If you work at Twitter (TWTR), you might be able to work from home “forever.” You also have a pretty good chance of sitting in your home office permanently if you work for Facebook (FB) where CEO Mark Zuckerberg has said he expects half the social network’s staff to be remote within the next five to 10 years.
But, if you’re working in a lab developing a Covid vaccine, you’re still going into the office.
“You can't do life sciences from a remote location. You can't do experimenting in your kitchen or your living room like many people can in the office world, “ Adam Sichol Managing Partner at Longfellow Real Estate Partners told Yahoo Finance.
While many tech companies have been right-sizing their real estate needs during the coronavirus pandemic — take Pinterest (PINS) which paid nearly $90 million to get out of a San Francisco lease — real estate firm CBRE reported last fall that total commercial laboratory space has grown by 12% in 2020 to 95 million square feet. Another 11 million square feet is currently under construction.
“We've seen a rise in demand for life science real estate, which is really no surprise during Covid,” Sichol said. “We've seen a rise in demand for that space in all of our markets, which include Boston, Cambridge, New York City, RTP North Carolina, San Diego and San Francisco.”
“Not enough supply”
While other industries have been leaving high tax states like New York and California for Florida and Texas, life sciences is doubling-down in its biggest markets. Sichol says it’s a function of of the talent pool.
“What's driving the space is the great institutions: the MITs of the world, the Columbia Universities, the Duke Universities, the UCSDs, UCSFs, Stanford. And those institutions are not really going anywhere,” Sichol believes.
While commercial real estate vacancies have been rising and rents have been falling overall, the life science space isn’t seeing any deals when it comes to pricing.
“Last year there was record amounts of capital that went into life sciences across the country,” Sichol says. “We saw record amounts of VC capital. We saw record amounts of public funding from the public markets. We continue to see trends of FDA approvals going in the right direction so there's significant demand in the space for lab space and there's not enough supply right now to meet that demand. So we are seeing prices rise.”
Jen Rogers is an anchor for Yahoo Finance Live. Follow her on Twitter @JenSaidIt.
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