It’s hard for life sciences startups to find lab space, and there’s a good reason. The sector has been on a tear, according to a report tallying venture capital and real estate transactions in Seattle and other life science clusters within the last year.
Venture capital funding for the life sciences hit record highs nationally, reaching more than $30 billion for the 12 months ending this September, according to the report by real estate firm CBRE.
Seattle area companies raised a whopping $898 million during that time frame, on top of $958 million in the previous 12 months. That’s compared to $328 million two years ago, from September 2018 through September 2019, according to a CBRE spokesperson.
Life science employment is also on the rise, increasing 3.6% between 2019 and 2020 in the Seattle area, with R&D jobs increasing 5.9%.
The third-quarter 2021 report mirrors recent findings from another recent report by the industry group Life Science Washington, showing an increase of 23.5% in life science employment in Washington from 2015 to 2019. That’s faster than private sector employment overall and life sciences employment nationally.
Washington state rode a biotech IPO wave this year, with five biotech companies entering the public markets in 2021. Sana Biotechnology raised $587 million in its IPO, Absci pulled in $200 million, and vaccine company Icosavax raised more than $180 million. Nationally, IPOs this year have already raised more than last year’s $10 billion record, according to CBRE, driven in part by pandemic-fueled interest.
Recently-launched Seattle area biotechs raising capital in the last year include Shape Therapeutics, which raised $112 million, Umoja Biopharma, which raised $263 million, and South San Francisco and Seattle-based Sonoma Biotherapeutics, which raised $265 million.
The biotech market overall is showing signs of cooling, however, with one major biotech index fund, The SPDR S&P Biotech ETF, down 22% since the beginning of the year.
In Seattle, developers continue to see promise in the life sciences. The new report doesn’t cover fourth quarter real estate transactions, which include 211,000 square feet in South Lake Union and 188,000 square feet near the Space Needle now slated for life sciences development. Meanwhile, the 865,000 square-foot life sciences project at Seattle’s Denny triangle is working its way through design approval by the city.
“The Seattle market continues to see fierce leasing competition,” according to CBRE.
Other highlights from the report are below:
- Lab space is tight. The vacancy rate for lab and R&D space is 7.1% in the Seattle area, with tenants seeking 1.2 million square feet of space and 1.1 million square feet of development underway that does not yet have a tenant signed up. Nationally, vacancy rates are at 4.9%, compared to 16.8% for conventional office space.
- Drug approvals are increasing. Advances in gene editing, genomics and other areas continue to fuel biotech growth and innovation. The U.S. Food and Drug Administration approved 52 novel drugs per year on average from 2017 through 2021 (2021 numbers are projected). That’s compared with 22 drug approvals on average per year from 2016 through 2010.
- Seattle and Bothell, Wash. are top employers. The Seattle region has approximately 9 million square feet of lab and R&D space, dominated by Seattle (about 5,500,000 square feet), and Bothell (about 2,800,000 square feet), home to fast-growing global biotech SeaGen.
- New startups lead recent leases. Top lease transactions for the third quarter of 2021 involve several recently minted startups. Shape Therapeutics leased about 116,000 square feet, GentiBio about 15,000, and Tune Therapeutics about 15,000. In addition, CorneaGen leased about 14,500 square feet, SeaGen about 300,000, and an undisclosed tenant 99,000 square feet.
Editor’s Note: This story has been updated to include more information about Seattle’s venture capital funding
