Demand for New Lab Space More Than Double Available Supply in Denver
Demand for new life sciences lab space is outpacing speculative construction, according to a new CBRE report on the booming U.S. life sciences market. In the Denver-Boulder area, over 35 tenants are seeking nearly 1.5 million square feet of lab space, compared to a construction pipeline of 635,000 square feet. Voracious demand is pushing lab vacancy rates to record low levels — 4.9 percent across the U.S. and just 1.8 percent in Metro Denver.
The Denver-Boulder region is the 10th-largest life sciences market in the U.S. by lab/R&D inventory with 3.4 million square feet dedicated to the sector. The largest markets in the U.S. are Boston-Cambridge (42.2 million sq. ft) and the San Francisco Bay Area (32.7 million sq. ft.).
“Barriers to entry in the nation’s largest life sciences markets are compelling companies to expand to places like greater Denver, which is known for its highly educated talent pipeline. The region’s universities, medical and research facilities, and biotech destinations like the Fitzsimons Innovation Community are creating an ideal ecosystem for the industry to grow in Colorado,” said David Saad, executive vice president with CBRE in Denver specializing in the life sciences.
Life sciences companies collectively sought nearly 23.8 million square feet of new lab space across the 12 leading U.S. markets in this year’s third quarter. That exceeds the amount of lab space under spec construction — meaning space being built without a tenant already signed — by nearly 2.8 million square feet. That gap has widened steadily since last year; even as construction has ramped up considerably, growth in demand continues to outpace it.
Many factors are fueling the life sciences market, including global demand for vaccines for COVID-19 and viruses like it. Initial public offerings for life sciences companies in the U.S. are on pace for a record year of raising roughly $13 billion. Venture-capital funding for U.S. life sciences companies exceeded $30 billion, the most on record, in the 12 months ended in September. In metro Denver, $332 million was directed to life sciences companies, a record high for the market. Job growth in U.S. biotech and research & development sectors registered a 12.1 percent gain in September from a year earlier.
To read the full report, click here.