Originally published by Trey Barrineau for NAIOP's Winter 2020/2021 Issue,
Investment pours into the sector as the world seeks vaccines and treatments for COVID-19.
Life sciences real estate was performing well before the COVID-19 pandemic struck earlier this year. For example, CBRE’s “U.S. Real Estate Market Outlook 2020” notes that the sector (including medical office) accounted for an annual average investment of $18.7 billion from 2014 to 2019.
However, the challenges and opportunities presented by the public health crisis have boosted interest and investment in the sector at a time when other areas of commercial real estate such as retail and office have struggled.
“If you look at activity from February through May, the repurposing of resources, the new companies that were formed and the investing that went into COVID therapies and treatments, it brought a lightning bolt of energy to the entire industry,” Chris Haskell, Ph.D., head of Bayer’s West Coast Innovation Center in San Francisco, said during a recent webinar for NAIOP’s San Francisco Bay Area chapter. “It’s an immediate call to purpose.”
According to Crunchbase, a service that provides information about public and private companies, investors poured $16.55 billion into the biotech and life science sector in the first half of 2020. By comparison, $13.4 billion flowed into the sector during the same period in 2019.
Life sciences also gets significant funding from the federal government. For example, California’s life sciences industry received more than $4.95 billion from the National Institutes of Health in 2019, with $1.87 billion of that flowing into the Bay Area, said Rebekah Studer, leasing manager with Phase 3 Real Estate Partners in the San Francisco Bay Area. She moderated the recent life sciences webinar for NAIOP’s San Francisco Bay Area chapter.
“This has really helped drive the pace of innovation in the region,” she said.