Triangle Ranks in Top Five Life Science Markets
North Carolina’s Research Triangle region is among the nation’s largest and fastest-growing markets in the life sciences, according to a new report by Los Angeles-based CBRE Group, the world’s largest commercial real estate services and investment firm.
“The Raleigh-Durham market, with Research Triangle Park as its traditional hub and a growing, dynamic Durham submarket, is the fifth-ranked life sciences cluster in the nation,” the report states. “The region benefits from an abundance of life sciences talent and a disproportionate amount of NIH funding compared to other regions.”
The report compares regions across the United States based on the number of scientists in key industry categories, industry funding for local life sciences companies, size and long-term growth of the life sciences workforce, and the inventory of industry lab space.
The top five largest life science markets are Boston/Cambridge, the San Francisco Bay area, San Diego, New Jersey and Raleigh-Durham. Rounding out the top ten are Washington, D.C./Baltimore, greater New York City, Philadelphia, Los Angeles and Chicago.
Research Triangle area’s strengths
The Triangle has the fifth fastest-growing life science market, based on its 12.1 percent employment growth rate from 2014 to 2017. “This growth demonstrates the amount of momentum in the local industry, especially with a recent surge in venture capital funding,” the report says.
Among states, North Carolina was fourth in percentage growth of venture capital funding received during the 18 months from the first quarter of 2017 to the third quarter of 2018. Companies in the state attracted nearly half a billion dollars in venture capital in the third quarter of 2018.
“The amount of new venture capital to the life sciences industry over the past year has been staggering,” the report says, with $15.8 billion raised. Venture capital funding “surged 86 percent over the past year, driving employment growth, new construction and increased attention from investors.”
The Triangle ranked fifth in the concentration of life science talent, with nearly 60,000 employees, and seventh in new talent.
Area universities produced 2,214 total life science graduates in the 2016-17 academic year, including 337 with doctoral degrees – more Ph.D.s than any region except for Boston/Cambridge, New York and Washington, D.C./Baltimore.
“The amount of Ph.D. talent supplied in Raleigh-Durham is impressive,” the report says.
The Triangle ranked 12th in the number of biomedical engineers, biochemists, biophysicists, and chemists, with 2,110 total.
The region’s research universities contributed to the Triangle’s high overall ranking. They brought in $1.1 billion in research grants from the National Institutes of Health in 2018, ranking fourth.
Duke University led the way with $460 million in NIH grants, earning 10th place among universities studied in the report, and the University of North Carolina at Chapel Hill brought in $439 million, earning 14th place.
The sector's growth heated up the region’s commercial real estate market.
“Demand and a limited supply of new lab space have pushed average rents 15 percent higher over the past year and driven vacancy down by more than 3 percentage points,” the report says. “Major occupiers seeking space include gene therapy companies, contract research and manufacturing organizations, and crop-science companies.”
The major trend in the region’s lab market is the redevelopment of major research campuses. “Alexandria is redeveloping the Syngenta campus, while Karlin is redeveloping former GSK, DuPont and Reichhold campuses – all in Research Triangle Park,” the report notes.
Bullish on growth prospects
CBRE says in a news release the life science sector has “ridden a wave of momentum into this year that has positioned various industry hubs . . . for outsized growth” in coming years.
“Numerous indicators point to robust expansion for the industry, including the 86 percent increase in venture-capital funding for U.S. life sciences companies to $15.8 billion for the year ended in September from the previous year,” the company says.
Also, life science lab space under construction in the sector’s five largest U.S. markets expanded by 101 percent last year to 6.0 million square feet.
“Multiple indicators point to sustained, strong growth for the life sciences industry, which makes life sciences labs and offices an ideal focus for developers and investors,” says Steve Purpura, vice chairman, who leads CBRE’s life sciences business. “Few industries offer this much expansion potential, but much of the activity happens in a select number of special markets.”
The report’s primary author, Ian Anderson, CBRE’s director of research and analysis, says, “Multiple demographic, scientific and financial factors have propelled life sciences into growing faster than most other industries in the early part of this century, and many U.S. markets are well equipped to facilitate and capitalize on that growth.
“Those likely to stay at the top of that list, or to rise on it, have an uncommon combination of health institutions and universities, a qualified workforce, a pipeline of industry funding, an ample base of lab space, and a solid technology industry to partner with life sciences companies.”