The San Diego life science sector is set to outperform other assets classes during the downturn. According to a new report from JLL, venture capital spending will help to prop up the industry. In the first quarter, life science companies secured $5 billion in venture capital funding in the San Diego market, and $315 million in healthcare alone.
"Analysts see the COVID-19 pandemic continuing to fuel more growth and demand for Life Science research and development," Grant Schoneman, managing director at JLL, tells GlobeSt.com. "The continued push for more testing to fight the coronavirus, coupled with the ongoing need to produce more effective technologies to treat cancer, diabetes, neurological and other diseases will continue to drive investment into the life sciences sector."
The venture capital spending has been steadily increasing in the market, and as a result, life science has become the leading sector in San Diego. "Since 2013 the life science sector has recorded strong year-over-year growth, seeing an ever increasing capital flow into the sector that has stimulated growth of many new companies and many new technologies," says Schoneman. "This strong and sustained investment activity was highlighted in 2018 when the FDA approved a record 59 new drug therapies, and more recently, the first quarter of 2020 saw all-time record venture capital investment into the sector, with nearly $6 billion invested in venture-backed life science companies."
The COVID-19 pandemic will also fuel demand and activity in the life science sector. Diagnostics in particular is leading activity with the life science market, thanks in large part to demand for more coronavirus testing. "San Diego has a number of companies that are pivoting their technologies to test for coronavirus—securing government grants as well as other forms of funding to help drive their research. Other sectors leading the life science market are companies working to produce a vaccine for COVID-19," says Schoneman. "A few companies leading this charge include Moderna Therapeutics, Novavax and local San Diego company Inovio Pharmaceuticals. I think the growth in diagnostic and vaccine companies will continue following the pandemic as the need for more effective testing and disease control is expected to increase."
While other parts of the economy are struggling severely as a result of the pandemic, life science activity is actually expected to increase. The second quarter is poised to, again, grow in terms of leasing activity and venture capital spending. "There have been close to 100,000 square feet of transactions that have already closed during the second quarter and there are currently over 325,000 square feet of deals in active lease negotiations," says Schoneman. "Following behind that activity is another 450,000 square feet of deals in the proposal negotiation stage. There is also a healthy number of new companies actively touring the market for space—both large and small—that will help keep demand in the life science market healthy for the foreseeable future."
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Kelsi Maree Borland
