Major Investments in Biotech Could Spell CRE Opportunities
Much of the investment is in later-stage companies that are ramping up and will need space to do so.
“There was a lot of money in life sciences. It’s a very tight market now,” Cozen O’Connor member Adam Silverman told GlobeSt.com in November 2023. “I think everyone used it as a pause. Now they’re having trouble leasing up the buildings they have. But I think everybody expects that in the next six months, 12 months, 18 months, this will turn again.”
His prediction is already coming true on the early side. JLL pulled data from Crunchbase, which tracks and covers startups, and found that in the first half of 2024, more than 50 companies raised venture rounds of at least $100 million.
Fierce Biotech, which follows developments specifically in the industry, had a slightly shorter list at $100 million. But include all funding rounds of at least $50 million and in the first half of 2024, their tally was 72. The top single round of $1 billion in April 2024 went to Xaira, which looks to combine machine learning, data generation, and therapeutic product development to create a software platform for discovering new drugs. Also in April, Metsera’s work in obesity and metabolic disease treatments brought in $290 million.
In March, Mirador Therapeutics brought in $400 million in a series A round to create medicines for inflammatory and fibrotic diseases. Earlier in the month, Alumis had a C round for $259 million to support oral therapies for immune dysfunction.
Formation Bio, which uses artificial intelligence to help other biotech companies improve their workflow automation, brought in $372 million in June.
So far in July alone were Beacon Therapeutics ($170 million), Myricx Bio ($114 million), and SciRhom GmbH ($68 million).
Most of the money is being invested in U.S. companies. JLL said that the amounts of large rounds owed to investors are “interested in companies that are well into trials with strong clinical data, as they are seen as less risky relative to discovery stage companies.”
Planning biotech spaces is more complex than for medical offices. Most of the companies are clustered near universities with a life science or biomedical focus. That leaves CRE developers and investors limited by geography. Furthermore, building requirements are exacting, and specific to a given firm. The majority are single-tenant properties. There are likely additional requirements in plumbing and HVAC.
Even so, JLL has seen examples where a big funding deal sparked a property investment. Cargo Therapeutics raised $200 million in March and then picked up a 99,000-square-foot property nine months later.