The latest Bureau of Labor Statistics data show brisk hiring in the life sciences sector, which has several major hubs across the U.S., including San Diego.
Employment in the sector increased 5.3% in January from a year earlier, outpacing overall national job growth of 4.7%. Even hotter is a life sciences subsector, biotech research and development, which notched 11.5% growth.
This growth has a direct impact on lab real estate, even in already hot markets such as San Diego, analysts said.
As an example, CBRE calculates a 91% positive correlation locally between life sciences job growth and average asking rents for lab space.
The San Diego area’s life sciences employment grew to 68,698 in 2020, up 11.6% from 2016. Meanwhile, the area’s average asking rent for lab space nearly doubled to $74.88 per square foot last year, up from $41.52 in 2016.
Ted Jacobs of CBRE called it “an employee’s market” locally and nationally. And San Diego has a leg up, he noted – life-science workers are being drawn here from other hubs, thanks to the laidback lifestyle for which the region is renowned.
“On the employer side, companies are opening labs in San Diego to retain top talent,” Jacobs said. “Life science real estate developers are reacting accordingly, developing ground-up buildings that take advantage of the city’s temperate climate by integrating outdoor amenities and advertising how their buildings can help companies attract and retain top talent.”
Life sciences isn’t the only high flying market – tech is emerging too, driving real estate demand.
“As major tech companies lease up developments originally earmarked to be life sciences buildings, rental rates are rising to the highest they have been in San Diego,” Jacobs said.
CBRE has tracked a similar job growth/rent price correlation in the Boston-Cambridge (93%) market, indicating that the trend applies to other major hubs.
“Real estate often lags other economic and business measures. In the case of the life sciences sector, demand for lab space is the natural result of robust growth in jobs and in public and private funding in recent years, despite recently challenging equity markets,” said Matt Gardner, CBRE U.S. Life Sciences Leader.
A couple of signs point to continued growth in the sector, according to CBRE, from challenges like the pandemic to the sharp increase in biological and biomedical engineering graduates, more than enough to fill available jobs.
“Society often turns to science to respond to big challenges, from disease to energy to food. All these signals point to continued high expectations for innovation in the life sciences going forward,” Gardner said.