Investors are investing $ 10 billion this year in life sciences real estate

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The future of the office sector remains largely uncertain at this point in the wake of the pandemic, but there is one segment that continues to show tremendous success.

Investors have spent more than $ 10 billion this year on the purchase of life sciences buildings, Bloomberg News reports citing data from Real Capital Analytics. That’s about 4 percent of all global commercial real estate transactions before May, double the number recorded during the same time last year.

And those numbers don’t even include new developments in the biological sciences, such as the huge Fenway Center in Boston, which broke the ground in 2017.

Sales and refinancing of life sciences buildings totaled about $ 25 billion last year, a significant jump from $ 9 billion in 2019. In one major deal, Blackstone made $ 6.5 billion in profit from refinancing the BioMed Realty Trust, the largest REIT office in the United States.

This can partly be attributed to the drive to develop vaccines against Covid-19. But the sector has thrived before: in some areas where new projects were emerging, such as San Diego or Boston, there were growing demands for the rent of laboratories or research buildings. Over the past five years, rents in and around San Francisco have grown by 90 percent, while rents for regular office space have increased by only 20 percent over the same period.

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“The pandemic has only exacerbated the growth in demand, but we think this trend will continue for many years,” Nadim Megji, head of Blackstone Real Estate Americas, told Bloomberg News.

However, this sector is causing some hesitation. Building can cost 15 percent more than conventional offices, and the risk of oversupply remains possible as developers rush to take their first steps.

[Bloomberg News] – Sasha Jones

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