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I-270 Biotech Corridor: 2021 Year-End Report

25 feb. 2022

The I-270 Life Science Market’s Breakout Year

While already established as a top-5 life science cluster, 2021 will be remembered as the year that the Maryland market took flight. The corridor experienced record setting activity fueled by organic and out of market demand – a direct result of historic levels of public and private sector funding pumping into the life science industry. Accordingly, the market’s existing supply has largely been committed with a vacancy rate of sub-1%; exerting upward pressure on rental rates and catalyzing the next wave of ground-up and adaptive reuse developments.

*Includes new leases, subleases, and user-acquisitions

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I-270 BioTech Corridor

Key Year-End Trends

Voracious Demand
  • 1.5M SF of Activity: 1M SF of net absorption (4X historical avg) plus 516K SF of other activity (sublease/user-acquisition)
  • 2/3 of Activity R&D: Shady Grove remains the preferred location capturing 67% of the nearly 1M SF of leases at market leading rents of $40+ NNN
  • GMP Forthcoming: Over 500K SF completed in 2021 with an additional 1M SF of manufacturing requirements in the market

Constrained Supply
  • Sub-1% Vacancy Rate: less than 80K SF of existing availability along the entire corridor
  • Supply to increase 20%: new institutional capital has entered the market to deliver the needed supply
  • Significant prelease activity: the 2.4M SF of projects that are under construction (equal composition of GMP and R&D) are 32% precommitted

I-270 Breakdown

Existing Supply Vacancy Rate Availability Rate Under Construction / Conversion
Shady Grove 3.8M SF 0.4% 7.9% 868K SF
Gaithersburg 2.9M SF 0.1% 14.7% 495K SF
Frederick 2.2M SF 0.0% 19.9% 842K SF
Parklawn 1.1M SF 5.3% 9.3% 49K SF
Germantown 492K SF 0.0% 15.8% 131K SF
I-270 TOTAL 10.5M SF 0.7% 13.0% 2.4M SF

Notes:
1. Availability Rate includes subleases and projects under construction/conversion slated to deliver in the next 12-24 mos.

2022 Outlook

The momentum from 2021 will carry into the new year as the demand pipeline shows no signs of retreating. There are currently over 450K SF of deals at lease with an additional 1.9M SF of tenants actively seeking space in the market. While the supply pipeline is nearing 1M SF of proposed life science projects, additional ground up development and conversions will be needed to keep pace with demand.    

Capital Markets Update

2021 was a record year for life science investment as investors looked to capitalize on Maryland’s notable leasing fundamentals and supply/demand imbalance. Nearly $500M of transactions were completed with an additional $390M of deals under contract or currently being marketed.

2021 By the Numbers 

I-270 Biotech Corridor Deal Highlights