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Biopharma and medtech markets advance toward equilibrium: 2024 life sciences cluster analysis – Endpoints News

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mar&shy;kets ad&shy;vance to&shy;ward equi&shy;lib&shy;ri&shy;um: 2024 life sci&shy;ences clus&shy;ter analy&shy;sis</h1> <div class="epn_author_box byline_author"> <div class="single_byline_author"> <div class="epn_image" style="background-image: url('https://endpts.com/wp-content/uploads/2024/09/Mark-Bruso-Headshot.jpg');"></div> <div class="epn_text"> <h3>Mark Bruso</h3> <h4>Director, Boston and National Life Sciences Research, JLL</h4> </div> </div> </div> <div class="epn_content"> <p>What are the fun&shy;da&shy;men&shy;tal build&shy;ing blocks of ma&shy;jor life sci&shy;ences clus&shy;ters in the U.S.? Which mar&shy;kets are home to the best tal&shy;ent pools? What macro forces are dri&shy;ving life sci&shy;ences de&shy;ci&shy;sion-mak&shy;ing? We an&shy;swer these ques&shy;tions and more for life sci&shy;ences com&shy;pa&shy;nies, in&shy;vestors and de&shy;vel&shy;op&shy;ers in the 2024 Life Sci&shy;ences Re&shy;al Es&shy;tate Per&shy;spec&shy;tive and Clus&shy;ter Analy&shy;sis.</p> <p>De&shy;spite ex&shy;pe&shy;ri&shy;enc&shy;ing a pro&shy;longed slump, bio&shy;phar&shy;ma and medtech re&shy;al es&shy;tate fun&shy;da&shy;men&shy;tals point to re&shy;cov&shy;ery and long-term growth ahead. The cen&shy;tral ques&shy;tion that re&shy;mains is when, not if, the sec&shy;tor will be&shy;gin its re&shy;cov&shy;ery, re&shy;turn&shy;ing to the ro&shy;bust growth seen over the past two decades.</p> <p>In ad&shy;di&shy;tion to ex&shy;plor&shy;ing top clus&shy;ters for bio&shy;man&shy;u&shy;fac&shy;tur&shy;ing, medtech, tal&shy;ent and AI, the 2024 Per&shy;spec&shy;tive high&shy;lights key growth dri&shy;vers for Cana&shy;da and LATAM, and de&shy;lin&shy;eates 10 crit&shy;i&shy;cal ob&shy;ser&shy;va&shy;tions about the cur&shy;rent state and fu&shy;ture out&shy;look of the U.S. life sci&shy;ences re&shy;al es&shy;tate mar&shy;ket:</p> <ol> <li style="list-style-type: none;"> <ol> <li><strong>What has changed in a year?</strong></li> </ol> </li> </ol> <p style="padding-left: 40px;">In the past year, the pre-ex&shy;ist&shy;ing sup&shy;ply-de&shy;mand im&shy;bal&shy;ance has in&shy;ten&shy;si&shy;fied in most ma&shy;jor lab mar&shy;kets, forc&shy;ing rents down near&shy;ly 9%, which is where they were in the first quar&shy;ter of 2022. We project this sup&shy;ply su&shy;per cy&shy;cle will end with&shy;in the next six to 12 months, de&shy;pend&shy;ing on the mar&shy;ket, and will then be fol&shy;lowed by a pe&shy;ri&shy;od with lim&shy;it&shy;ed new sup&shy;ply and re&shy;pur&shy;pos&shy;ing of old&shy;er as&shy;sets that will boost re&shy;cov&shy;ery.</p> <ol> <li style="list-style-type: none;"> <ol start="2"> <li><strong>In&shy;ter&shy;est rates are the &ldquo;ca&shy;nary in the coal mine&rdquo;</strong></li> </ol> </li> </ol> <p style="padding-left: 40px;">Biotech is an in&shy;ter&shy;est-rate-sen&shy;si&shy;tive sec&shy;tor. For de&shy;mand to re&shy;cov&shy;er, in&shy;ter&shy;est rates will need to come down. There is a strong cor&shy;re&shy;la&shy;tion be&shy;tween biotech eq&shy;ui&shy;ty val&shy;ues, ven&shy;ture cap&shy;i&shy;tal fund&shy;ing and re&shy;al es&shy;tate leas&shy;ing ac&shy;tiv&shy;i&shy;ty, and low&shy;er rates should lead to im&shy;proved pub&shy;lic val&shy;u&shy;a&shy;tions and in&shy;creased VC in&shy;vest&shy;ment, ul&shy;ti&shy;mate&shy;ly dri&shy;ving de&shy;mand for lab space.</p> <ol> <li style="list-style-type: none;"> <ol start="3"> <li><strong>Ven&shy;ture fund&shy;ing has mor&shy;phed and so has de&shy;mand</strong></li> </ol> </li> </ol> <p style="padding-left: 40px;">While over&shy;all life sci&shy;ences ven&shy;ture fund&shy;ing is up 34% in 2024, the na&shy;ture of fund&shy;ing has changed. Ear&shy;ly-stage fund&shy;ing for pre-clin&shy;i&shy;cal as&shy;sets has de&shy;clined while mega rounds of over $100 mil&shy;lion now rep&shy;re&shy;sent 60% of ven&shy;ture in&shy;flows, up from 40% a year ago. This con&shy;cen&shy;tra&shy;tion of fund&shy;ing in lat&shy;er-stage com&shy;pa&shy;nies is tem&shy;per&shy;ing re&shy;al es&shy;tate de&shy;mand. <ol> <li style="list-style-type: none;"> <ol start="4"> <li><strong>Ten&shy;ants ex&shy;tend de&shy;ci&shy;sion-mak&shy;ing and then take less space</strong></li> </ol> </li> </ol> <p style="padding-left: 40px;">With less growth cap&shy;i&shy;tal avail&shy;able, ten&shy;ants are tak&shy;ing longer to make re&shy;al es&shy;tate de&shy;ci&shy;sions. The me&shy;di&shy;an time on mar&shy;ket for ten&shy;ants in Boston, the Bay Area and San Diego has in&shy;creased 67%. When deals are signed, ten&shy;ants are tak&shy;ing less space rel&shy;a&shy;tive to their fund&shy;ing lev&shy;els com&shy;pared to two years ago. One po&shy;ten&shy;tial head&shy;wind in re&shy;al es&shy;tate de&shy;mand are el&shy;e&shy;vat&shy;ed lev&shy;els of ac&shy;qui&shy;si&shy;tions. <ol> <li style="list-style-type: none;"> <ol start="5"> <li><strong>Large phar&shy;ma seeks to op&shy;ti&shy;mize, not max&shy;i&shy;mize</strong></li> </ol> </li> </ol> <p style="padding-left: 40px;">Ma&shy;jor phar&shy;ma&shy;ceu&shy;ti&shy;cal com&shy;pa&shy;nies are fo&shy;cused on op&shy;ti&shy;miz&shy;ing their re&shy;al es&shy;tate hold&shy;ings rather than ex&shy;pand&shy;ing. Of the 30 large phar&shy;ma re&shy;al es&shy;tate moves tracked in H1 2024, 67% re&shy;sult&shy;ed in a re&shy;duc&shy;tion of space. How&shy;ev&shy;er, phar&shy;ma lead&shy;ers ex&shy;pect in&shy;creas&shy;es in head&shy;count, foot&shy;print, and lo&shy;ca&shy;tions by 2030. <ol> <li style="list-style-type: none;"> <ol start="6"> <li><strong>Grow&shy;ing share of all sec&shy;tor VC dol&shy;lars head&shy;ing to AI/ML com&shy;pa&shy;nies</strong></li> </ol> </li> </ol> <p style="padding-left: 40px;">Ar&shy;ti&shy;fi&shy;cial in&shy;tel&shy;li&shy;gence and ma&shy;chine learn&shy;ing are be&shy;com&shy;ing in&shy;creas&shy;ing&shy;ly im&shy;por&shy;tant in bio&shy;phar&shy;ma, with the po&shy;ten&shy;tial to yield bil&shy;lions in an&shy;nu&shy;al sav&shy;ings. AI/ML ven&shy;ture fund&shy;ing in life sci&shy;ences ex&shy;ceed&shy;ed the 2023 full-year to&shy;tal in just the first six months of 2024. It now rep&shy;re&shy;sents 12% of all life sci&shy;ences ven&shy;ture fund&shy;ing, of&shy;fer&shy;ing am&shy;ple op&shy;por&shy;tu&shy;ni&shy;ty for growth for the sec&shy;tor. <ol> <li style="list-style-type: none;"> <ol start="7"> <li><strong>This down&shy;turn is dif&shy;fer&shy;ent than any oth&shy;er this cen&shy;tu&shy;ry</strong></li> </ol> </li> </ol> <p style="padding-left: 40px;">The cur&shy;rent mar&shy;ket down&shy;cy&shy;cle is marked&shy;ly dif&shy;fer&shy;ent from pre&shy;vi&shy;ous ones ex&shy;pe&shy;ri&shy;enced by the sec&shy;tor. Va&shy;can&shy;cy rates in near&shy;ly every ma&shy;jor mar&shy;ket are at record highs much ear&shy;li&shy;er in the cy&shy;cle com&shy;pared to past down&shy;turns, pri&shy;mar&shy;i&shy;ly dri&shy;ven by a mis&shy;matched sup&shy;ply cy&shy;cle. <ol> <li style="list-style-type: none;"> <ol start="8"> <li><strong>The re&shy;turn to mar&shy;ket equi&shy;lib&shy;ri&shy;um will vary wide&shy;ly by ge&shy;og&shy;ra&shy;phy</strong></li> </ol> </li> </ol> <p style="padding-left: 40px;">When the life sci&shy;ences re&shy;al es&shy;tate sec&shy;tor re&shy;cov&shy;ers, it will not do so uni&shy;form&shy;ly across all mar&shy;kets. Fac&shy;tors like ex&shy;cess sup&shy;ply de&shy;liv&shy;ered dur&shy;ing the down&shy;turn pre-ex&shy;ist&shy;ing ten&shy;ant base, and qual&shy;i&shy;ty of land&shy;lords will in&shy;flu&shy;ence how quick&shy;ly dif&shy;fer&shy;ent sub&shy;mar&shy;kets re&shy;turn to equi&shy;lib&shy;ri&shy;um. Es&shy;tab&shy;lished clus&shy;ters with strong fun&shy;da&shy;men&shy;tals are like&shy;ly to re&shy;cov&shy;er faster. <ol> <li style="list-style-type: none;"> <ol start="9"> <li><strong>If we re&shy;sume a pre-pan&shy;dem&shy;ic trend&shy;line, the sec&shy;tor will fall short of ab&shy;sorb&shy;ing the over&shy;sup&shy;ply</strong></li> </ol> </li> </ol> <p style="padding-left: 40px;">We will see the speed of re&shy;cov&shy;er&shy;ies con&shy;tin&shy;gent on some mix of lo&shy;ca&shy;tion, spon&shy;sor&shy;ship and as&shy;set qual&shy;i&shy;ty. Met&shy;rics like biotech eq&shy;ui&shy;ty val&shy;ues, ven&shy;ture de&shy;ploy&shy;ment, sci&shy;en&shy;tif&shy;ic leaps and rev&shy;enue gen&shy;er&shy;a&shy;tion will all in&shy;ter&shy;play in the com&shy;ing years to de&shy;ter&shy;mine what is the ac&shy;tu&shy;al need for lab R&amp;D space across the coun&shy;try. <ol> <li style="list-style-type: none;"> <ol start="10"> <li><strong>If we re&shy;sume a pre-pan&shy;dem&shy;ic trend&shy;line, the sec&shy;tor will fall short of ab&shy;sorb&shy;ing the over&shy;sup&shy;ply</strong></li> </ol> </li> </ol> <p style="padding-left: 40px;">De&shy;spite near-term chal&shy;lenges, there are nu&shy;mer&shy;ous rea&shy;sons to ex&shy;pect long-term growth in the life sci&shy;ences sec&shy;tor. These in&shy;clude con&shy;tin&shy;ued growth in FDA ap&shy;provals, in&shy;creased patent in&shy;no&shy;va&shy;tion, pro&shy;ject&shy;ed growth in glob&shy;al phar&shy;ma&shy;ceu&shy;ti&shy;cal sales and record lev&shy;els of ven&shy;ture cap&shy;i&shy;tal dry pow&shy;der wait&shy;ing to be de&shy;ployed. <p><strong>While the cur&shy;rent state of the sec&shy;tor may feel chal&shy;leng&shy;ing, the re&shy;port em&shy;pha&shy;sizes that the long-term out&shy;look re&shy;mains pos&shy;i&shy;tive. Es&shy;tab&shy;lished clus&shy;ters with strong fun&shy;da&shy;men&shy;tals and high-qual&shy;i&shy;ty as&shy;sets are ex&shy;pect&shy;ed to lead the re&shy;cov&shy;ery.</strong> <p>For in&shy;vestors, de&shy;vel&shy;op&shy;ers and oc&shy;cu&shy;piers in the life sci&shy;ences re&shy;al es&shy;tate sec&shy;tor, the key take&shy;away is to re&shy;main pa&shy;tient while po&shy;si&shy;tion&shy;ing for the even&shy;tu&shy;al up&shy;swing. Un&shy;der&shy;stand&shy;ing lo&shy;cal mar&shy;ket dy&shy;nam&shy;ics, fo&shy;cus&shy;ing on qual&shy;i&shy;ty as&shy;sets in es&shy;tab&shy;lished clus&shy;ters and keep&shy;ing an eye on emerg&shy;ing trends like AI/ML in&shy;te&shy;gra&shy;tion will be cru&shy;cial for suc&shy;cess in the evolv&shy;ing life sci&shy;ences land&shy;scape. <p><a href="https://www.us.jll.com/en/trends-and-insights/research/life-sciences-real-estate-outlook/?utm_source=endpoints&amp;utm_medium=synd&amp;&amp;utm_campaign=gl-us-ind-life-life-sciences-0924" target="_blank" rel="nofollow noopener"><strong>Ac&shy;cess the 2024 Life Sci&shy;ences Re&shy;al Es&shy;tate Per&shy;spec&shy;tive and Clus&shy;ter Analy&shy;sis to dis&shy;cov&shy;er which bio&shy;phar&shy;ma, medtech and bio&shy;man&shy;u&shy;fac&shy;tur&shy;ing clus&shy;ters are thriv&shy;ing.</strong></a> <p><em>These top clus&shy;ters are just the tip of the ice&shy;berg. JLL&rsquo;s pro&shy;pri&shy;etary method&shy;ol&shy;o&shy;gy uti&shy;lizes a va&shy;ri&shy;ety of da&shy;ta points to eval&shy;u&shy;ate top mar&shy;kets. Reach out to </em><a href="https://www.us.jll.com/en/people/travis-mccready/?utm_source=endpoints&amp;utm_medium=synd&amp;utm_campaign=lifesciencesresearch&amp;utm_content=2024clusterreport" target="_blank" rel="nofollow noopener"><em>Travis Mc&shy;Cready</em></a><em>, Head of Life Sci&shy;ences, Amer&shy;i&shy;c&shy;as Mar&shy;kets and Chair of the Glob&shy;al Life Sci&shy;ences Ad&shy;vi&shy;so&shy;ry Board at JLL to ex&shy;plore these clus&shy;ters fur&shy;ther and dis&shy;cov&shy;er oth&shy;er ge&shy;o&shy;gra&shy;phies that made our list.</em> <p><em>Source: JLL Re&shy;search, 2024 Life Sci&shy;ences Re&shy;al Es&shy;tate Per&shy;spec&shy;tive and Clus&shy;ter Analy&shy;sis</em> <div class="epn_tag_box"> </div> <div class="epn_author_box"> <h3 class="epn_section_title">Author</h3> <div class="single_author"> <div class="epn_image" style="background-image: url('https://endpts.com/wp-content/uploads/2024/09/Mark-Bruso-Headshot.jpg');"></div> <div class="epn_text"> <h3>Mark Bruso</h3> <h4>Director, Boston and National Life Sciences Research, JLL</h4> <div class="epn_social"> <div class="epn_left"> <a href="mailto:mark.bruso@jll.com" class="epn_mail">mark.bruso@jll.com</a> </div> <div class="epn_right"> <a href="https://www.linkedin.com/company/jll/" title="Find JLL on LinkedIn" rel="nofollow noopener" target="_blank" class="epn_linkedin">JLL on LinkedIn</a> <a href="https://www.us.jll.com/" rel="nofollow noopener" target="_blank" class="epn_website">https://www.us.jll.com/</a> </div> </div> </div> </div> </div> </div> </div> </article> </div> </div> </div> </section><footer class="epn_footer"> <div class="container"> <div class="row"> <div class="col-8 col-md-2"> <a href="/" class="epn_logo"> <img loading="lazy" src="https://endpts.com/wp-content/themes/endpoints-rakia/assets/svg/epn-logo-tagline-negative.svg" alt="Endpoints News"> </a> <div class="epn_info"> <p>Bioscience &amp; Technology Business Center<br>The University of Kansas<br>Lawrence, 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placeholder="Job Title" data-toggle="tooltip" data-placement="top"> </div> </fieldset> <h3 class="epn_ux_caption my-3"> <span>Newsletter Interests</span> <p class="singup_form_p">Pick what newsletters get delivered to your inbox each week.</p> </h3> <fieldset> <p>Biopharma</p> <div class="epn_ux_switch_group epn_white_box"> <p> <span class="epn_subscribe_bold_uppercase">ENDPOINTS NEWS</span> <span class="epn_grey">Daily at 11:30 AM ET</span> </p> <div class="epn_ux_switch"> <input type="checkbox" id="epn_modal_subscribe_endpoints_edition" checked=""> <label for="epn_modal_subscribe_endpoints_edition"></label> </div> </div> <div class="epn_ux_switch_group epn_white_box"> <p> <span class="epn_subscribe_bold_uppercase">EARLY EDITION</span> <span class="epn_grey">Daily at 7:15 AM ET</span> </p> <div class="epn_ux_switch"> <input type="checkbox" id="epn_modal_subscribe_early_edition" checked=""> <label for="epn_modal_subscribe_early_edition"></label> </div> </div> <div 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checked=""> <label for="epn_modal_subscribe_endpoints_fda_plus"></label> </div> </div> <div class="epn_ux_switch_group epn_white_box"> <p> <span class="epn_subscribe_bold_uppercase">ENDPOINTS MANUFACTURING</span> <span class="epn_grey">Thu at 2 PM ET</span> </p> <div class="epn_ux_switch"> <input type="checkbox" id="epn_modal_subscribe_endpoints_manufacturing" checked=""> <label for="epn_modal_subscribe_endpoints_manufacturing"></label> </div> </div> <div class="epn_ux_switch_group epn_white_box"> <p> <span class="epn_subscribe_bold_uppercase">ENDPOINTS WEEKLY</span> <span class="epn_grey">Sat at 6 AM ET</span> </p> <div class="epn_ux_switch"> <input type="checkbox" id="epn_modal_subscribe_endpoints_weekly" checked=""> <label for="epn_modal_subscribe_endpoints_weekly"></label> </div> </div> <div class="epn_ux_switch_group epn_white_box"> <p> <span class="epn_subscribe_bold_uppercase">POST-HOC</span> <span class="epn_grey">1-2 times a week</span> </p> <div class="epn_ux_switch"> <input type="checkbox" id="epn_modal_subscribe_post_hoc_biopharma" checked=""> <label for="epn_modal_subscribe_post_hoc_biopharma"></label> </div> </div> <p class="mt-4">Healthcare</p> <div class="epn_ux_switch_group epn_white_box"> <p> <span class="epn_subscribe_bold_uppercase">ENDPOINTS HEALTH TECH</span> <span class="epn_grey">Tuesday, Thursday at 10 AM ET</span> </p> <div class="epn_ux_switch"> <input type="checkbox" id="epn_modal_subscribe_endpoints_health_tech" checked=""> <label for="epn_modal_subscribe_endpoints_health_tech"></label> </div> </div> <div class="epn_ux_switch_group epn_white_box"> <p> <span class="epn_subscribe_bold_uppercase">BREAKING NEWS ALERTS</span> <span class="epn_grey">2-3 times a week</span> </p> <div class="epn_ux_switch"> <input type="checkbox" id="epn_modal_subscribe_breaking_news_alerts_healthcare" checked=""> <label for="epn_modal_subscribe_breaking_news_alerts_healthcare"></label> </div> </div> </fieldset> <div class="epn_group mt-4"> <button 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