November 2021 event.

At the time, Marcus also announced two additional projects for two of the firm’s life science clients, and talked about the trends in the industry.

“Gene therapy and cell therapies are the future complex medicines that we will see going forward,” said Marcus. He added that he believed that the Triangle was well-positioned to remain among the top three U.S. markets for the life sciences in the years to come.

And Marcus isn’t the only industry leader who is bullish on the sector.

‘No parallel’ for Future of Work in Triangle’s life science sector, economy

Reliance on life science accelerating demand

“The world is becoming ever more reliant on the bioeconomy, bringing with it a need for more focus on the processes, people, and places that accelerate life sciences manufacturing and bring product innovations to the masses,” Bill Bullock, senior vice president of economic development and statewide operations with the North Carolina Biotechnology Center, wrote in a column published by WRAL TechWire earlier this year.

“Demand for lab space is indeed at an all-time high,” said Travis McCready, executive director of life science markets for JLL, in an interview with WRAL TechWire earlier this year. “From a macroeconomic level, we are, in the United States, operating with now about 166 million square feet of leasable lab space.”

That’s a record high, McCready noted. And nearly every market in the United States, said McCready, is “operating at historically low vacancy rates for lab space.”

Take what’s happening in the Triangle, for example.

Through January 2022, noted McCready, “We’re tracking about 1.7 million square feet of supply, and 2.2 million square feet of demand.”

“Statistically speaking, there is no space,” McCready said.

NC’s next big step as global leader in life sciences: equity

New projects on the rise

“Part of what is driving this demand, perhaps what is more interesting than whether we’re at a high,” said McCready. “Is an exponential increase in investment going toward cell and gene therapy companies.”

McCready noted that there’s been a fivefold increase in the number of cell and gene therapy companies in development within the prior five year period. “And that’s not going to slow at all,” he added.

Those companies will need a place to conduct their work. That much is clear.

But where that work will occur? That’s not yet set in stone.

“The Raleigh-Durham market is the fourth-most vibrant life sciences geography in the United States, largely due to its biomanufacturing concentration,” said McCready. He noted that while the region does enjoy “unquestionable strength,” it still has room to develop growth in life science research and development to bolster its position as a top market.

Meanwhile, the demand for space continues, and investors, companies, and developers are seeking opportunities to meet the growing demand in this sector of the regional and state economy.

“It’s an extraordinary market right now, where demand, pretty much everywhere, far outstrips supply, and commercial real estate is playing catchup,” said McCready. “That’s the punchline.”

Future of Work special report: Across the Triangle, an ‘insatiable demand’ for land

This editorial package was produced with funding support from JLL and other partners. WRAL TechWire retains full editorial control of all content.

The series launched here, and the second report discussed high demand. Next, the series explored the relationship between work spaces, work places, and the current labor market. The following weeks, we’ve investigated specific sectors of the real estate market, and next week’s focus is on the life science sector.