Could SVB Meltdown Deal a Major Blow to Life Sciences’ Hot Streak?

Life sciences real estate has boomed over the last few years, following a major breakthrough in gene editing in 2010 that has created a long runway for biotech startups and continued research, fueling the need for more life sciences labs and office space. With the urgent need for a vaccine during the early months of the pandemic, the sector got even more of a boost, posting historic numbers in 2021. But the hot streak has tempered over the last year as venture capital has dried up across many industries. But there are still booming markets around the country, and the segment is considered one of the strongest in real estate. 

It’s been a critical sector to the overall health of the country’s office market, which has struggled to get back to pre-pandemic figures now that hybrid and remote work has become a permanent fixture and many companies have downsized their space footprints. As a result, life sciences real estate has been seen in some places as a potential office market savior. Last month, San Francisco Mayor London Breed said that she wanted to eliminate some code barriers to make it easier for empty office buildings in the city’s downtown to be converted into biotech space. Breed cited the city’s 5 percent life sciences vacancy rate compared to its office vacancy rate of more than 25 percent as a deciding factor. 

In 2021, the life sciences real estate sector hit all-time highs in funding, job growth, demand for lab space, and new construction.

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