The life science industry, which experienced a surge in growth during the COVID-19 pandemic, continues to show resilience and potential for long-term expansion. The crisis catalyzed an unprecedented focus on vaccine development, testing, and broader health research, leading to a doubling of venture capital funding for startups from $6.6 billion in 2019 to a peak of $31.8 billion in 2021. This influx of capital triggered a construction boom across key life science hubs like Boston/Cambridge, San Francisco, San Diego, and Raleigh-Durham to address the near-zero vacancy rates.
By 2023, the landscape began to shift with the delivery of millions of square feet of wet lab and R&D space and a slowdown in venture capital funding, resulting in increased vacancy rates. The national lab/R&D vacancy rate rose to 13.1%, a significant jump from the 8% average between 2016 and 2020. Despite this, the life science sector’s long-term outlook remains optimistic. Biotech venture capital funding, while down from its peak, is still substantially higher than pre-pandemic levels. The National Institute of Health (NIH) funding has continued its upward trajectory, reaching $38.1 billion in 2023, a 25% increase since before the pandemic. Moreover, there is a robust 82.8 million square feet of new construction in progress, although construction starts have returned to pre-pandemic levels.
Job growth in the life sciences has been strong, with an 11% increase in employment since 2018 and a 2.0% growth in 2023. The industry’s contribution to the U.S. economy was a staggering $2.9 trillion in 2021.
In California, particularly Southern California, the life science industry has had a profound economic impact, supporting 1.19 million jobs and generating $413.7 billion in business output. The state leads the nation in life science employment, with significant NIH and National Science Foundation funding fueling innovation and growth.
San Diego stands out as one of the top life science clusters in the U.S., with over 2,100 establishments contributing to the region’s innovation economy. Despite a slight decline in occupancy rates, the demand for lab space remains high, with significant construction projects underway and strong venture capital interest.
Los Angeles County, though historically behind other life science clusters, is gaining momentum with substantial employment and venture capital investment. UCLA’s recent acquisition of the Westside Pavilion mall for transformation into a research park underscores the region’s commitment to advancing life sciences.
Overall, the life science industry’s future looks promising, with sustained funding, job growth, and technological advancements driving demand for lab space. The upcoming BIO International Convention in San Diego in 2024 further highlights the sector’s vitality and global significance.
