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Jeff Cranmer:The US life sciences industry is at an inflection point. Hiring is on the rise, capital markets are loosening, and the pool of available talent is broadening to more locations, so says a report from CBRE, this month's sponsor of the BioCentury This Week podcast. Today, we have a special edition of BioCentury This Week focused on life sciences talent trends and how those trends are driving property demand. My co-host and fellow executive editor, Selina Koch, and I are very pleased to be joined by Ian Anderson. He's Senior Director, Head of US Life Sciences and Healthcare Research at CBRE. First off, Ian, welcome to the show
Ian Anderson:Thank you very much for having me. It's great to be here
Jeff Cranmer:Excellent. I gotta ask, this tripped me up. maybe it's obvious to other people, but CBRE is a commercial real estate services company, but we're here to talk about life sciences talent. Indeed, your team has just released a report on life sciences talent trends. Square the circle for me
Ian Anderson:Yes, you're, you're right. probably worthy of some clarification. So CBRE is one of the world's, if-- it is actually the world's largest commercial real estate services provider. It does a myriad number of things in the built environment, too many to name here. But one of the main jobs we have is to find optimal and ideal spaces or properties for companies, and more appropriate here, life sciences companies. So that could be a uh research and development lab, a wet laboratory in Kendall Square. It could be a downtown office space in uh Los Angeles, or it could be a manufacturing operation in Pennsylvania or Texas. So we find those locations, we find those properties, we find those spaces for our clients. It's one of the main things we do. However, those spaces are really only as good as the people that occupy them. They are the most important component. And so those spaces don't work particularly well if the companies can't find the right talent to occupy them, they can't recruit the right people, or in some cases, they can't get people to come to work. So as a result we focus a lot of our research, like this report, ensure our clients and our professionals are as educated as possible in knowing the trends in life sciences talent not only nationally on more of a macro level, but also looking on a metropolitan area level how talent uh or the life sciences industry and talent is trending in Boston versus San Francisco, where have you. But also then when we get, we get much more micro too. And so when you wanna find a location in Boston or the Bay Area, where's the best location you, you want to, to be, whether it's Peninsula or East Bay or what have you, depending on the
Jeff Cranmer:Peninsula. Always the peninsula, people. Always the peninsula. I'm sorry, I'm the home team for uh the peninsula. Selina, of course,
Selina Koch:City. Gotta go for the
Jeff Cranmer:City or Dogpatch. Uh,
Selina Koch:South San Francisco, you know
Jeff Cranmer:Yeah, if you had bought in Dogpatch 20 years ago, man, you'd be uh you'd be loving life right now with UCSF there. Um, so Ian, this report just out last month, I'll drop a link in the show notes for those curious. Let's talk methodology. Anything we need to know about the methodology you used for the report?
Ian Anderson:you know, I think really the main things maybe that are needed is that most of it is data from the US Bureau of Labor Statistics at least most of the employment or the talent data we, we rely on. There's also some venture capital funding data that's from private sources. And then we do do a ranking of all the markets in the United States where we feel are-- that, offer the most ideal or optimal talent pools for companies to locate in. And so that is a combination of public sources that we use in terms of employment trends like US Bureau of Labor Statistics. but it also requires our subjective judgment to weight certain factors depending on how we feel would ultimately provides an optimal talent pool
Selina Koch:So that-- did that show up in your um report as that R&D talent score?
Ian Anderson:It is, yeah
Selina Koch:Okay. Yeah, I was curious about that, if it's how we should think about that when we look at the report. For example there's recent… So when you looked region by region, in some regions there's-- in some of the major markets, there was still kind of shrinking employment. does that-- those very recent data factor into the overall talent score or should we think of it a little bit more as like a lagging indicator
Ian Anderson:Yeah, you're right. You're right. So obviously you've y-y-you know what you're doing with the data here 'cause you're asking those questions perhaps, or you're asking some good questions. So our ranking of these markets does not take into account the monthly, quarterly and really not annual changes in life sciences industry employment. What it does track or it-- most of its basis is on are key professions that drive research and development in the life sciences industry. It's a report that the US Bureau of Labor Statistics creates every year. And, it's a moment in time and, and it only tracks people with certain occupations. We've identified those occupations. It's not good at looking at an historical time series, this data we get, but it'll identify how many bioengineers are in the Bay Area or in Boston how many biological technicians, how many chemists and so on. Long story short, it is not based on kind of the ebbs and flows of industry employment. It's based upon people who have certain occupations each year in these markets. But it's also, just to take this another step, if you will, it's also based on people graduating. This is annual data, people graduating with degrees that we would characterize with life sciences expertise. So these are rather slow-moving data points on why we only create this report once a year
Jeff Cranmer:All right. Well thanks for that, Ian. Let's dig in here. One of the top trends, which honestly surprised me, but in a good way, is that the biopharma life sciences labor market is turning a corner. Hiring's picking up. Biotech, as we know dearly here on the BioCentury This Week podcast, spent years wrestling with the bear market. So when did the page start to turn?
Ian Anderson:So let me backtrack very quickly. You're right. So our rankings don't take into account some of these, again, as I said, these monthly or quarterly changes in industry employment, right? But it's obviously important because this measures how quickly the, the industry is expanding or contracting. I'm kinda lucky to be able to report on this because it's just started to, I would say, really clearly change just in twenty twenty-six. However, we started to see the page start to turn in 2024 when we saw industry in pharmaceutical and medicine manufacturing start to tick up in twenty twenty-four. That was the first signal we started to see that things were turning around. Then in twenty twenty-five, we started to see a shift in people employed in testing medical and diagnostic laboratories in the United States. That started to turn around. And then in twenty twenty-six, we've really started to see a very discernible uptick in people employed in biotechnology research and development.
Selina Koch:So it sounds like it's sort- been sort of a gradual turnaround led by different sub-sectors, starting with the manufacturing and eventually now maybe seeing some increases in actual like biotech R&D, which is very
Ian Anderson:Yeah, biotech has definitely started to turn around. So we had this two-year period from November of twenty twenty-three through November of twenty twenty-five, where if you looked at average job growth in the biotech industry, on average, it was actually declining at a negative zero point five percent rate. That's a year-over-year rate. But in twenty twenty-six so far, that average, the biotech industry or employment in the biotech industry is growing at about two point one percent on average. So definitely a big turnaround. If I could, I would pull up a chart, or you'd have to look at the-- look in the report, but you can see these, these column charts, and you can just see it declining and being flat for a couple of years. And then all of a sudden in twenty twenty-six, there was a s-significant uptick. And so for a company like CBRE, for us tracking that, we now have two of the major sub-industries in life sciences, that's biotech and pharma and medicine uh pharmaceutical and medicine manufacturing, both of those ticking into gear, growing jobs. And so ultimately, there's a lag. Ultimately, that means that there's gonna be more demand for space for laboratories and so forth
Jeff Cranmer:Ian, your report shows some of the more favorable life sciences employment growth is happening outside of the three big hubs, Boston, San Francisco, San Diego. where, where are you seeing this growth?
Ian Anderson:Yeah. So when we look at the life sciences uh industry employment on a metropolitan level basis that data lags a little bit further. The latest we can get that is for calendar year twenty twenty-five. But the data just came out about two months ago. When we look at that, it was very surprising to me that some of the lesser known hubs or celebrated hubs in the life sciences industry perhaps are doing better than what we'd call the big three, which would be Boston, San Francisco and San Diego. So for example Chicago had some of the fastest growth in the life sciences industry between twenty twenty-four and twenty twenty-five. New York City, New York City region, we define that mostly uh the northern suburbs of New York, Long Island and the city, we don't include New Jersey in that. But you've got Chicago, New York, Los Angeles and Philadelphia leading the pack in terms of employment growth. And on the other hand, those that are continuing to decline unfortunately the Bay Area, Boston notably and then a couple of others. Maybe not surprisingly, Washington and Baltimore declined in its employment, but obviously that-- some of that's been affected by federal government contraction. But obviously NIH NIH cuts there. Uh, another one that kind of surprised me was uh the Raleigh-Durham metropolitan area actually saw a decline in employment in biotech and pharmaceutical and medicine manufacturing between twenty twenty-four and twenty twenty-five. So that's a little counterintuitive to most because obviously there's so much momentum there. Most of it is on the manufacturing side. My assumption is, is that a lot of those announcements have not turned into a discernible actually job hiring that is then showing up in the data for the Bureau of Labor Statistics
Jeff Cranmer:And how's Houston faring?
Ian Anderson:well, Houston, Houston's probably middle of the pack. if you look at um total life sciences employment, Houston's done better than most. the thing about Houston is it has a very small R&D sector. in it, it's mostly more manufacturing. Some of its employment benefits from just the fact that it's a very high growth metropolitan area. Generally speaking, yeah, it's either on average or ahead of the pack
Selina Koch:Yeah, this is one where I think the text of the reports, it's something like Houston having a record year in 2025 for employment, which is great. But then a slight decline in growth, you know, recently. so that just makes me wonder, is it like, what can we glean from that disconnect? Is it kind of a normal pullback after a peak, just fluctuation, or is there a sense in which the growth is not on a happening on a durable base?
Ian Anderson:You're mentioning-- You're talking about Houston right now?
Selina Koch:Houston, yeah.
Ian Anderson:Well, there's a couple things there. I'm gonna probably get in the, the weeds maybe a little bit too much here, but we have a definition of total life sciences employment we use, and that actually, part of that is beyond just biotech R&D jobs. It's all R&D jobs in the physical and life sciences industry. And so that, that begins to take into account other industries. It goes a little bit beyond the life sciences industry. What we found in our research is, is that some of the R&D cuts by the government is affecting markets who have a higher proportion of people in that industry set. So one thing we focus on in the report is we focus on something we called core life sciences employment, so that's just biotech and pharmaceutical. So we focus on that a little bit more. So it-- we avoid some of the noise with some of the other federal governing-- government cuts that are affecting the larger R&D industry
Selina Koch:While looking at this sort of patchwork of regional data another kind of disconnect I noticed was between New York City and New Jersey. How do we think about that?
Ian Anderson:Yeah. there's a couple things there. One is, is that the, the outperformance by New York City, it, it is not happening in the city itself. So it's not happening in the five boroughs. It is happening in Westchester County and some of the northern suburbs like Duchess County, which we include in that definition of New York City as a market, and it's happening in Long Island. But it's not happening in the city itself. And you also notice in these markets that have done a little bit better in terms of core life sciences employment in twenty twenty-five and that are continually growing these are not your your heavy biotech R&D markets as much, and those that were flooded with capital during the boom in twenty twenty-one, for example. These are markets uh more diversified and historically have more of a pharmaceutical, foundation to their life sciences employment. So, you know, these are the historical centers of, the pharmaceutical industry, obviously Chicago New York little bit of New Jersey and um and Philadelphia too at the head there
Jeff Cranmer:Let's turn to uh the capital markets. Uh, how is the money affecting these trends, and what do the capital markets say about what's to come?
Ian Anderson:Yeah, that's one thing we do in our research is, is that everyone wants to know. We sh- we share with them the data, the current performance, how these markets are ebbing and flowing. of course, the next question is, is what's next? Where do we go from here? So in many cases, what we do is we follow the money. And through our research over the last several years there is a, a notable leading indicator in not only the XBI but also and, and as we show in our report venture capital funding to the life sciences industry. I mean, it's, it's very rough, but generally speaking, about nine to 18 months after which we see changes in life sciences venture capital funding, do we see a change in em- uh, a subsequent change in employment. so we've started to see life sciences venture capital funding start to tick u-up. Certainly not a boom so far, it has we'd say turned the corner. It's increasing again. And so, the safe statement is, is that we're gonna continue to see life sciences employment ever so slightly increase and improve. but I will tell you, I just pulled the latest venture capital funding data to the life sciences industry through the end of June. That venture capital funding is up thirty-three percent. if you tally it for the first half of this year, it's up thirty-three percent this year versus the first half of twenty twenty-five. So things appear to be moving in the right direction. And maybe I don't need to tell some of the-- your, your listeners, but obviously the XBI matched, may have even broken, I'm not sure precisely its record for twenty twenty-one. IPOs are trending the right way, M&A. So there's a whole host of indicators that seem to suggest that life sciences employment is gonna get better
Selina Koch:Can we talk a little bit about how those variables relate to another one we haven't discussed yet, which is lab space vacancies? Because I think if I, if I remember this right, what I saw in your report is that pr- there was a pretty sharp decrease even, maybe even a record low high, I guess, in vacancies um, quite recently, even though the hiring is ticking up. So what do you think? Are people still operating as leanly as they can, or is that just gonna follow even later? How do you think about that?
Ian Anderson:sure. Yeah, yeah. So uh you know, one thing uh you know, as an aside is that I report I provide this research and I present it to many of our professionals in the commercial real estate industry, investors, owners of these properties, in many cases it falls on deaf ears. It's good news, it's wanted to hear, but a lot of this has not transpired into a substantial change into what is a very overbuilt life sciences laboratory sector. We've seen just a slight stabilization in vacancy of lab space around the United States, but it is still arguably as high as it has ever been. It's absolutely the highest it's ever been for all the records we have going back. But it's gonna take some time for those good trends to just translate into making an impact for many of these people who, who own this lab space. So a vacancy is still gonna be abundant for a little while here.
Selina Koch:Okay. And this one's not, not in the scope of your report so I'm not sure w-what you'll say about it, but how does uh trends in AI and automation relate to how lab space is going to be used in the future?
Ian Anderson:That's uh obviously a billion-dollar question. What I can tell you is, is that a couple things. One, we have not seen a discernible impact from AI on lab use. And that's generally speaking. That's looking at data across the country. That's tracking markets from Boston to the Bay Area to San Diego, so on and so forth. It could be a little bit different in the Bay Area versus, let's say, Raleigh-Durham or Philadelphia or something. But on average, we really have not yet seen a discernible impact from AI on this.
Selina Koch:Interesting. So you had a, a one metric in there that was, I think, space per employee maybe, and that seemed to drop quite steeply recently. Do you think that could be a factor there?
Ian Anderson:It absolutely could. It absolutely could. It, it-- and we can speculate on it. so what you're referring to is that, you know, what we saw in the, in the boom we just saw companies taking lots of excess space. As we can imagine, many had perhaps unrealistic expectations for growth, overly optimistic, so they took a lot of excess space. And you could see according to our research that the amount of space per life sciences employee in the United States just started to shoot up decisively. And that peaked around twenty twenty-two as the tide turned on the industry. And since then, what's happened is, is that companies have started to get rid of that excess space. They've started to sublease it to other companies. They've started to downsize, right-size. That's most of the story. But as for AI affecting it, it's possible, certainly could be a factor. But when I look at actual leases signed by life sciences companies around the United States, there's no significant shift that those leases are getting smaller
Selina Koch:Good news
Jeff Cranmer:Ian, another thing you're watching is emerging talent, where folks are studying life sciences at US colleges, universities, what they're studying, where they're studying. what have you found?
Ian Anderson:Well, there's a couple things. First off uh the bad news is, is that there are less students focusing on life sciences disciplines in the latest academic data, which is the academic year ending twenty twenty-four. So we have seen over several years, and there's only so far I went back in the data, but the trend over many years, at least the past decade, is an increasing number of students focused on degrees again, we can use, say, generally with life sciences expertise. Generally speaking, that's degrees in biological and biomedical sciences. But that's steadily been increasing for many years. The latest data shows that the-- for the first time in many years, the number of students actually declined. And it wasn't just the numbers, th-this wasn't just demographics. If you look at all degrees in the United States, there is a less lower share of people focusing on degrees with life sciences expertise. So that's kind of the, the bad news. if you peel back the layers of the onion, you, and you look at some of the degrees people are studying with a couple things have happened. One, it seems to be that people are a little less interested in biology ever so slightly in some of the biological sciences. And you can see a, you can see a shift towards pharmaceutical sciences and more clearly towards bioinformat-informatics and biomath, and probably some of those degrees that are more appropriate for the AI revolution. so that's, that's one thing you see. Another thing we've noticed too is that, you know, we get back to these, these secondary markets that have been doing better in terms of life sciences employment. We're also seeing that more graduates with life sciences experience are coming from colleges outside of Boston, San Francisco, and San Diego. One piece of research we did was we went back and we looked at twenty twenty twelve, and we looked at the number of PhDs graduating with life sciences expertise. And out of the top fifty schools graduating these PhDs, about ten%, nine point six percent were graduating from schools out of uh the Bay Area, Boston, or San Diego. When we look at the latest data, it's not a huge shift, but the latest data shows only eight point four percent of those PhDs were coming from colleges or universities in those top three markets. Long story short is we see this, this broadening of the pie where life sciences talent is not only growing, but where it's emerging from. And more of that talent, ever so slightly, is coming a little bit less out of colleges in, again, the Bay Area, Boston, and San Diego, and it's coming out of places like Chicago, New York, Philadelphia. And even beyond that, it's coming from places like Gainesville or Ann Arbor,
Jeff Cranmer:Yeah, I did see, I did see Gainesville on there.
Ian Anderson:Yeah
Jeff Cranmer:U of F. All right. Well let's wrap things up with a ranking. Again, we're speaking to Ian Anderson of CBRE. everybody loves rankings. I particularly do. I know you have yours, Ian, for optimal pools of existing and emerging life sciences talent. Now, I'm kind of gonna guess Boston, San Francisco are near the top. Are there any surprises in the list? How did the ranking shake out?
Ian Anderson:Yeah So there's a couple things, just as a quick, backdrop to the way we rank this. So we rank these markets, these optimal talent pools for life sciences for the life sciences industry, based upon the volume. Okay? The number of people with certain life sciences professions, where they are. The number of graduates with life sciences expertise coming out of colleges, universities. We also track the density or the concentration in these different markets. So yeah, as you said, in our rankings, this is the fifth time we've done this report, and again, leading the pack, not-- maybe not surprisingly, are Boston and San Francisco. I have to say that every year I-- when I look at the data it is really shocking the… Not only the number of some of these key occupations, but the density that come out of Boston which obviously gives it this number one ranking. for example I think it's bioengineers. The number of bioengineers, biological technicians in Boston when you compare it to other markets around the United States, it's just-- it's almost jarring to see how many they have and how dense they are in that market. But, so yeah, Boston and San Francisco at the top. What I think is a little unusual to people when they see this ranking are some of the other markets that are ranked very highly. So the Washington-Baltimore region New York-New Jersey Los Angeles-Orange County, and maybe Philadelphia. All those markets are ranked above San Diego. So people ask like, "How does that happen?" And it actually, it happens just due to the pure numbers, sheer numbers of people with life sciences occupations or graduates with life sciences expertise coming out of LA, New York Philly, for example. So, and that helps give those markets a bit of an edge. And so, you know, when we mention to our clients and where they need to access talent to grow their businesses, I mean, I-- what we say is you just can't overlook the, the sheer numbers coming out of those markets. I mean, we know, you know, you wanna go to San Diego or the Bay Area or, or Boston. But if you are overlooking the people that are coming out of uh what have you, Penn, UCLA Columbia or some of the existing talent, you may be overlooking that. Last thing I'll just say is some of the surprises. A lot of that stays fairly static each year. I mean, the data doesn't change significantly. But we do see these up-and-comers in the data. A couple of them. First Madison, Wisconsin continues to impress us you know, it's not a huge metropolitan area, but its concentration of certain life sciences researchers there. Dallas is another one. Salt Lake City is one with considerable momentum Pittsburgh as well, and then Miami-Fort Lauderdale, which isn't on-- probably on the, on the radar of, of many. But Miami not only shows up perhaps, a surprising number of emerging talent graduates, but existing talent as well. And they've also had a considerable amount of investment over the past year or two, venture capital investment into that region too, which might cause that sector there to grow even further
Selina Koch:Salt Lake City one is interesting. I kind of wonder if um having a kind of cutting-edge AI company Recursion there as a local acts as like a catalyst or if there's some other bigger factors
Ian Anderson:Well, there, there's uh there's a couple things there. I mean, yeah, I mean, you know, some of these Western metros I know I'm using that term a little loo-loosely, but obviously have a heavier tech presence. The med tech industry is stronger there too. But also although it is a bit of a jump, but historically, at least during the boom there was some overflow of Salt Lake City being a, somewhat of a more favorable alternative to the Bay Area too
Jeff Cranmer:Hmm.
Selina Koch:We should give a shout-out to Seattle, Jeff. it's just behind San Diego in the rankings. I don't know if that surprises anybody, but we recently held, or BioCentury held a Grand Rounds conference there, which the point of that conference is to focus at the academia industry interface. So University of Washington, Allen Institute, lots of talent in Seattle
Jeff Cranmer:Yeah. And next year we're going to Houston
Selina Koch:We're going to Houston, also in the rankings
Ian Anderson:Yeah
Jeff Cranmer:sounds great. Well, we've been speaking with Ian Anderson, Senior Director, Head of US Life Sciences and Healthcare Research at CBRE, the commercial real estate services company, and this month's sponsor of BioCentury This Week podcast. Ian, thanks for joining us
Ian Anderson:Thank you very much for having me. Great speaking with you
Jeff Cranmer:Excellent. And we'll be back next week on the BioCentury This Week podcast
Voice Talent:BioCentury would like to thank CBER for supporting the BioCentury This Week podcast. To learn more about how CBER's unmatched expertise, resources, and connections empower life sciences companies, visit cber.com/lifesciences