Montgomery County, Maryland, was a leader in biotechnology before COVID-19 hit, ranking among the highest in the nation for the number of life sciences companies, and the pandemic has only fueled the industry’s growth.
That means more high-paying jobs and demand for research and laboratory-suitable real estate.
There are currently 650 companies operating in the bio-health area in Maryland, including biotechnology and medical device manufacturers. The majority are early-stage companies, but many are now transitioning to later-stage and product manufacturing. Some are well established.
The region is attractive to the industry for several reasons.
“Montgomery County and Maryland have a very educated workforce. Also, in comparison to other markets, the lab rent is inexpensive. And most recently, there has been an influx of venture capital funding and companies moving here,” said Peter Briskman, co-lead of commercial real estate services firm JLL’s mid-Atlantic life sciences practice.
“Grant funding from the National Institutes of Health has also reached a peak, benefiting many of those companies, and public offerings and clinical trails are at an all-time high,” he said.
These companies were well-positioned for research related to the COVID-19 pandemic.
“There were already companies working on vaccines and therapeutics and that gave Maryland and Montgomery County a head start. When you look at the billions of dollars that have gone out, specifically AstraZeneca, Novavax, Glaxo and Emergent Bio have received over $6 billion combined,” Briskman said.
“Montgomery County has become a hotbed for Operation Warp Speed. Five of the top 10 recipients of the federal government’s Operation Warp Speed funding reside in Maryland,” he added.
The mid-Atlantic region and Maryland have more residents who hold Ph.D. degrees than any other region in the country, and Briskman said top talent is in very high demand. The average salary for professionals in the industry is $170,000 a year, behind only San Francisco and Boston.
In Montgomery County, 32% of the adult population has a graduate degree, and 10% of all occupations in the county are STEM-related.
Since 2010, Montgomery County has seen life sciences employment grow by 39%, according to JLL.
Demand for lab space is also high and, despite having relatively low rents compared to other regions of the country, building out the space is expensive. In Montgomery County, a typical office build-out is $75 to $80 per square foot. For lab space, it is $125 to $130 per square foot.
The latest out-of-state life sciences company to relocate to the region is Cambridge, Massachusetts-based TCR² Therapeutics, which is developing T-cell therapies for cancer. It signed a lease in March to build out an 85,000-square-foot facility at the Shady Grove Life Sciences Center in Rockville and will more than double its workforce when it relocates here in 2023.
Maryland is a national leader in cell therapy research and development.
Vacancy rates have gone down, forcing life sciences companies to adapt to other types of space, such as converting Class A office space into lab space. Later-stage and production companies are moving away from leasing and toward purchasing their own office and lab space.
Here are some statistics about the bio-health, life sciences and biotechnology industry in Montgomery County and Maryland, according to JLL:
- Lab vacancy is at a historic low of 3.1%, compared to 20.4% for office space.
- Asking rents are at historic highs, up 30% over the last three years.
- More than 2 million square feet of future office and lab space development is in the pipeline.
- Maryland venture capital and grant funding has grown eight times over the last five years.
- Maryland ranks in the top 10 for the highest influx of venture capital funding.
- Maryland set a record high for NIH grant funding in 2020, surpassing San Francisco.
- Maryland firms raised $950 million through initial public offerings in the first quarter of 2021, compared to $1.3 billion for all of last year.
- Maryland is No. 1 for STEM employment concentration, with 63,000 STEM professionals working in Montgomery County.
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