Now Life Sciences

The same folks who warned you three years ago that the office sector was headed for a major crisis are now sounding the alarm about life sciences real estate — once thought a particularly safe bet in the commercial real estate landscape. Speaking of office, building values are down — way down — in Los Angeles compared with last year. Other major markets are also struggling.

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— Tom Acitelli, Co-Deputy Editor

Life Sciences Office and Lab Buildings Are Struggling Too: Report

Land & Buildings, the investment management firm that in 2020 raised early alarm bells about the pandemic’s ill effects on the office market, has released a new white paper arguing that attendance at medical office properties is down by 50 percent compared to 2019. Specifically, it analyzed cellphone data from location analytics company Placer.ai to look at attendance across 435 buildings owned by Alexandria Real Estate, one of the largest publicly traded life science landlords in the country. Attendance at Alexandria’s lab and office buildings in New York City was down 60 percent during the period from March 2022 to February 2023, compared to the pre-pandemic era of March 2019 to February 2020. The real estate investment trust’s Seattle properties were down 59 percent in attendance, while Boston and San Francisco saw declines of 56 and 52 percent, respectively.

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Los Angeles Sees Nation’s Steepest Decline in Office Prices: Report

It’s no surprise that Los Angeles’ office market is on the decline, but now we know it’s falling faster than any other major market in the United States. Los Angeles office sale prices in 2023 have dropped 43 percent — from $412 per square foot last year to $237 per square foot through the end of May this year — for the steepest decline in the nation, according to the latest report from Commercial Edge. The drop in value comes despite L.A. recording the largest sales volume in the West, with $1.01 billion in closed office deals year-to-date through May. Nationally, L.A. was only outpaced by Manhattan’s $1.32 billion volume. However, L.A. has recorded 47 percent less trade volume compared to the first five months of 2022.

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