The demand for lab space is rising as the life science sector expands. There are key considerations for asset owners who are considering converting office buildings into lab space, according to Newmark.
Attractive returns, driven largely by outsized rent growth, have also made lab space extremely appealing to asset owners and investors. The adjacent figure highlights cumulative growth in asking rents over the past five years across major life science markets in the United States. Asking rents for lab space in the San Francisco Bay Area, Chicago, Raleigh and Boston have increased by more than 60 percent since the first quarter of 2016, while office rents increased by only 15 percent to 30 percent during the same period. Similar trends can be found in Philadelphia, New Jersey and Los Angeles. New construction — both conversions and ground-up developments — are garnering even higher pricing as strong pre-leasing and tenant interest are putting further upward pressure on rat
