Life sciences employment and federal research funding have grown rapidly in the Seattle area since 2019, according to a new report from real estate firm CBRE.
The Seattle area ranked third among metro areas for life sciences employment growth, which increased 25% from 2019 to 2022. R&D employment in the region increased even more rapidly, at 39.3%. Only the San Francisco and Boston areas showed more rapid overall jobs growth in the sector.
Seattle also saw the largest increase of any metro area in funding from the National Institutes of Health from 2019 to 2022. NIH funding increased nearly 30% in the city, reaching about $1.39 billion in 2022. The University of Washington and Fred Hutchinson Cancer Center were the largest recipients of NIH money, at $591.6 million and $473.9 million, respectively.
Venture capital funding in Seattle life sciences for 2022 totaled more than $600 million, down from more than $1 billion in 2021, a record high. R&D space under construction in the Seattle area totals more than 1.6 million square feet, with about one third of that pre-leased.
“Companies in the Puget Sound region are approaching this year with cautious optimism,” Austin Arper, a vice president with CBRE’s Life Sciences practice in Seattle, said in a statement.
“Lingering economic uncertainty will slow real estate decision making for most, but continued NIH funding to our top research organizations will continue to fuel innovation and growth in the sector,” said Arper.
The Seattle-based trade group Life Science Washington also recently released a report on 2022 investment activity, tallying 50 life sciences transactions that raised more than $1.19 billion for the industry in the state. The group’s report captures all transactions up to the IPO stage, and also includes non-venture fund investments, such as NIH backing for companies and early-stage angel investment.
Venture deals for Seattle-based companies in 2022 included $93 million for Bonum Therapeutics, $96 million for Cajal Neuroscience, and $44.4 million for AltPep. Affini-T Therapeutics, which has locations in Seattle and Boston, pulled in $175 million.
The report, “2023 U.S. Life Sciences Outlook,” also assessed national trends.
After the boom years of 2020 and 2021, the overall life sciences industry has returned to a “a more normal pace,” the report concluded.
“Many metrics have receded from their 2020 and 2021 highs, but they’re still above their pre-pandemic levels. There is a lot of promising science in the works to propel this industry forward once the lending environment settles,” said Matt Gardner, CBRE’s Americas Life Sciences Leader, in a statement.
Other takeaways from the report:
- After soaring during the pandemic, venture capital funding is now closer to pre-pandemic levels. The first quarter of 2023 saw a 20% increase in venture capital funding compared to pre-pandemic levels.
- The IPO market has cooled substantially. Total value of IPOs in 2021 exceeded $10 billion, but were barely more than $2 billion in 2022.
- Annual NIH funding increased 62% in the past decade.
- Life sciences company R&D expenditures grew by an estimated 40% over the past five years.
- U.S. life sciences companies had a cumulative $200 billion in cash reserves last year. That amount is less than the previous three years but is higher than 2018.
- Square footage of lab space in the largest 13 U.S. life sciences markets expanded by 47% in the past five years and is expected to increase by 22% within the next two years.
- Layoffs continue in the life sciences industry, with more than 50 companies announcing layoffs in the first two months of 2023, up from the first two months of 2022. But overall, the unemployment rate for biological scientists was low, close to 2%.
- Many potential therapies are making their way through the pipeline. More than 11,500 phase 2 and 3 clinical trials are underway in the U.S., a substantial increase from 2012.
