While challenges persist in the short term, there are signs pointing toward long-term growth for life sciences, according to JLL’s 2024 Life Sciences Real Estate Perspective and Cluster Analysis. The annual report reveals the top life sciences geographies, explores the state of the U.S. lab market, and identifies the forces driving lab space demand.
After adding rankings for both medical technology (medtech) and biomanufacturing in 2023, this year JLL Research introduced two new ranking categories that spotlight the top markets for talent and artificial intelligence (AI).
New Rankings: Talent And Artificial Intelligence
For 2024, JLL Research added two new rankings to determine the top markets for talent and AI. Large pharmaceutical companies today are hyper focused on optimizing their real estate holdings, with how to re-assess their space needs after a barrage of acquisitions being top of mind. Despite the short-term dynamic of 67% of big pharma companies reducing space in the first half of 2024, JLL’s recent Future of Work survey of global decision makers found that pharma leaders predict an increase in headcount, footprint, and number of locations by the end of the decade by a 3-to-1 margin.
“Large pharmaceutical companies are looking to use real estate to unlock both supporting business development and supporting innovation over the next five years,” said Kevin Wayer, President, Life Sciences, Work Dynamics Division, JLL. “First among equals in driving real estate needs is access to the right talent, and attracting and retaining the right talent enables organizations to grow.”
JLL Research identified Boston as the top talent cluster, followed by the San Francisco Bay Area (2), Greater DC and Baltimore (3), New Jersey (4) and Los Angeles (5). By incorporating metrics of scale as well as of growth, density and momentum, the ranking system provides a holistic approach that highlights both the current strength and the future potential of these markets.
A growing share of all VC dollars are heading to AI and machine learning (ML) biopharma companies. AI/ML venture funding exceeded the total level of 2023 in the first six months of 2024, now representing 12% of all life sciences venture funding.
“As the cost to develop new therapies has skyrocketed, biopharma companies have been leveraging artificial intelligence and machine learning technology for years,” said Mark Bruso, JLL Director, Boston and National Life Sciences Research. “By applying this technology in the drug discovery phase, companies can better identify the most promising molecules and cut down on the time and cost to get a drug to market.”
“First among equals in driving real estate needs is access to the right talent, and attracting and retaining the right talent enables organizations to grow.”
— Kevin Wayer, President, Life Sciences, Work Dynamics Division, JLL
The San Francisco Bay Area ranked the top market for AI and accounts for half of all AI/ML biopharma venture funding since January 2023. Boston (2), which received one-fifth of AI/ML biopharma venture funding; Los Angeles (3), San Diego (4) and Chicago (5) round out the top five markets. When assessing markets strengths when it comes to AI, the concentration of talent and funding were big indicators of trailblazers in this emerging space.
Top Life Sciences Clusters
To determine the top overall life sciences clusters, JLL Research analyzed the key fundamentals and drivers that differentiate markets, including growth; density; and momentum across talent, funding and real estate fundamentals.
Once again, Boston (1), the San Francisco Bay Area (2) and San Diego (3) come out as the top three markets for life sciences commercial real estate in the U.S. These three mature clusters have been the apex of life sciences activity for years with an established talent and funding base and the real estate infrastructure to support activity. Greater DC and Baltimore (4), Raleigh-Durham (5), Los Angeles (6), New Jersey (7), Philadelphia (8), New York City (9) and Seattle (10) comprise the remaining 10 top life sciences clusters.
“The relationship between the market dynamics and industry trends provides a unique perspective on the competitiveness and attractiveness of various regions, highlighting both their current strength and future potential,” said Maddie Holmes, Senior Research Analyst, Life Sciences Industry Insight and Advisory, JLL.
Top 10 Life Sciences Clusters
1. San Francisco Bay Area
2. San Diego
3/4. Greater DC, Baltimore
5. Raleigh-Durham
6. Los Angeles
7. New Jersey
8. Philadelphia
9. New York City
10. Seattle
For the second consecutive year, JLL Research looked at the growing demand for and availability of skilled talent; innovation measured by clinical trials and venture capital funding; industry performance and concentration to rank the top five markets for medtech and biomanufacturing.
Los Angeles ranked as the top medtech market, followed by Minneapolis (2), the San Francisco Bay Area (3), Boston (4) and Salt Lake City (5). Boston takes the top spot from Raleigh-Durham for biomanufacturing, with New Jersey (2), Raleigh-Durham (3), Greater DC and Baltimore (4) and the San Francisco Bay Area (5).
