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Page 12 — Health Care, Senior & Life Sciences Quarterly — October 2024 www.crej.com LIFE SCIENCES – HEALTH INNOVATION T he 2024 edition of BioSci- ence Colorado Magazine: All In reflects the dedication and collaboration of Colo- rado’s life sciences commu- nity, which is saving and changing lives around the world with health innovations from Colorado. This annual publication’s theme serves as a rallying cry, echoing the eco- system’s commitment to supporting one another and collaborating on transformative technologies to heal people and improve lives. In the new magazine, Colorado BioScience Association outlines how the state’s collaborative ecosystem makes real progress for patients and elevates Colorado as a leading loca- tion for life sciences innovation. n Thriving hub for health innovation. One of the standout stories of 2024 is the record-breaking fundraising by Colorado’s life sciences community. In the first half of the year, compa- nies raised more than $1.2 billion, showcasing the region’s capacity to drive innovation and attract invest- ment, even in challenging economic conditions. The ecosystem raised $1.47 billion in 2023. This fundraising success high- lights the resilience and potential of Colorado’s startups and established companies alike, as they continue to secure the capital needed for development and commercializa- tion. The momentum is one of the key reasons why companies, inves- tors and talent are choosing Colorado for expansion or relocation. n All ready: Real estate developers invest for innovation. The new develop- ment map offers a detailed look at the infrastructure sup- porting Colorado’s life sciences com- munity. Colorado offers ample room to grow, and the map provides a comprehensive over- view of lab and office spaces avail- able to companies at various stages of development. The state’s innovation communi- ties and real estate developers bring a deep understanding of the specific needs of life sciences companies. With millions of square feet of lab and office space either ready to lease, under construction or in the planning stages, the development map is designed to serve as a prac- tical tool for companies seeking to expand their operations in Colorado. n Global companies deepen their roots in Colorado. The 2024 edi- tion also focuses on the contin- ued investments in Colorado by companies with a global presence, including Medtronic, Terumo Blood and Cell Technologies, Agilent Tech- nologies, and AlloSource. Drawn by the state’s highly skilled workforce, business-friendly climate, and col- laborative ecosystem, these organi- zations are continuing to invest in their Colorado operations. The presence of these anchor com- panies with decades of success in Colorado is a significant driver of the state’s economic growth, contribut- ing to job creation, innovation, and the further development of criti- cal infrastructure. The companies are hiring the state’s highly skilled talent to enhance their research, development and commercialization efforts. n Giving our all for patients and advocates. Patients whose lives have been changed by health innovations share their stories, including: Siri Lindley, a world-champion tri- athlete turned coach, animal-welfare advocate, and motivational speaker, was saved by an innovative Colora- do-based clinical trial of a drug to treat her acute myeloid leukemia. Brooke Eby, diagnosed with amyo- trophic lateral sclerosis two years Colorado’s life sciences community: Changing lives Elyse Blazevich President & CEO, Colorado BioScience Association T he life sciences commercial real estate sector experi- enced explosive growth in the last few years. The inventory of life sciences lab and Current Good Manufactur- ing Practice space grew 49% since first-quarter 2020, from nearly 150 million square feet to over 218 mil- lion sf as of second-quarter 2024. This growth was driven by strong labor growth and a flood of venture capital that targeted life sciences in 2021 and 2022. However, the recent slowdown in funding has impacted the growth of life sciences compa- nies and, in turn, decreased leasing activity. Beginning in 2023, several companies have had to use layoffs to rebalance their balance sheets, and these layoffs have resulted in many companies either shrinking their existing footprints or hold- ing off planned expansions. The number of new companies looking to move into new space has also dropped as VC investors clearly show a prefer- ence for later stage companies. This slowdown of expansions and new compa- nies has clearly impacted life sci- ences activity. Net absorption turned negative over the last two quarters and was negative for full year 2023. The overall U.S. vacancy rate has grown from a low of 7% in econd- quarter 2022 to the current 18.9% as of second-quarter 2024. Vacant sub- lease space entering the market has driven the sublease vacancy rate from 0.6% in first-quarter 2022 to the current 3.5%. Also impacting the vacancy rate has been the increase in new inventory delivering vacant. The construction pipeline tripled from 11 million sf in first-quarter 2020 to nearly 35 million sf at its highest level in third-quarter 2023. More recently, over 15 million sf of new space entered the market in the last four quarters and softening demand has meant that much of this space has deliv- ered vacant. Overall asking rents have contin- ued to grow despite the softening market. Asking rents were up 0.9% on a quarter-over-quarter basis as of econd-quarter 2024 and up 11.8% on a year-over-year basis. Occupiers have shown a clear preference for newly constructed, highly ameni- tized space. A recent Cushman & Wakefield analysis of leases signed in 2024 indicated an 82% preference for class A space over class B and C space. Additionally, the same analy- sis showed that tenants are willing to pay a 12% pricing premium for newer class A space over older class A space. n Construction pipeline slows. The life sciences construction pipeline grew for seven straight quarters from 12 million sf in four- quarter 2021 to nearly 35 million sf in second-quarter 2023 as new projects broke ground each quar- ter. This trend began to reverse in third-quarter 2023 in response to softening market fundamentals. As of mid-year 2024, the construction pipeline has fallen for four straight quarters to 19 million sf from nearly 31 million sf in third-quarter 2023. The fall in construction activity has come as some projects that were due to break ground were cancelled, while others that were proposed have been abandoned. Speculative construction activity has receded whereas build-to-suit projects now make up a larger number of proj- ects under construction. Projects due for completion in 2025 are expected to total 9 million sf with nearly 60% of this space pre- leased. The slowdown in construc- tion projects should provide some breathing room and give the sector time to absorb some of the vacant inventory that has entered the mar- ket. Life sciences CRE sector begins recalibration LIFE SCIENCES – MARKET UPDATE Sandy Romero Research manager, Global Research, Cushman & Wakefield Steve Billigmeier Colorado Life Science Practice Group lead, Cushman & Wakefield Please see Blazevich, Page 26 READY RealEstate Developers Invest for Innovation FORTCOLLINS LONGMONT LOUISVILLE BOULDER SUPERIOR BROOMFIELD AURORA GREENWOOD VILLAGE AURORA Fitzsimons InnovationCommunity 5-building innovation communitywith 427,000 square feetof custom laboratory, o ce,andmeeting spacewith retailand residentialamenities DEVELOPER: Fitzsimons Innovation CommunityandAimco STATUS: Move-in ready BROKER: CBRE BOULDER ElementResearchCenter 7-building life sciences center DEVELOPER: Steelwave STATUS: Move-in ready BROKER: CBRE FlatironPark 23-building life sciences campus spanning 1M square feet DEVELOPER: BioMedRealty STATUS: Move-in ready BROKER: BioMedRealty HATCHlabs@WildernessPlace Successful conversionof thehistoric BoulderBeerCompanyBrewerybuilding intoan innovativehub foremerging companies in the life sciences industry. DEVELOPER: NexCoreGroupand HATCHspaces STATUS: Move-in ready BROKER: DeanCallan&Company PearlEast InnovationCampus 11-building life sciences campuswith lab ando ce space DEVELOPER: BeaconCapital STATUS: Move-in ready BROKER: CBRE RidgewayScience+Tech 112,000-square-footnet zeroenergy andall-electric life sciencesand technology campus DEVELOPER: ConscienceBayCompany STATUS: Planneddelivery in2026 BROKER: JLL BOULDER -CONTINUED TerraBoulder Twobuildings;207,000-square-foot life sciencesand technology campus DEVELOPERS: SchnitzerWest, BrueBaukolCapitalPartners STATUS: Planneddelivery in2026 BROKER: JLL WildernessPlace Twobuildingswith life sciences labando ce space DEVELOPER: BeaconCapitalPartners STATUS: Move-in ready BROKER: JLL BROOMFIELD ColoradoRealEstateExchange (CoRE) 3-building,450,000-square-foot life sciences labando ce campus DEVELOPERS: LincolnPropertyGroupandFCP STATUS: Accepting inquiries BROKER: CBRE FORTCOLLINS InnosphereVentures 7,800-square-foot facilitywith labs for startupand scaleup companies STATUS: Move-in ready BROKER: InnosphereVentures ResearchInnovationCenteratCSU 7,500-square-footBSL-2wet lab spaceand o ce space STATUS: Accepting inquiries BROKER: CSU GREENWOODVILLAGE ColoradoHealth&TechCenters 175,000-square-foot life sciencesand technology campus DEVELOPER: SafaviAppliedLifeSciences,LLC STATUS: Move-in ready BROKER: Newmark LONGMONT MaxTechCenter 475,000-square-foot life sciencesand technologydevelopment DEVELOPER: BroeRealEstateGroupand Alvarez&MarsalCapitalRealState STATUS: Move-in ready BROKER: CBRE LOUISVILLE In niteLabs 167,000-square-foot life sciences facility with spec suitesavailable DEVELOPERS: SteelwaveandRialto CapitalManagement STATUS: Move-in ready BROKER: CBRE CentennialValley InnovationCampus 30+acres,100,000- to500,000-square-foot facilities DEVELOPER: KoebelandCo.andVitrian STATUS: Planneddelivery in2026-2027 RedtailRidge 2.55M-square-foot campuswith life sciences labando ce space,and AdventHealthAvistaHospital DEVELOPER: SterlingBay STATUS: Construction slated tobegin asearlyas2025 BROKER: CBRE SUPERIOR CoalCreek InnovationPark 270,000 square feetofnew,purpose-built lab spacewith fully furnished lab suites DEVELOPER: PMBandMontgomery StreetPartners STATUS: Planneddelivery in2026 BROKER: CBRE Coloradoo ers room togrow. Welcoming innovation communities and realestatedevelopersbringa deepunderstandingof life sciences companiesand theirneeds.With millionsof square feetof life sciences labando ce space ready to lease,under construction,or beingplanned, there’sabundant space for companiesatevery stage of commercialization. 2024-2025 BIOSCIENCECOLORADO 29 28 BIOSCIENCECOLORADO 2024-2025 Colorado’s commercial real estate developers are investing to support health innovation. Please see Romero, Page 26