Home Commercial Seattle-Bellevue Life Sciences Industry Major Contributor to State GDP

Seattle-Bellevue Life Sciences Industry Major Contributor to State GDP

Seattle, Bellevue, Puget Sound, Life Sciences, Bothell, Vue Research Center, The Alexandria Center, South Lake Union, Allen Institute

By Jacob Bourne

The life sciences industry, including biotech and pharmaceuticals, made significant strides in 2015, totaling $520 billion in mergers and acquisitions across the country, by companies seeking greater revenue. According to a 2016 JLL report, Life Sciences Outlook, this movement is in part a response to profit generation blocked by the expiration of patents and propelled by intensified competition among companies to hire the best talent. Additionally, national trends include greater investment interest from real estate industry players, increased venture capital funding, as well as innovations in how life science spaces are utilized, spurred by the specialized nature of the industry.

The Seattle-Bellevue area, one of several national life sciences clusters the report examined, ranked fifth in the nation for sector growth, earning $310 million in 2015 in venture capital, which represents 4.3-percent the nation’s total VC pie for that year.

“We have two main life sciences clusters in the Puget Sound region,” stated Danny Seger, senior vice president, JLL. “The larger of the two is the Seattle market, which is largely driven by the drug discovery and therapeutics industries. Bothell is a smaller secondary market with more focus on testing, product development and medical devices.”

One noteworthy difference between Seattle and suburban submarkets is the vacancy rates. While there’s a falling trend across the board, Seattle has extremely low vacancy at 2.6 percent with Bothell at 10.5 percent and 8.1 percent in Redmond. Vacancy had been nudged upward slightly in South Lake Union by the addition of 140,000 square feet of lab-office space at the Vue Research Center. Sixty-seven-percent of the space had been pre-leased by NanoString Technologies, Novo Nordisk, Presage Biosciences and Blaze Biosciences with little space remaining at the site completed earlier this year.

“There is an inconsequential amount of vacancy in Seattle and limited product in the development pipeline,” explained Seger. “These underlying market factors have caused rental rates to continually increase over the last couple of years.” Rents around Lake Union average $43.87 per square foot though the Vue Research Center space claimed over $60. In contrast, life sciences manufacturing space in Bothell is relatively low-cost at $20.92 prompting some companies to migrate to the area from Seattle for more economical options.

New product currently underway is an expansion project at The Alexandria Center in South Lake Union offering 183,623 square feet of 100-percent pre-leased space to Juno Therapeutics to be delivered Q1 2017. Last year 272,408 square feet was completed at the Allen Institute for Brain Science, also in South Lake Union.

The life sciences sector is Washington State’s fifth largest industry contributing about $12.5 billion to the GDP. The Seattle-Bellevue cluster is in the top ten in the country for VC funding and the area’s establishments received about $829.1 million in funding from NIH largely due to the presence of several global research institutes in the region including the Seattle Biomedical Research Institute and Institute for Systems Biology.

“The life sciences cluster in the Puget Sound area is different than many other markets, because a significant portion our local life science companies partner with, or have close ties to, nonprofit organizations such as the University of Washington, Fred Hutch and Seattle Children’s,” said Seger.

“In the short and mid-term the market should stay healthy, and we will continue to feel upward pressure on pricing,” he added.

In the Seattle area as well as nationally, hiring and wage growth continue in the sector. Companies like Seattle Genetics and NanoString have accelerated hiring while Juno Therapeutics grew its employee roster by about 50 percent this year.