By Bob Caudill, Executive Vice President, Colliers International
From public and private funding increases to the demand created by the COVID-19 pandemic and the vaccine rollout combatting it, the life sciences sector is continuing to see a significant increase in interest from both developers and investors across the country. Rapid growth in advanced therapy medicinal products (ATMP) science, which includes gene therapy, is also driving demand for lab and manufacturing space from both early and mid-stage biotech companies. All-important leasing data points, such as vacancy and net absorption, further compare favorably to the challenged office market, suggesting even more positive days are ahead for this sector.
Orange County boasts world-class life sciences innovations and is continuing to grow its educational,
Bob Caudill, Executive Vice President, Colliers International
employment and investment footprint. Given the amount of medical device and diagnostic equipment companies in Orange County that occupy office, research and development and industrial properties, life sciences has now become the largest industry in the market. In fact, Biocom’s 2020 California Economic Impact Report has Orange County generating $37.2 billion in economic activity and supporting more than 150,000 jobs.
Orange County’s growth is attributed to several factors, such as UC Irvine’s $1 billion expansion of its Medical and Health Sciences Complex. UC Irvine is ranked No. 35 in the country and No. 69 globally within the prestigious Shanghai World Ranking, making it one of the world’s best academic research institutions. UC Irvine, UCLA and UC San Diego are creating the next generation of life sciences firms in Southern California. In addition to the universities’ impact on the growing sector, the City of Hope recently announced it will be investing more than $1 billion to build a comprehensive Lennar Cancer Center at FivePoint Gateway in Irvine, which is already attracting cancer-focused life sciences firms to the area.
With an inventory totaling 9.7 million square feet, the Orange County life sciences market posted a healthy performance in 2020. Net absorption totaled 146,134 square feet, while the vacancy rate fell by 150 basis points to 5 percent. Orange County also has the lowest average net asking rates at $19.20 per square foot.
Some of the largest leases signed over the prior 12 months include:
- Bio-Rad’s 136,000-square-foot lease at 9500 Jeronimo Road in Irvine.
- Inari’s 130,000-square-foot expansion into 6001 Oak Canyon in Irvine.
- Masimo’s 127,000-square-foot sublease at 58 Discovery in Irvine.
- Alcon’s 185,000-square-foot renewal at Serrano Center in Lake Forest and 210,000-square-foot renewal at 15800 Alton Parkway in Irvine.
- ProTab Laboratories’ 130,000-square-foot sublease at 25892 Towne Centre Drive in Foothill Ranch.
Market expansion is set to remain limited over the short-term with only 239,000 square feet of dedicated life sciences space currently under construction. However, supply may be eased by the provision of lab space in new and existing office properties.