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National Study Cites $2.7B in Funding, Low Vacancy Rates and Steady Growth as Leading Factors in City’s Prestigious Ranking

PHILADELPHIA, February 22, 2019 – Cushman & Wakefield’s new report titled Life Science: Great Promise & Rapid Growth recently confirmed Philadelphia’s prominence as a leading life sciences industry hub within the U.S. and Canada.

Researched to provide an overview of the sector and its impact on commercial real estate in 13 top markets, the study established Philadelphia’s leadership based on the depth of its life science talent pool, the strength of its academic research institutions, the region’s standing as the third largest recipient of NIH grant funding, the more than $2.7B in life science venture capital funding received since 2010 and the amount and quality of its Class A laboratory space.

“This report highlights Philadelphia’s continued standing as one of the leading life science hubs in the country,” said Casandra Dominguez, director of Philadelphia Research at Cushman & Wakefield. “The region’s diverse ecosystem of world renowned academic research institutions, hospitals, large pharmaceutical companies, innovative biotech startups and a robust biomedical employment base is fueling venture capital investment and tech transfer. Growing demand for lab space and a low vacancy rate of 2.6% is driving development across all submarkets. Given the industry’s recession-proof nature and an aging national population driving demand, we can only expect life science investment in Philadelphia to continue to grow, as more investors seek exposure to this sector.”

Added Senior Director Paul Garvey, “The life science services industry is soaring in Philadelphia. The region’s rich life sciences and pharmaceutical history dates back more than a century. Today’s success represents the consolidation of the institutional sector’s intense research and development efforts with the ongoing commercialization of life-saving drugs and therapeutics. As a result, Philadelphia is at the forefront of the next wave of gene and cell therapy discoveries and advancements. Few other U.S. cities can match the region’s diverse talent pool, intellectual property ecosystem and supporting contract manufacturing capabilities.”

Over the past decade, two sets of forces have been driving the acceleration of growth in this sector – an increased demand for health services as the population ages and the technology enabling a greater supply of new life science products, which in turn has led to historically high investment in this sector.

Thanks to an influx of venture capital as well as billions of dollars in funding from the National Institutes of Health, the life sciences sector has grown nearly five times as fast as the economy since 2000, adding 85,000 jobs, with roughly 70% of that job growth (61,000) in the past eight years. This is primarily a response to an aging population with increased longevity. By 2030, there will be 73 million Americans aged 65 or older, equating to 20.6% of the population, compared with 40.5 million Americans in this cohort in 2010.

For its life sciences report, Cushman & Wakefield surveyed approximately 125 million square feet (msf) of lab space in 11 key U.S. markets with life sciences clusters. (The firm also follows the lab-space market in numerous secondary and tertiary lab markets). While the Lab space vacancy is 8.4% in these 11 U.S. markets, the overall vacancy rate for Philadelphia was the second lowest at 2.6%, a 3.6% decrease since 2008 according to this survey. This is based on a total of 17 msf in lab inventory available throughout the region.

Across the sector in the U.S., average lab space rent has increased 33.2% in the past decade, compared with a 17% increase for U.S. office space. In Philadelphia, asking rents are $23.71 per square foot (psf), representing a 3.5% increase since 2008.

In addition, the region is the third largest recipient of NIH grants nationally, with three-quarters of the $1.0 billion in annual funding going to the academic and research institutions in University City. These universities and hospitals are investing in tech transfer and incubation programs, which are spinning off successful biotech and life sciences startups.

A leader in life science research with core concentrations in gene and cell therapy, biotech, medical devices, pharmaceuticals, diagnostics and health IT, Philadelphia’s relative affordability and high quality of life also have made it a choice location for life science companies, which is why 80% of U.S. pharmaceutical and biotech companies have a presence in the New Jersey, Pennsylvania and Delaware corridor.

The three main life sciences clusters in the region include: University City, where the major academic research institutions and hospitals are located; the Navy Yard, a redeveloped former military facility that includes GlaxoSmithKline’s U.S. headquarters and lab space for other life sciences tenants; and the PA suburbs, where big pharma R&D campuses and manufacturing plants are located. About 8.6 msf of the region’s 17 msf of lab inventory is in R&D/Flex space, with a majority of that located in the suburbs. The broad range of lab facilities located across submarkets and types of space, from Class A new construction office to R&D/Flex, means rents can run from $20/sf to over $50/sf full service gross equivalent.

“Life sciences has been, and will continue to be, a major growth driver for the U.S. economy for decades,” said Greg Bisconti, Cushman & Wakefield Executive Director and leader of the firm’s Life Sciences Advisory Group. “Essentially the tech area of healthcare, the life sciences sector has become a broad and growing collection of everything from diagnostics, genetic reading and writing and personalized medicine to medical device technology, pharmaceutical research and development, and much more.”

“Life science companies have been an important driver of economic growth and commercial real estate development, and space serving this sector is in high demand,” added Ken McCarthy, Cushman & Wakefield Principal Economist and Americas Head of Applied Research. “These companies require specialized lab space for research along with office space. Life sciences’ rapid growth has generally outpaced lab-space supply despite a 10% increase in inventory over the past five years and kept lab market vacancy rates tighter than overall office markets.”

About Cushman & Wakefield’s Life Sciences Advisory Group

Cushman & Wakefield’s Life Sciences Advisory Group provides real estate strategy, transaction structuring, and financial services geared to the specific operational and business requirements of biopharmaceutical, biotechnology, medical device, and pharmaceutical clients. The group is comprised of the firm’s leading life sciences professionals with a dedicated and coordinated effort to help our clients attract and retain top scientific talent, migrate to lower cost environments, monetize underutilized assets, efficiently use capital in the funding of new facilities, and gravitate to emerging therapeutic fields. Through our people, our powerful network and resources, we leverage the global markets so our clients can remain nimble in a highly competitive landscape.

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with 48,000 employees in approximately 400 offices and 70 countries. In 2017, the firm had revenue of $6.9 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit or follow @CushWake on Twitter.

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