In the bustling life science sector, a remarkable trend is emerging across the United States. The availability of specialized lab and R&D spaces is dwindling, hitting an unprecedented low vacancy rate of just 4.9%. This tightening market is reflected in the surge of lease prices, which have seen a significant increase of 7.5% in just six months, from March to September 2021, in the nation’s leading life science hubs, as reported by CBRE.

The Raleigh-Durham area, a notable player in this sector, is featured on CBRE’s prestigious list of top life science markets. The region’s appetite for such spaces remains robust, fueling a wave of new developments and renovations of existing structures to meet the specific needs of life science operations. Currently, the area boasts 1.2 million square feet of space either under construction or in the development phase.

The demand for new lab space is soaring, with life science companies in the top 12 markets collectively seeking nearly 23.8 million square feet in the third quarter of this year alone. This figure surpasses the available space under construction by a substantial margin of 2.8 million square feet.

The Triangle area, in particular, is a hotbed for life science activity, with a strong presence and growth of cell gene therapy companies. The market pipeline is impressive, with over 6 million square feet of new life sciences inventory. Remarkably, the Triangle offers the second-lowest average asking rates among the top markets, with recent figures indicating a rate of $29.11 per square foot NNN.

Ann-Stewart Patterson, First Vice President at CBRE|Raleigh, highlights the significant traction the market has gained from life sciences companies and investors over recent years.

A testament to the region’s allure is the announcement by Life Science Logistics, headquartered in Dallas, Texas, to take up 132,000 square feet of space near the Raleigh-Durham Airport. This $15 million venture is expected to generate 50 to 100 new jobs by April 2022. John Blackington, the company’s director of business development, shared with WRAL TechWire that the decision was influenced by the region’s competitive business costs, rich talent pool from local universities, and a robust pipeline of new products for consumers.

The life science and biotechnology sectors are experiencing the fastest job growth in history. The Triangle alone employed around 34,000 industry workers in 2020, with an overall job growth rate of 5% and an even higher rate of 6.7% in R&D roles. The CBRE report anticipates continued job creation in the industry, driven by the persistent demand for life science spaces.

Over the past two years, more than 50 single-story buildings near Research Triangle Park have been acquired by life science investors for lab conversions. Notable transactions include the rezoning of the former Morrisville Outlet Mall, now known as The Stitch, for life science use, and the subsequent lease by Invitae, as reported by WRAL TechWire.

Morrisville’s proactive approach to zoning changes has facilitated life science developments, such as the Spark LS project by Trinity Capital, spanning 109 acres. The News & Observer reported on this significant zoning regulation update.

The industry has attracted substantial investments from prominent companies like Amgen, Tempus, Grail, and a massive $2 billion from FUJIFILM Diosynth Biotechnologies, which plans to expand its workforce and facilities further. Iqvia is also set to bolster its employee numbers with a new 160,000 square foot facility.

In a strategic move, bluebird bio sold its Durham facility to National Resilience, Inc. for $110 million in July 2021, retaining around 100 employees post-transaction.

Joel S. Marcus, founder and executive chairman of Alexandria Real Estate Equities, spoke at a Triangle Business Journal event, expressing optimism for the Research Triangle’s future, despite the pandemic’s economic impact. His company, managing roughly 4 million square feet of life science space in the Triangle, is aiding two companies in occupying 274,000 square feet of space.

Furthermore, Alexandria Real Estate Equities expanded its footprint by acquiring the former RTP Foundation headquarters for $25 million.

On a national scale, venture-capital funding for U.S. life sciences companies has hit a record high, exceeding $30 billion in the year ending September 2021, with the Triangle receiving about $586 million of that investment, as per the CBRE report. This influx of capital underscores the sector’s vibrant growth and the Triangle’s pivotal role in this thriving industry.