The Puget Sound’s $12.5 billion life sciences industry is “an innovation hub” being driven not by huge corporate players, but by startups and small to mid-sized companies that are experiencing growth, according to a new report.
The number of biotech businesses has risen 3.1 percent this year to 959 companies, with many of them clustered in Seattle, one the nation’s premier biotech markets, and suburban markets of Bothell and Redmond, according to the JLL Life Sciences Outlook report released in July.
Overall inventory of life sciences-related offices and laboratories was 9.7 million square feet, with a total vacancy rate of 5.5 percent and an average asking rent of $22.03 per square foot.
More than 24,300 people work in the region’s life sciences industry, representing 1.8 percent of private employment with year-over-year growth of 1 percent.
In Seattle’s South Lake Union and Capitol Hill, “rents continue to rise, with lab space nearly impossible to get,” the report said.
Lab stock in South Lake Union, the most expensive submarket in the Downtown Seattle area, stood at 3.7 million square feet and a vacancy rate of 1.3 percent. Asking rent was $39.37 per square foot, up nearly 15 percent year over year.
The only life sciences project currently under construction in the area is the 288,850-square-foot Alexandria Center at 400 Dexter Avenue North, which is fully leased.
ZymoGenetics—one of Seattle’s earliest and most visible biotechnology companies that was purchased by Bristol-Myers Squibb in 2010—plans to vacate its South Lake Union Steam Plant in 2019, a blow to the area. “While this is certainly a hit to the Lake Union life sciences industry, it does open up about 112,000 square feet of lab space for one of the region’s other biotech companies,” said JLL.
In Capitol Hill, rentable and owner-occupied lab stock combined reached just 900,000 square feet. There was zero percent vacancy rate and no new life science projects planned for the near future. Asking rent was $31.20 per square foot, the same as the prior period.
Bothell, the second largest life sciences market in the greater Puget Sound area, has 2.1 million square feet of rentable and owner-occupied lab stock inventory in its two core areas of Canyon Park and North Creek.
Bothell has a vacancy rate of 17.2 percent, down 90 basis points from the prior year, making it “the one submarket in the region with plentiful available lab space,” says the report. Average asking rent per square foot there rose 1.7 percent from last year to $20.95.
The largest biotech company in the state, Seattle Genetics, which expects to hire 200 employees, is expanding to 100,000 square feet of new office space in its Canyon Park campus in order to accommodate that growth. The company also purchased a 51,000 square foot Monte Villa Parkway Research Center from BioMed Realty earlier this month for $17.8 million. The property had been recently occupied by Bristol-Myers Squibb, which used it as pharmaceutical manufacturing facility.
In Redmond, vacancy rates stand at 4.7 percent, while rental rates rose 24.9 percent year-over-year. Redmond remains the cheapest option for lab space in the region, with average rental rates of $16.83, said the report.
The majority of firms in the region’s life science market specialize in research and development (44%), the report found. Other major areas include medical equipment and supplies (16%), electromedical instrument manufacturing (13%), medical and diagnostic labs (12%), testing labs (11%) and research and development (4%).
Seattle is on the cutting edge of the fast-growing immune-oncology segment of the industry, which includes treatments that restore or enhance the immune system’s ability to fight cancer, the report said.
That treatment segment is expected to grow from $14 billion in 2019 to $34 billion by 2024, according to a Research and Markets report. Companies including Adaptive Biotechnologies, which is headquartered in the Eastlake neighborhood of Lake Union, are active in the immune-oncology development space, said JLL.
While a failed clinical trial caused Seattle-based Juno Therapeutics to cancel its flagship cancer drug, the life science firm has still grown its employee headcount to 550 workers, in part because of a $50 million payment from its partner, Celgene, to develop and commercialize its products abroad.
Major areas for employees in the industry include research and development, which employs 44 percent of life science workers, while 32 percent are employed in electromedical instrument manufacturing and 10 percent are in medical and diagnostic imaging.