Dallas-Fort Worth is named in a new report as the top emerging market for life sciences, based on size, institutions and talent, and rapid growth, along with Nashville and Atlanta.
North Texas' life sciences total labor pool has grown by 17%, surpassing the national average growth. According to CBRE, research and development employment has grown 44.5% in DFW since 2019. Only New Haven, Connecticut, and Nashville, Tennessee have seen a greater increase.
The University of North Texas' Health Sciences Center and University of Texas Southwestern Medical Center, both in Dallas, have contributed to the growth of the North Texas area. These institutions produced the tenth highest number of graduates in biomedical and biological sciences in 2022.
In a prepared press release, Chelsea Story, vice-president of CBRE's Life Sciences in Dallas, said that DFW has the right pieces in place to be a dominant player in the life sciences industry. Our region has attracted $1.6billion in venture capital funding for the life sciences between 2018 and 2022. The only problem we face is that the demand for facilities to house life sciences companies outstrips the supply. The DFW life sciences sector is growing because companies are looking to use our talent and want to be located here.
The U.S. Life Sciences industry and the real-estate that houses it have shown resilience during the current economic downturn, according to several metrics. There are a number of indicators that point to the life sciences industry and its real estate being resilient during this economic slowdown.
CBRE predicts that the cumulative square footage for lab space in 13 of the largest U.S. markets in life sciences, which has already grown by 47% over the last five years, will grow by 22% in the next two to reach 220 million sq ft as the projects under construction are completed. Nearly a third of the space has been pre-leased by companies.
The life sciences sector will not be immune to the economic downturn. The recent turmoil in the banking industry will likely hinder venture capital funding for startups in life sciences and technology this year. Initial public offerings of life sciences companies are down. The job growth rate for life sciences professionals slowed down to 4.1% in January 2023 compared to 6.4% the year before. The U.S. laboratory vacancy rate increased to 5.7% from 5.1% in third quarter, but it still remains low compared to other real estate sectors.
Life sciences are expected to grow even more, based on other indicators. According to the U.S. National Library of Medicine, global clinical trial numbers will reach 444,567 in March 2023. This is a 36% increase from 2020. The number of Phase 2 and 3, when life sciences firms expand their operations most frequently, increased in the U.S. over the last decade.
Matt Gardner, CBRE’s Americas Life Sciences leader, said in a prepared press release that the life sciences industry, and the wider economy, have been in turbulent waters over the past few months. However, the product pipeline, the industry's key gauge, signals sustained growth. Many metrics have declined from their highs of 2020 and 2021, but are still higher than their pre-pandemic level. The industry will be able to move forward with a number of promising scientific developments once the lending climate settles.