It is difficult for life science startups to find laboratory space and there is a good reason. The sector has been on a tear, according to a report showing venture capital and real estate transactions in Seattle and other life science clusters within the past year.
Venture capital funding for life sciences hit record highs nationally, reaching more than $ 30 billion a year by September, according to the report by real estate firm CBRE. And while large clusters like Boston hurled in billions, the Seattle area brought in as much as $ 898 million.
In the Seattle area, jobs in life sciences increased by 3.6% between 2019 and 2020, while R&D jobs increased by 5.9%.
The report for the third quarter of 2021 reflects the latest results from another recent report by the industry group Life Science Washington, which shows an increase of 23.5% in life science employment in Washington from 2015 to 2019. It is faster than employment in the private sector general and life science employment at the national level. .
Washington State is riding on a biotechnology listing wave, with five biotech companies entering public markets in 2021. Sana Biotechnology raised $ 587 million in its IPO, Absci raised $ 200 million, and vaccine company Icosavax raised more than $ 180 million. Nationally, IPOs this year have already raised more than last year’s record of $ 10 billion, according to CBRE, driven in part by pandemic-driven interest.
Newly launched biotech companies in the Seattle area that raised capital last year include Shape Therapeutics, which raised $ 112 million, Umoja Biopharma, which raised $ 263 million, and South San Francisco and Seattle-based Sonoma Biotherapeutics, which raised $ 265 million.
However, the overall biotech market is showing signs of cooling, with a large biotech index fund, SPDR S&P Biotech ETF, which has fallen by 22% since the beginning of the year.
In Seattle, developers continue to look promising in the life sciences. The new report does not cover fourth-quarter real estate transactions, which include 211,000 square feet in the South Lake Union and 188,000 square feet near the Space Needle, which is now intended for the development of life sciences. Meanwhile, the 865,000-square-foot life science project in Seattle’s Denny Triangle is working its way through the city’s design approval.
“The Seattle market continues to experience fierce leasing competition,” according to CBRE.
Other highlights from the report are below:
- The laboratory space is cramped. The vacancy rate for laboratory and research and development facilities is 7.1% in the Seattle area, where tenants are seeking 1.2 million square feet of space and 1.1 million square feet of ongoing development that has not yet registered a tenant. Nationwide, vacancy is 4.9%, compared to 16.8% for conventional office space.
- Drug approvals are rising. Advances in genre editing, genomics and other fields continue to promote biotechnological growth and innovation. The U.S. Food and Drug Administration approved an average of 52 new drugs per year from 2017 to 2021 (2021 figures are expected). This is compared to an average of 22 drug approvals per year from 2016 to 2010.
- Seattle and Bothell, Washington, are top employers. The Seattle region has approximately 9 million square feet of laboratory and R&D space, dominated by Seattle (approximately 5,500,000 square feet) and Bothell (approximately 2,800,000 square feet), home to fast-growing global biotechnology SeaGen.
- New startups are leading the latest leases. Top-leasing transactions for the third quarter of 2021 involve several start-ups. Shape Therapeutics rented about 116,000 square meters, GentiBio about 15,000 and Tune Therapeutics about 15,000. In addition, CorneaGen rented about 14,500 square feet, SeaGen about 300,000 and an undisclosed tenant 99,000 square feet.
