A panel discussion was held by Bisnow's Bay Area Life Sciences & CRE in San Francisco last month. Among the panellists are some of the Bay Area’s life science real estate leader: Gavin Keith of DPR Construction; Gregg Domanico, Executive Vice President and Managing Director of Kidder Mathews; Terry Stelter of AlfaTech; David Bendet, Managing Director for Life Sciences of CBRE; Neil Fox, CEO of Phase 3 Properties; Mike Jackson, Vice President of Operations of Truebeck Construction; Tracy Murphy, Executive Vice President of Kilroy Realty Life Sciences; David Braunstein, Vice President of Seavest Healthcare Properties; Kirk Syme, President of Woodstock Development; Geoffrey Sears of Wareham Development; Mike Futrell of South San Francisco City Manager; and Lisa Strope, Vice President and Director of Research of JLL. The discussion revealed that all panellists agreed that recently there is a seemingly insatiable demand of space from life science startups.

According to JLL Vice President and Director of Research Lisa Strope, life science had a good year in 2018. The San Francisco area attracted $5B in venture capital, topping Boston's market for the first time ever. The region's life science market has 25% job growth over the last five years, more than double the nationwide 10%.

The robust life science industry development is evidenced by a low 3.54% vacancy rate in San Mateo County; and a regional demand of 3.8 M SF of life science space with anticipated rising rent, as mentioned by Kidder Mathews’ Executive Vice President Gregg Domanico. He said:

“The demand for space under 10K SF is extremely high”, and
“It is possible for real estate developers getting into that business”

Domanico further explained that, of the $7.3B of venture capital that went to Bay Area life sciences, almost $800M went to companies in seed capital or Series A or B funding, resulting startups are looking for space that suits their needs.

This market trend was also confirmed by Phase 3 Real Estate Partners’ CEO Neil Fox (developer of Genesis, South San Francisco's 21-story life science tower). Fox said that Phase 3 is working on hosting multiple startups that need smaller space in their north tower of Genesis project, so that startups do not need to take much more space than they really need. He is also shortening the usual ten-year lease term into a two- to three-year lease term to allow flexibility for startups. Fox then shared one of his earliest projects as a reinforcing example: redevelopment of a hospital into a co-working facility with lots of share space and amenities that was successful, even under a contracting economy.