Chicago and Indiana Among the Fastest Growing Life Sciences Clusters
In an industrial sector defined mostly by innovation, life sciences research remains a high expense, high-risk scheme – and having a great location strategy is a vital success factor.
According to Deloitte’s 2019 Global Life Sciences Outlook, rising research and development (R&D) costs, operating costs, competitive wages for top talents, and skyrocketing lab rent payment in top tier clusters are driving life science firms to newfangled and creative real estate strategies so they can remain near resources and top talent.
Competitive and expensive real estate markets are forcing life sciences firms to think twice when assessing their real estate preferences. For the most highly in-demand locations, fierce competition for talent and space is resulting in both creative renovations and new development of first generation space.
But not every need for life sciences laboratory space can be met in larger and more established clusters such as San Diego, Boston-Cambridge, or Raleigh Durham. As these cities face a scarcity of laboratory space and other life sciences real estate, companies looking for alternative options are discovering second-rank markets such as Chicago, Indiana, Seattle, and Denver. Even though established United States clusters are located on either coast, emerging clusters are showing that life science companies are growing and taking root in the middle of the nation.
Midwest cities such as Indiana are showing sufficient growth to rank as emerging clusters. Indiana’s pharmaceutical and medical device industries have shown steady growth since 2014 and was ranked in the top 10 states for bio-science patent distributions in 2016. According to TEConomy 2018 research on Investment, Innovation, and Job Creation in the Bioscience Industry, Indiana boasted the highest location quotient for drugs and pharmaceuticals compared to all other US states. This implies there is a high employment concentration in the industry in this city relative to the rest of the nation.
Illinois, chiefly the Chicago region, is now home to several top research institutions and universities, and also boasts the headquarters of big firms such as Hospira, Baxter International and Abbot Laboratories.
The Windy City also received favorable attention in February 2018 when CBRE (the commercial real estate giant) pointed out the city’s emergence as a noteworthy life sciences cluster. And even though the region ranks tenth in NIH funding with awards totaling around $688.2 million, it placed ninth in lab space (8.8 million square feet), patents (1246), and VC funding ($332.21 million from nine deals).
Over the next few years, we can expect these city’s commercial real estate sector to be the main beneficiaries of the booming life sciences sector.