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October 12, 2015

Seattle's biotechs look to Bothell for space as lab vacancy rate nears zero

Puget Sound Business Journal

Annie Zak

For the last couple of years in the Puget Sound region, it has been tough for life science companies to find offices that also include lab space.

A new report shows that trend isn't changing any time soon.

The report, called the Fall 2015 Life Science Market Overview, was released in early October from Seattle real estate firm Kidder Mathews. It shows that the life science real estate market in the region is continuing to tighten.

The life science office and lab space market experienced increased demand in 2014 and the first half of 2015, which dramatically reduced space availability, according to the report. The vacancy rate for unoccupied lab space in Seattle is virtually zero and there is less than 50,000 rentable square feet of unencumbered, lab-ready space that will be delivered in 2016, Kidder Mathews found.

Some landlords are building new facilities, but they're usually leased up long before they're completed. For example, Seattle biotech Juno Therapeutics(Nasdaq: JUNO) leased up at least 80,000 square feet in a new South Lake Union building that won't be finished until 2017.

But new life science companies are still popping up. For example, Just Biotherapeutics is a new biotech that was just founded last year. Many of the area's existing biotech companies are also growing quickly, such as Juno and Seattle Genetics.

Perhaps most interestingly, the report found that smaller companies and organizations will have the hardest time in this tight market.
"Small lab users will have the most difficulty finding space. Landlords find demising larger spaces to be expensive and would just as soon wait for a bigger tenant to come along. Startups will have to rely on cohabitating or subleasing to handle their facility needs."

This space shortage in Seattle means more of these companies will likely turn to Bothell's real estate market to find a home.

"Bothell does have a minimal amount of lab space available at rental rates substantially less than what one would find in Seattle, but with no space available in Seattle these Eastside options will get leased in 2015," according to the report.

On the Eastside right now, there are about 53,000 rentable square feet available for life science companies.

Earlier this year, the announcement that Expedia would relocate its headquarters from Bellevue to Interbay - to Amgen's campus - meant even more loss of precious lab space for the Puget Sound region.

For the full story, go to Puget Sound Business Journal.

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