Throw a dart at a map of the Boston region at the start of 2020, and you’ll hit one: a planned or under-construction development for the life sciences industry, that umbrella term that covers pharmaceutical, medical, telemedical, and biotechnology companies.
These developments underscore the effects that the industry has on the regional jobs market and, by extension, on the housing market—given that these jobs pay a lot more than those in most fields.
There are major life sciences projects planned or underway from Somerville to Watertown to Somerville again to different parts of Boston, including South Boston, Fort Point, Dorchester, and Allston. What’s more, this major development trend—which really emerged in 2019, with a slew of project filings and formal groundbreakings—shows no signs of abating in the new decade.
That’s because the Boston area has become the national capital of the life sciences industry. A February 2019 report from commercial brokerage CBRE put the region at or near the top of just about every measure of the industry’s health.
The region ranked no. 2 in terms of number of life sciences employees, for instance, behind only the San Francisco Bay Area. It was the second fastest growing in terms of employee count, behind only Seattle. It was the top market for drawing recent grads with life sciences degrees, and the top for funding from the National Institutes of Health (and Massachusetts was tops in venture capital funding).
A report out in January from the nonprofit Massachusetts Biotechnology Education Fund projected that the industry would add 12,000 more jobs by 2024, bringing the total to around nearly 100,000. The report also found that competition was fierce for new hires, with companies often having to spend more than three months filling a position.
“Boston has really become the world leader in life sciences,” said Duncan Gratton, an executive director at Cushman & Wakefield, another commercial brokerage that has researched the industry’s rise. “Not only do you have startups—young companies getting funding and looking for smaller chunks of space—you have global life sciences companies wanting to be here, wanting to expand here.”
The reasons why have a lot to do with the nature of the industry. Its products—mostly medicines, technologies, and devices—often take years to develop and involve a lot of research. The region’s universities, then, are a draw, and so are its hospitals. Both are among the best in the world at what they do.
“There is an ecosystem that exists here that you can’t replicate just anywhere,” Gratton said.
And this southern New England hive in turn produces some seriously sweet honey for its worker bees, a reality that ripples through the Boston region’s housing market.
The average annual salary for a life sciences worker was $123,600 as of early 2019, according to a report from industry research source BioSpace. The average annual bonus was nearly $30,000, and the average annual increase in salary was 5 percent.
For comparison, the average per capita income in Massachusetts is about $71,000, according to the Federal Reserve; and the median household income for Boston proper as of the end of 2018 was about $62,000 and, for Cambridge, about $89,000, according to Census Bureau estimates.
Boston’s having so many well-compensated workers in general—including in technology and financial services—has long been a major reason why the area’s rents and prices are so high compared with much of the rest of the nation’s metros. Boston proper, in fact, has one of the nation’s highest shares of what’s come to be called affluent tenants, those renter households pulling in at least $100,000 a year. Life sciences’ success only sustains this.
The median condo price in Greater Boston as of December was $563,000 and the median single-family price was $599,900, according to the Greater Boston Association of Realtors and real estate research firm the Warren Group. A January report from Realtor.com found that the region’s median downpayment was $76,500, one of the highest in the U.S.
The industry is not as big a driver of prices as the area’s historically low housing supply, but life sciences’ impact on residential real estate is definitely quantifiable because of its heftier salaries, brokers say.
“If I were to guess, I would say that at least 5 percent of the buyer market is a direct result of moving for work in these industries,” April Bradshaw, a broker with Compass, said in an email. She estimated that 60 percent of her total business in 2018 was related to relocations “for biotech, pharma, and startups.”
It doesn’t hurt either that life sciences’ overall prognosis is good in the region. All of that new commercial development in anticipation of growth is Exhibit A. Plus, the industry produces goods that will always be in demand—especially as the number of elderly Americans balloons in the next 15 years.
What might trip up the industry? Those years of research take lots of funding relative to other lines of business. Most of the billions of dollars of VC and NIH money invested in life sciences every year is invested in companies based in Massachusetts or California, according to CBRE.
The funding pipeline, then, is the Achille’s heel of the industry—and of its side effects, including on commercial development and residential real estate in the Boston area.
“If the financing markets slow down,” Gratton said, “the demand for this type of space will slow down for sure.”