By David M. Greenwald
Sacramento, CA – Biocom California’s 2021 California Economic Impact Report has been released, showing just how robust the life sciences industry has been.
“In 2020, the Life Science sector undertook groundbreaking work at an unprecedented pace to lead the fight against the SARS-COV-2 virus. With biotech and pharma leading the pandemic response, the Life Science industry quickly developed diagnostics, therapeutics and vaccines, served as a stabilizing economic force, and retained its role as a major source of innovation,” the report found.
More importantly the industry demonstrated strong and sustained growth across California in 2020 despite the economic disruption and loss of employment experienced by most sectors in the face of the pandemic.
“Job growth slowed, but venture capital surged,” the report found.
Among the key findings, “Total direct employment, including self-employed workers, reached 489,000 in 2020. The sector’s high paying jobs pushed average compensation to $134,000.”
While California’s total employment dropped by 7.4% in 2020, Life Sciences registered a 0.5% job gain.
Including all the multiplier effects of Life Sciences to the California economy, “this industry generated $239 billion in gross state product (GSP) for California and $405 billion in total business sales in 2020. For every $100 in initial sales, the supply chains and consumer spending yielded an additional $85.”
Further, “The inclusion of these multiplier effects means that Life Sciences was responsible for a total of 1.38 million jobs with total earnings (labor income) of $131 billion in 2020.”
The Vanguard has previously reported the high demand for wet lab and other facilities in the Sacramento region.
In December, a Business Journal article found, “Tenant demand outpaces life-sciences construction as sector heads into another robust year.”
CBRE Group Inc. found recently that “life-sciences companies were collectively seeking nearly 23.8 million square feet of new lab space across 12 U.S. markets with a life-sciences hub in the third quarter of this year.”
“Tenant demand for life-sciences space is outpacing supply in 2021, a trend that’ll continue next year as the sector sees billions pumped into it,” the article noted. “Nationally, lab space vacancy is at 4.9%, although several markets are far below that. Boston-Cambridge, Massachusetts’ lab market, for example, has 1.1% vacancy.”
“Life-sciences labs quickly are becoming a highly sought-after property type for both tenants and investors,” said Ian Anderson, CBRE’s Americas head of office research, in a statement. “This intense demand for lab space is the natural result of a global push for new medicines begetting strong funding and hiring in the life-sciences sector.”
Michelle Willard, the Chief Public Affairs Officer for the Greater Sacramento Economic Council, told the Vanguard in January “our life science industry and biotech industries are just booming in Greater Sacramento.
“There’s no shortage of—right now we have 558 life science companies in our region,” Willard pointed out. She noted currently 26 percent of the Greater Sacramento Economic Council’s active business projects are food and ag, bio life sciences, and ag tech.
“I honestly think that number is larger,” she said.
This is a huge market that Davis can tap into—if it takes advantage of it.
“I like to refer to Davis as the front door to the Silicon Valley for the region,” Barry Broome CEO of Greater Sacramento said a few years ago. Davis, he explained, helps to pull other communities along in the minds of Silicon Valley investors.
Economic development, he explained, is “if you do it right, it’s a profitable proposition.”
Holding Davis back is largely a lack of space, said Danielle Casey, then of Greater Sacramento.
“When we work with firms that are looking at coming into the region, they’re looking at expanding, it has already been said in terms of certainty… We have innovative companies that are looking at connecting with Greater Sacramento. I’d say, for the most part, Davis isn’t even considered because they’re going to do a look at a requirement in terms of commercial space availability and they’re just not finding it,” she said.
“They don’t even see it all,” Danielle Casey said. “So you’re not even getting a look to begin with.”
Michelle Willard told the Vanguard earlier this month that there is a huge potential for life sciences in the Sacramento Region and that is still centered around Davis and UC Davis.
As indicated above, she said “our life science industry and biotech industries are just booming in Greater Sacramento.”
Housing costs are also a problem, but as Barry Broome noted back in December, that’s “out of whack everywhere.
“When I look at housing, it’s really not cheap in Phoenix any longer,” he noted. “These cities and these metros where all the opportunity exists is just drawing people—and whether you’re Salt Lake, Denver, Phoenix, your housing market ends up being lopsided.”
He added, “Our community is really doing a good job of building housing right now.”
Broome noted, “From a scientific standpoint, Austin is nowhere near a scientific center the way our region is—with our food, agricultural, biomedical, and veterinarian science expertise.” Though he acknowledged, “Software, you’d probably choose Austin headquarters because of the zero-income tax and the less liability.
“So, it’s really about understanding our market position and how we differentiate it,” he said.
Broome said, “I thought we would see more in food and ag” in the region when he came to Sacramento.
He noted the Food and Ag Center (World Food Center) that Chancellor Katehi was attempting to develop.
“The industry went through a big a transformation in terms of technology and then kind of stalled,” he said.
On the other hand, “When Aggie Square gets operational, I really see that life science center, especially around cell therapies, really exploding here and being a big industry driver.”