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California Leads in Pharmaceutical-Biotech Construction

Dec 1, 2006 12:00 PM

In the last few years, the trend toward outsourcing has put a serious dent in the U.S. manufacturing construction sector. In general, the market has relied on base-line replacement projects instead of new construction starts. However, current capacity utilization in U.S. manufacturing buildings is near 82%, well above the usual threshold for a surge in capacity investment, says Jim Haughey, chief economist for Reed Construction Data.

“Square footage [growth] has been lackluster, says Robert Murray, vice president, Economic Affairs, McGraw-Hill Construction, New York. “But spending increases.”

In fact, in its 2007 forecast, McGraw-Hill predicts a 14% increase in spending for manufacturing construction. The company estimates that in 2007 more than $12 billion will be spent on construction for manufacturing, compared to $10.7 billion in 2006 and $9.5 billion in 2005.

Of the 400 industries included under the manufacturing umbrella, the pharmaceutical-biotech market may be the best investment for this increase in spending. Currently, there are 78 pharmaceutical-biotech plants, carrying a total investment value (TIV) of $6.3 billion, in various phases of construction throughout North America, says a recent report from Industrial Info Resources, the Sugar Land, Texas-based marketing information service company. These projects, including both research facilities and manufacturing plants, are scheduled for completion through 2009. California boasts eight plants currently under construction. Maryland, Massachusetts, and Texas tied for second with seven plants each. The Mid-Atlantic region held its top spot with 13 plants totaling a TIV of $2.5 billion. The West Coast claims eleven construction sites with a total TIV of $900 million. The Great Lakes region's eight sites carry a total TIV of $568 million.

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