Beijing Life Sciences Real Estate
May 24, 2022
Operating income of Beijing's pharmaceutical and health industry rose 173% y-o-y in 2021, driven primarily by increased vaccine production. Industry development will also be guided by Beijing’s 14th Five-Year Plan, which will promote life sciences as one of the two main growth engine industries.
This report identifies the factors driving the expansion of Beijing’s life sciences industry, assesses how these trends are impacting the city’s office, business park and logistics market, and lays out optimal strategies for occupiers and investors.:
- The rapid development of Beijing’s pharmaceutical and life sciences industry has underpinned explosive growth in office new leasing demand, with flight-to-quality features well above the overall average, as firms make substantial investment in their workplaces to attract and retain talent.
- Compared to other industries, life sciences companies have more complex requirements for R&D laboratory space and tend to locate their R&D laboratories among life sciences properties in business parks. Beijing has formed three life sciences clusters throughout past 20 years, which are known as Zhongguancun (ZGC) Life Sciences Park, China Bio-medicine Park (CBP) and Beijing Economic-Technological Development Area (BDA).
- Corporate real estate strategy varies among life sciences firms according to their stage of development and corresponding property needs. Each of Beijing’s three life sciences parks has distinct attributes suited to the needs for leasing or owning properties.
- CBRE data show that the total stock of Beijing life sciences property stood at 992,000 sq. m. as of the end of Q1 2022, accounting for 10.7% of overall Beijing business park supply. All properties are in the city’s three life sciences parks. Nearly a quarter of total stock was delivered in 2020, which marked a supply peak. Vacancy was 11.2% in Q1 2022, significantly below the overall business park vacancy rate of 18.9%.
- Build-to-suit is an increasingly popular strategy among large pharmaceutical and biological enterprises in Beijing seeking to house R&D and manufacturing operations. These companies are provided ample space since 2019.
- Compared to general cold storage facilities such as fresh goods units, medical cold storage facilities have higher specifications. Beijing’s medical cold storage facilities are mainly located in the major logistics submarkets of Majuqiao/BDA and Daxing Jingnan, both of which are near BDA and CBP, respectively, and Shunyi Airport Logistic Park. Elsewhere, areas near the recently opened Daxing Airport are set to see the construction of large-size cold storage facilities.
- Amid a rise in life sciences property and cold storage investment both globally and in China’s tier I cities, investable assets in Beijing are attracting attention from foreign and domestic buyers.