Report Says Life Sciences Sector Boosting San Francisco Real Estate Demand

23 Jul, 2007, San Francisco, CA

C&W releases white paper on real estate implications of the sector’s growth; launches Global Life Science Practice Group

In conjunction with the launch of a Global Life Science Practice Group, Cushman & Wakefield today released a comprehensive report on the commercial real estate implications of the growing life sciences sector. The report anticipates continued growth for the sector and increased demand for life-sciences specific real estate in San Francisco and several other U.S. markets.

Considered by most to be the birthplace of the biotechnology industry, the San Francisco market is currently experiencing a very low market vacancy of around 7 percent. The area is home to the venture capital industry, which helps attract start up firms to the market. The market is also benefiting from large expansions by companies such as PDL BioPharma, Gilead, Fibrogen and Genentech.

“South San Francisco is the largest life sciences market in the United States,” says John Minervini, Executive Director and Managing Principal of Cushman & Wakefield’s Global Life Science Practice Group. “The recent announcement of the sale of the Slough portfolio to HCPI has added a third major investor to this dynamic market.”

The report, Life Sciences Sector Drives Real Estate Growth, was produced by Cushman & Wakefield’s Research professionals Maria Sicola, Rick Cleveland and Mark Urbanowicz, based on published and proprietary market data with input and additional analysis from principals of the firm’s newly formed Global Life Science Practice Group.

According to Ms. Sicola, executive managing director and head of Cushman & Wakefield Research Services in the U.S., major findings of the report point to strength in the life sciences sector overall, including an abundance of capital earmarked for expansion and increased corporate activity, as well as the emergence of life sciences “clusters” in select U.S. markets that have attracted significant numbers of firms to specific locations. All of this, said Ms. Sicola, accounts for “a noticeable increase in demand for properties catering to life sciences – from investors and companies.”

The life sciences sector has benefited from strong demographics, including the aging baby-boomer population in the U.S., technological advances in research and development and increases in prescription drug spending. These trends are positioning life sciences assets for long-term growth, according to the report, based on sector growth and the fact that life sciences firms typically sign long-term leases.

The report also cites growing investment demand for life sciences properties. In 2006, 227 life sciences related assets traded for a total of $5.1 billion, up from $601 million in 2002, according to data compiled by Real Capital Analytics. San Francisco remains the nation’s top life sciences market, with up to 30 million square feet of inventory. The report also looks at developing life sciences markets including the New York metro area and its surrounding suburbs, suburban Maryland, Raleigh Durham, N.C., Puerto Rico, Seattle and metro Los Angeles.

Cushman & Wakefield’s Global Life Science Practice Group brings together brokerage specialists and consulting partners to meet the unique requirements of companies in the life sciences industry. Members of the group have developed broad expertise in the life sciences arena, demonstrating an understanding of the industry and its specific needs, how the industry interacts with government agencies for funding and incentives, and an ability to help clients identify and implement real estate solutions that support core financial and operating strategies.

In addition to Mr. Minervini, who is based in Los Angeles, members of the Global Life Science Practice Group include Executive Director Christopher Kinum, East Rutherford, N.J.; Executive Director Mark Winters, Boston; Senior Director Thomas Giannone, East Rutherford; Partner Nick Giraudeau, Madrid, Spain; as well as Consulting Partners Jim Reeb, Bob Hess, France Houdard and Matt Jackson.

A complete copy of the 22-page report may be obtained by written request to rick.cleveland@cushwake.com.

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