REAL ESTATE NEWS

Landlords in the nation’s top life science hubs have been coping with oversupply that sent vacancy rates skyrocketing this year, with one notable exception: in Greater Los Angeles, an expanding biotech/pharma sector has been struggling to find available lab and manufacturing space.

The three largest U.S. hubs, in Boston, the Bay Area and San Diego, have experienced availability rates this year of 32%, 35%, and 26%, respectively, according to JLL’s 2024 life science cluster analysis. Nearly 16M SF of space was available in the Bay Area’s life science inventory, which totals more than 40M SF.

The availability rate in the Los Angeles/Orange County life science cluster is only about 3%, which amounts to a little more than 300K SF out of a total inventory estimated at 12M SF, the lowest availability of any of the 10 largest U.S. life science markets.

Demand for the limited amount of inventory in Greater Los Angeles is fueled by a university cluster, including UCLA, USC and the California Institute of Technology, that is churning out life science startups.

Demand outpacing supply contributed to a 6% rent increase in L.A.’s life science sector in the first half of the year, JLL reported, while rents dropped nationally by 9% during the same period.

The shortage of life science space in Greater Los Angeles involves industrial as well as office, lab and R&D space. The Los Angeles/Orange County cluster is a leading hub for biotech/pharma manufacturing, with more than half of the inventory involving manufacturing.

The shortage of space has officials in cities throughout Greater Los Angeles scrambling to streamline the permitting process and allow more flexible land use to accommodate biotech labs and industrial flex spaces that can be used for life science expansions, CoStar reported.

In Thousand Oaks, the city has streamlined the permitting process for life science projects, including office-to-lab conversions, aiming to facilitate a growing cluster in proximity to Amgen’s life science campus.

Several projects now are moving forward in Thousand Oaks, including a 350K SF biotech campus that Alexandria Real Estate Equities is developing at a former Amgen site at 1100 Rancho Conejo Blvd. and a 120K SF industrial building that Cruzan is developing for life science use at 1300 Lawrence. Graymark Capital has acquired a 99K SF office building at 120 Via Merida for about $18M, with plans to convert the building into lab space.

Pasadena’s City Council has approved what it called “strategic” zoning changes aimed at expanding the city’s bioscience sector into a thriving hub for life science R&D. The city has adjusted the definition of research and development in the zoning code, removing distinctions between office and non-office uses, making it easier for life science companies to combine labs, offices and R&D spaces together.

In addition to streamlined permitting, Pasadena has eased restrictions on parking and conditional use permit requirements, allowing greater building heights and the use of roof space for equipment.

El Segundo city officials are competing for life science businesses by connecting companies and real estate stakeholders. They’re holding roundtables with local developers, venture capitalists and entrepreneurs, hoping to encourage commercialization of early-stage biotech companies.

Source: GlobeSt/ALM