While the life sciences real estate sector in the Puget Sound region is still growing and flourishing, the challenge for tenants will be finding suitable facilities as the existing inventory is well below 5 percent vacancy and the pipeline for new development projects is extremely limited, said Daniel Seger, a senior vice president in commercial real estate firm JLL’s Bellevue office.
According to JLL’s Life Sciences Outlook 2015 study, Seattle—which ranks 10th in the U.S. in this sector—has found success in the life science and biomedical fields partly due to the presence of some of the world’s largest philanthropic organizations, such as the Bill and Melinda Gates Foundation, which has funded several major grants in Seattle-based research institutes. Also, the University of Washington consistently ranks in the top five of institutions receiving National Institutes of Health funding and is about to embark on building a new state-of-the-art life sciences building.
“More than 35,000 Washingtonians in 72 cities work at more than 500 life sciences and global health organizations and major research universities. This is the fifth largest industry in our state,” according to Washington Gov. Jay Inslee’s Web site. “The life sciences and global health sectors contribute over $7 billion to the economy,” the site says.
Seattle’s major research institutes include the Allen Institute for Brain Science, Benaroya Research Institute, Seattle Biomedical Research Institute, the Infectious Disease Research Institute and the Institute for Systems Biology, which focuses on global health and third-world infectious diseases.
In addition, commercial real estate firm JLL said that the suburban market northeast of downtown Seattle offers quality low-cost alternatives to the more expensive South Lake Union and Capitol Hill submarkets. Close to the Bellevue central business district, this area’s office parks and low-rise office buildings are located among evergreen trees, wetlands and parks, which allows companies to attract talent with access to nearby amenities at a significantly discounted cost of living.
But don’t count out the venerable South Lake Union neighborhood just yet: Glendale, Calif.-based American Realty Advisors last month purchased Seattle-based Vulcan Real Estate’s 12-story office/retail property at 2201 Westlake Ave. for $251 million with future plans to attract life sciences and biomed tenants, and BioMed Realty Trust is anticipating a first quarter 2016 completion of its BioMed Realty Research Center project at 500 and 530 Fairview Ave.
San Diego-based BioMed Realty Trust’s Fairview project connects a new seven-story, 122,000-square-foot laboratory and office building with the firm’s neighboring, existing 101,000-square-foot building. Completion is set for the first quarter of 2016. Tenant sizes will range from 14,000 to 16,000 square feet. A new three-level parking garage will accommodate 136 cars. The neighboring building at 530 Fairview is currently fully leased to Novo Nordisk, NanoString Technologies and Presage Biosciences.
Meanwhile, the University of Washington’s Seattle campus is looking at a July 2016 start for its $160-million, 187,000-square-foot Life Sciences Building. According to the university’s capital projects office, the project completed its pre-design phase in January and is currently in the schematic design review phase.
Perkins + Will in Seattle is the architect on the project, which will provide modern research and instructional space for the department of biology so that the university can, according to the school capital projects office, “meet major increases in undergraduate student demand,” and recruit more faculty to meet that student demand; plus “provide open, flexible, modular, high-density labs ideally suited to be collaborative, and offer interdisciplinary research that is not met by the current biology buildings.”
The Life Sciences Building will be a five-story above-grade building plus a mechanical penthouse with two stories below grade. The site encompasses the existing greenhouses and landscaped area located on the east side of Kincaid Hall. The first floor will have an open entry to the building at grade at Stevens Way and include four research/teaching laboratories. A new greenhouse and loading dock are at grade at the Burke Gilman Trail designated as the basement one level. The upper four floors are modular in design, consisting of 10 research labs per floor with the procedural program on the north side, labs in the center and offices along the south bay. The basement one and basement two levels house growth chambers, animal housing and research facilities.
According to the Daily Journal of Commerce, biology is the largest undergraduate major on campus, with 40 percent of the students taking at least an introductory course. The biology department also does research into climate change, biomechanics and neurobiology.
Life sciences startup funding, however, recently took a hit. Gov. Inslee recently refused to veto a state legislature budget cut to the state’s 10-year-old Life Sciences Discovery Fund, which covers the early stages of life sciences research that enables new treatment data, devices and diagnostics from labs to move onto commercial enterprises. The fund’s proposed 2015-2016 fiscal budget of $11 million was instead diverted to the state’s general fund and no funding is scheduled to resume in fiscal 2016-2017 either. According to local news reports, the governor and legislature are anticipating a spike in private donations.
