Chicago is one of the nation’s leaders for employment in the life sciences industry, but startups and research and development firms in this sector may have a difficult time finding lab space as the city boasts the lowest vacancy of any primary market, according to a recent report from CBRE.
While many U.S. industries are navigating fundamental disruption, the life-sciences industry – which includes pharmaceuticals, biotechnology and medical-device manufacturing – is on a long-term expansion track.
Chicago is primed to benefit from this industry’s growth, as the market has seen strong gains in employment and National Institutes of Health (NIH) funding in recent years.
However, as employment and funding have increased, available lab space is difficult to find. Currently, the market boasts a less than two percent vacancy, the lowest of any primary market that CBRE tracks.
“Chicago is well-positioned for future growth in life sciences thanks to its large cluster of pharmaceutical and biotech companies and world-renowned research institutions such as Northwestern University, the University of Chicago, Rosalind Franklin University and the University of Illinois at Chicago, Fermi and Argonne Labs” said Scott Brandwein, executive vice president with CBRE in Chicago. “With existing vacancy extremely low for lab space, there is demand for more product in this market. This now has the government and private sector focused on this need and is beginning to facilitate the expansion with some new projects in the development pipeline.”
Chicago has received an employment boost in recent years, especially in its traditional industries of pharmaceuticals and medical manufacturing, which have experienced a sharp uptick since 2013. Jobs in this sector total nearly 18,000, exceeding the previous high of approximately 17,500 in 2006. In total, Chicago is the fifth largest market in the nation for employment in this sector.
There is momentum in the research and development sector as well. With the low vacancy rate for lab space, research institutions and private firms are initiating more projects to meet demand.
A number of science parks are in the development pipeline, including projects at IIT, Illinois Science + Technology Park (Skokie), University of Chicago, Illinois Medical District and the new Rosalind Franklin University of Medicine Science Innovation and Research Park. This activity coincides with funding increases from both venture-capital and NIH. In 2016, Chicago received $654 million in NIH funding, making it the 10th largest recipient in the nation. Funding from venture capitalists in 2015 and 2016 equated to the eight years prior combined.
According to the CBRE report, all of this activity has Chicago poised to compete more effectively with other major research centers moving forward, aiding it in the attraction of international life sciences companies, as well as increasing the overall number of startups.