Life Sciences in NYC
The Origin Story
New York City is already a global hub for finance, fashion, theatre, food, and more recently, technology. But thanks to a huge push from Mayor Bloomberg in the early 2000s, New York is now growing into a strong center for life sciences.
In 2005, Bloomberg announced plans to develop a portion of the Bellevue Hospital campus, known as the East River Science Park, into the largest commercial bioscience center in New York City. He hoped this project would attract the world’s leading pharmaceutical and healthcare companies to NYC, generating even more city investment in the sector.
Bloomberg told constituents that “a key component of our economic development strategy has been to diversify New York City's economy and create new jobs… The development of the East River Science Park will help us accomplish that goal by transforming New York City, already a leading center of bioscience research, into one of the nation's primary commercial bioscience clusters as well." The 728,000-square foot, two-tower facility, now called the Alexandria Center for Life Science, put New York on the map for life sciences, and today, we continue to invest heavily in this sector.
What can other companies learn from the way these tenants are approaching real estate, and what do service providers need to understand provide the best solutions for these new clients?
Investors in Life Sciences
The first step to pursuing work in the Life Sciences sector is to understand the various players in the scene. Growing this new industry requires a combination of public investment from groups like NYCEDC and private development companies providing resources to meet the basic needs of the science community.
In December of 2016, Mayor de Blasio announced a $500-million life science initiative and Governor Cuomo a $650-million push into biotech incentives. Yasmeen Ahmed Pattie, Principal at East Egg Project Management, says that “while the growth of the sector after Alexandria happened in fits and starts, these initiatives sparked a steady stream of development.” Carlo Yuvienco, Vice President of Life Sciences at NYCEDC, explains that the quasi-governmental non-profit corporation “exists to [align] with the City’s goals for economic growth, predominantly through real estate development but also through programmatic initiatives like LifeSciNYC.”
At the same time, small groups of entrepreneurs with big life sciences ideas are mostly getting direct investments from major pharmaceutical companies and venture capitalists. When these budding companies close their funding, they will need actual lab and office space to develop their concepts and go-to market strategies.
Additionally, universities such as the Weill Cornell Center for Medicine are investing in the expansions of their life science facilities to welcome more students who want to enter this popular field. As Head of Real Estate for Weill, Christina DeRose oversees three million square feet of space.
Enter the real estate developers such as Taconic, who are tasked with pioneering the design and construction the actual facilities that will attract all of these blossoming biotech companies and their investors and help keep them here in NYC.
What’s Driving Real Estate Decisions for Life Sciences Companies?
Matt Weir, Senior Vice President of Commercial Asset Management of Taconic, saw the potential for NYC to attract this type of development after being approach the NY Stem Cell.
“With respect to life sciences, it began with robust demand drivers and institutions and foundations that are here already… ultimately, as we’ve done with other sectors in the past, we saw the [real estate] challenge; we understood the real estate specific components and our goal was to create solutions… the NY Stem Cell Foundation came to us about one of our buildings… and we learned that our building was well suited for it when you look at feasibility: zoning, ceiling heights, ability to put an enormous amount of infrastructure on the roof, bring the verticals down to the floors.”
Another made-in-NYC life science story is the tale of the New York Blood Center. Ken Schoenfelder, the organization’s Director of Real Estate, has overseen major growth at the organization and is currently looking for another 595,000 square feet for his research facility.
Just like the standard corporate office client, the life science innovators want to use their real estate assets as a tool for attracting and retaining talent and for promoting creativity and driving a positive employee experience. Schoenfelder revealed that “to attract scientists and expand our role as an accelerator, we really need a new facility.”
To that end, Schoenfelder revealed their current real estate project drivers:
- Their current building is outdated, was built in 1930s as a trade school, then converted in 1960s to a state-of-the-art facility that is now outdated again
- The new facility needs to be designed with a space to sublease to smaller tenants who share equipment and facilities, acting as a marketplace where ideas and information can be currency
- Companies are looking for a great location in proximity to academic, for-profits, and startups
DeRose also gets specific on how medical centers like Weill use their real estate to attract top students, doctors, and professors, as well as get the attention of big pharmaceutical companies. “Big pharma funds a lot of research and professors start their own ventures, so relationships between these three [pharmaceutical giants, professors and academia, and venture capitalists] are important…we like to create a sort of cluster for all types of researchers to come together in a shared space so no one feels like they’re banished out of the main hub off to Siberia.”
Designing and Building for Life Sciences
Bill Harvey, Managing Director at Newmark with an expertise in helping Life Sciences tenants, explains “there’s a tendency to think of life sciences as monolithic, but in truth, there’s a lot of different types of space.” Harvey says only about 50% of buildings are pure lab, as “scientists still have a need for offices, for conference rooms.” Additional space can be allocated for various work modes from biology and chemistry labs with fume hoods and venting to the business centers for incubators and accelerators.
Life sciences organizations seem to value collaboration with their peers even from other companies. These tenants are drawn to a mix-use ecosystem where a range of innovative entrepreneurs can work together under the same roof while having their own corner to retreat to for heads-down focus time. Echoing DeRose’s point from earlier, big pharma, small start-ups, and the investors themselves like to be near each other.
Taconic is now developing the popular “plug-and-play” setup for small entrepreneurs to lease a small square footage that is already built out with these amenities, like Schoenfelder will be doing in his upgraded facility. Weir explains that Taconic is building out significant square feet of “graduation labs or step-up labs” where early stage and venture-backed companies can grow their business. Big pharmaceutical companies will want to be in close proximity to these startups to stay updated on their potential investment pipeline and what looks most promising. “We have a vision where we’re seeking to create space for the whole cross-section.”
Especially in the academic world, DeRose explains, “the quality of laboratory and the clustering really does matter to them.” She is often asked “who else is in the building?”
Supply & Demand
Harvey is tracking an additional 1.5 million square feet of life science space to be delivered in 2021 and says that the incubators will drive demand in NYC. While incubators only require a small footprint of space, it is the companies coming out of them who will need significant real estate assets.
Harvey explains that there is a real whole in the market for those companies graduating out of incubators once they hit around 30 employees. These companies typically need around 10,000 square feet, which becomes a challenge in the NYC real estate landscape, which is why companies like Taconic can be viewed as leading pioneers in the world of life science development.
Echoing the ecosystem trend that Weir, Schoenfelder, and DeRose are all trying to achieve, there is a strong need to attract various types of life sciences companies under one roof and build collaborative environments.
Ahmed Pattie is “gratified to see that the momentum has gotten so much stronger, and there’s so much activity.”