Life Sciences 2020: The Future is Here

LIFE SCIENCES 2020: THE FUTURE IS HERE

CONTENTS

EXECUTIVE SUMMARY 3

MARKET- BY-MARKET ANALYSIS 14

BALTIMORE 16

BOSTON 18

CHICAGO 20

MONTREAL 22

NEW JERSEY 24

NEW YORK CITY 26

OAKLAND / EAST BAY 28

PHILADELPHIA 30

RESEARCH TRIANGLE, NC 32

SAN FRANCISCO & PENINSULA 36

SAN DIEGO 34

SEATTLE 38

TORONTO 40

WASHINGTON D.C. METRO 42

APPENDIX 44

2 / CUSHMAN & WAKEFIELD

EXECUTIVE SUMMARY

The promise of the gene is being realized right before our eyes. In 1952, James Watson and Francis Crick discovered the chemical structure of DNA. More than six decades later, the life sciences industry has changed our world in fundamental ways. Several engines make up the life sciences— biotechnology, pharmaceuticals, biomedical devices, genetics and genomics, and R&D, among others—and as each of these engines has fired up, they have boosted demand for lab space in key markets across the United States and Canada. Key Takeaways • Rapid technological advances and surging demand from an aging population are creating a positive environment for life sciences growth. • Over the next decade, demand for lab space is expected to rise as employment in this industry surges. • The upward trend in occupancy will tend to give this sector a degree of recession resistance, although, as always, conditions in individual markets can vary depending on supply.

/ 3

The Demographic Engine

generation accounted for 49% of the population aged 65 and over. In 2011, the oldest baby boomers reached traditional retirement age, 65, and their numbers are rising daily. Currently, there are 52.4 million people aged 65 or older in the U.S., and an estimated 10,000 people reach 65 every day. 2 By 2030 the number of people 65 and over is projected to exceed 73 million, accounting for 21% of the population. Baby Boomers spend more on healthcare and demand more health services than any other age group. 3 As the population ages, the potential market for new treatments, drugs and equipment will continue to grow.

The demand for health care is booming as the U.S. population continues to age. In 2005 the median age in the U.S. was 36.2 years; by 2018 it had risen to 38.2. By 2030 the median age is projected to top 40 for the first time; 1 making more than half of the U.S. population over age 40. The baby boom generation—those born 1946 and 1964—has shifted from being the dominant age group in the workforce to being the largest group of retirees As of 2018, the baby boom

U.S. POPULATION 65 AND OLDER

Forecast

73

0 10 20 30 40 50 60 70 80

1940-2010 +2.2% per year 2010-2030 +3.0% per year

52

Source: U.S. Census Bureau Millions of Persons 4 / CUSHMAN & WAKEFIELD

1 U.S. Census Bureau 2 U.S. Census Bureau 3 https://meps.ahrq.gov/mepsweb/ Agency for Healthcare Research and Quality

The Technology Engine…Innovations Driving the Life Sciences Market The explosion in demand for life sciences space has been driven in part by technological innovations that have increased consumer and market demand. At the forefront of these innovations are genetics-related developments that have spurred the following: • Direct-to-consumer ancestry and genetic testing market • Cell and gene therapies that are improving patient drug therapy customization

• The emerging utilization of artificial intelligence in the life sciences industry, which has promising implications including significant improvements in diagnostics These innovations are forecast to maintain their momentum with double digit growth in global market capitalization in the next five years. The result is expected to be robust growth in the demand for space as the need for R&D space, diagnostics centers and healthcare facilities escalates. For example, in key research centers like Cambridge, MA the vacancy rate has fallen to near zero.

FORECAST CAGR (2019-2026)

FORECAST MARKET CAP (2019-2026)

SECTOR

MARKET CAP (2018)

Genomics

$15.9B

18.7%

$62.6B

Cell and Gene Therapy $1.1B

36.5%

$11.0B

Gene Editing

$3.8B

14.8%

$10.1B

Source: Fortune Business Insights, Bis Research, Reports and Data

/ 5

Genomics As of year-end 2018, the North American genomics market was valued at nearly $7.0 billion, with the U.S. accounting for that majority 4 . Direct-to-customer genomic and ancestry services have been a fast-growing subsector with companies such as 23andMe and ancestry.com leading the way. The personalization of care resulting from genomic information is also growing. Stanford Healthcare’s Clinical Genomics Program utilizes genomic information to develop tailored treatments for patients suffering from chronic illness. Cell and Gene Therapy The North American cell and gene therapy market—also dominated by the U.S.—holds the largest global market share of the sector and is forecast to grow 33.8% at a compound annual growth rate, (CAGR) through 2026. While gene therapy is not available for widespread use yet, current research could have an immense payoff in terms of new treatments. Clinical trials have yielded some promising results in oncology, and the U.S. Food and Drug Administration (FDA) has approved the sale of a limited number of gene therapy products.

Gene Editing Gene-based therapies aim to treat disease by adding, removing or altering genetic material at the DNA level. Applications of these technologies are not limited to human disease; they can also be utilized in agriculture to improve the food supply, and in animal genetic engineering. These include CRISPR and CAR-T-Cell Therapy. Artificial Intelligence (AI) in Life Sciences Artificial intelligence (AI) is captivating markets around the world and its applications in various sectors are poised to disrupt and transform. From accelerating drug development to transforming diagnostics, AI technology is primed to speed up the pace of life sciences innovations, which are already running at a breakneck pace. While gene therapy is not available for widespread use yet, current research could have an immense payoff in terms of new treatments.

4 Fortune Business Insights

6 / CUSHMAN & WAKEFIELD

The Capital Engine All this research requires capital. Biotechnology is the most research- intensive industry in the economy with research and development spending accounting for approximately 25.7% of total life sciences industry revenue. The pharmaceuticals industry ranks third, with R&D representing 15.5% of revenue in 2018. 5 There are three major sources of capital driving R&D in the life sciences sector. All have grown rapidly in the current cycle enabling life sciences companies to expand. The National Institutes of Health (NIH) Government research grants are the primary source of funding for academics and medical practitioners. The grants tend to be concentrated in major medical research institutes, primarily hospitals and major universities. In 2018 the NIH made $28.1 billion in research grants and over the latest five years a total of $124 billion in grants were made. The 10 cities receiving the largest grant awards over the last five years were:

(A list of the top 30 cities and top grant- receiving institutions can be found in the appendix).

TOTAL U.S. NIH FUNDING OVER TIME

$30,000

$25,000

$20,000

Average Annual Growth Rate: 1995-2018:

$15,000

Millions

$10,000

$5,000

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

1

Source: U.S. National Institutes of Health

2

Venture Capital While NIH funding focuses on research, venture capital funding focuses on commercialization. As life sciences technology has advanced, venture capital investment in the life sciences industry has exploded—from a total of $3.7 billion in 2008 to $17.4 billion through the end of 2019. TOTAL U.S. LIFE SCIENCES VENTURE CAPITAL FUNDING

CITY

RESEARCH GRANTS

$3,000 $6,000 $9,000 $12,000 $15,000 $18,000 $21,000

BOSTON

$9.36B

Average Annual Growth Rate 2008-2019: 14.2% 2014-2019: 9.5% 5. 14.7

NEW YORK $7.45B PHILADELPHIA $4.47B SEATTLE $4.47B BALTIMORE $4.22B SAN DIEGO $3.75B LOS ANGELES $3.55B SAN FRANCISCO $3.43B CHICAGO $3.16B PITTSBURGH $2.73B

Millions

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Source: Pitchbook

5 PwC Innovation 1000 report

/ 7

In 2018, R&D spending in the

3

Corporate Research and Development Spending The biggest source of funding for the life sciences sector (but most difficult to track) is R&D spending by corporations, largely pharmaceutical companies. In 2018, R&D spending in the pharmaceuticals and life sciences industries totaled $154.5 billion, up from $148.7 billion in 2017 and a 40.0% increase since 2012. GLOBAL CORPORATE R&D SPEND: PHARMA, BIOTECH, LIFE SCIENCES

pharmaceuticals and life sciences industries totaled $154.5 billion, up from $148.7 billion in 2017 and a 40.0% increase since 2012.

110 120 130 140 150 160

Average Annual Growth Rate 2012-2019: 5.8% 2014-2017: 8.3%

Billions

2012 2013 2014 2015 2016 2017 2018

Source: Strategy&, PwC

Together, these three sources of capital invested an estimated $125 billion in 2018. TOTAL LIFE SCIENCES RESEARCH CAPITAL BY SOURCE

$0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000

Millions

2012 2013 2014 2015 2016 2017 2018 VC NIH Biopharma R&D

Source: Cushman & Wakefield Research

As capital has flowed into life sciences, employment has increased, leading to greater demand for lab and office space.

8 / CUSHMAN & WAKEFIELD

The Employment Engine

Follow the money, follow the research and you find the jobs. Employment in life sciences 6 totaled 204,800 in 2019. The 11 metropolitan areas covered in this report captured approximately 138,000 of these jobs, or 67% of all the life sciences jobs in the nation. LIFE SCIENCES EMPLOYMENT BY CITY

With rising investment in the life sciences has come rapid growth in the number of jobs in the sector. From 1990 to 2010 employment in life sciences grew only slightly faster than in the U.S. as a whole, rising 1.0% per year (compared to 0.9% for the U.S.) However, since the end of 2013, employment in the biotechnology research and development industry has exploded, increasing by more than 70,000 jobs or roughly 7.5% per year.

10,000 20,000 30,000 40,000

LIFE SCIENCES EMPLOYMENT

115 135 155 175 195 215

Number of Jobs 0

Seattle

Chicago

Durham

Raleigh /

New York City Baltimore

Boston /

San Diego

Cambridge

New Jersey

Thousands of Persons 95

Philadelphia

Washington DC

San Francisco /

Oakland / Berkeley

Source: EMSI

Source: U.S. Bureau of Labor Statistics

The cities with the biggest research funding are among those with the highest levels of life sciences employment and the fastest job growth in that sector.

In the current decade, growth in life sciences-related employment has been more than three times stronger than total U.S. employment.

LIFE SCIENCES EMPLOYMENT GROWTH BY CITY (2010-2019)

LIFE SCIENCES EMPLOYMENT GROWTH BY DECADE

3,000 6,000 9,000 12,000 15,000 18,000

-0.5% 0.5% 1.5% 2.5% 3.5% 4.5% 5.5%

5.1%

Total Employment Life Sciences

Number of Jobs -3,000 0

1.9%

1.8%

1.6%

Millions

0.2%

New Jersey Seattle

Chicago

Durham

Raleigh /

Baltimore

Boston /

San Diego

Cambridge

-0.1%

Philadelphia

New York City

1990-2000 2000-2010 2010-2019

Washington DC

San Francisco /

Oakland / Berkeley

Source: EMSI

Source: U.S. Bureau of Labor Statistics

6 Defined as employment in Research and Development in Biotechnology industry, NAICS code 541714

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Life Sciences Workforce

New Jersey stands out as one of the top regions for life sciences talent because of its history as a home for major pharmaceutical manufacturers. When it comes to the growth of the talent pool, a different picture emerges. The fastest growth in the talent pool over the past decade has been in the strongest life sciences markets in the U.S.: Boston/ Cambridge, San Francisco/Peninsula and Oakland/East Bay. LIFE SCIENCES TALENT GROWTH BY CITY (2010-2019)

Cities and metropolitan areas that are attractive to life sciences companies are those that have the talent base that those companies need—a life sciences workforce that they can tap into. To illustrate this we identified 18 job categories that have skills that can be used in life sciences. (For a full list, see appendix). There are approximately 594,000 people in the U.S. with these job skills, and 195,000 of them are in our top 12 life sciences markets.

10,000 12,000

0 2,000 4,000 6,000 8,000

LIFE SCIENCES TALENT POOL BY CITY (2019)

Number of Persons

10,000 15,000 20,000 25,000 30,000 35,000

New York City

Seattle

Chicago

Research Triangle

Baltimore

Boston /

San Diego

Cambridge

New Jersey

Philadelphia

Number of Persons

Washington DC / Suburban MD

San Francisco /

0 5,000

Oakland / Berkeley

Source: EMSI

New York City

Seattle

Chicago

Research Triangle

Baltimore

Boston /

San Diego

Cambridge

New Jersey

Philadelphia

Oakland / Berkeley Washington DC / Suburban MD

San Francisco /

Source: EMSI

New Jersey stands out as one of the top regions for life sciences talent because of its history as a home for major pharmaceutical manufacturers.

10 / CUSHMAN & WAKEFIELD

Real Estate Market Dynamics: Find the jobs and you have the demand for space With rising capital and employment driving growth, the life sciences sector is a small but rapidly growing commercial real estate product type. In the 12 major U.S. life sciences markets covered in this report there is a total of 154 million square feet (msf) of lab space, or 8.8% of the total 1.75 billion square feet of traditional office inventory in these markets. Over the next two years that share is projected to increase marginally to 9.3% as an estimated 12.0 msf of new lab space is expected to be delivered.

Even though the total amount of lab space is small in the aggregate relative to the size of the U.S. office market, in some markets, lab space is a significant and important driver of market demand and pricing.

LAB INVENTORY AS A SHARE OF

40%

2019 2021

30%

20%

10%

0%

The largest markets are Boston/ Cambridge and the San Francisco

New York City U.S.

Philadelphia Boston

Chicago

Research Triangle

East Bay

Baltimore

Maryland

Oakland /

Suburban

Peninsula, both with 21.8 msf of space, followed by San Diego with an estimated 19.6 msf.

San Diego

Seattle /

New Jersey

San Francisco Peninsula

Puget Sound

Source: Cushman & Wakefield Research

TOTAL SPACE There are six markets in the U.S. in which the total lab space accounts for 10% or more of the total office inventory. Any developments in life sciences will have an important impact on these markets. Because in the San Francisco Peninsula life sciences space accounts for one-third of the total inventory, what happens in the life sciences industry is the critical driver of that market. On the other hand, in New York City lab space accounts for less than 0.5% of the total office inventory. Nevertheless, approximately 1.7 msf of lab space is expected to be completed there in 2021 making it the third-largest pipeline in the nation, only behind the San Francisco Peninsula (+3.9 msf) and Boston/Cambridge (+2.3 msf) markets.

CITY

SF

SAN FRANCISCO & PENINSULA

21,849,813

BOSTON

21,778,822 19,579,248 17,686,153 11,250,326

SAN DIEGO NEW JERSEY

SEATTLE/ PUGET SOUND

SUBURBAN MARYLAND RESEARCH TRIANGLE

10,676,361

10,156,683

PHILADELPHIA 9,741,755 OAKLAND / EAST BAY 8,256,469 BALTIMORE 6,500,000 CHICAGO 5,400,000 NEW YORK 1,558,335

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Since 2000, employment in life sciences has increased 87.9% compared to 14.4% for the U.S. as a whole.

AVERAGE ASKING RENT (LAB SPACE VS. OFFICE MARKET)

Lower Vacancy Currently, vacancy is lower and rents generally are higher for lab space than for office space in these 12 markets cited earlier. The vacancy rate is 7.1% compared with an office vacancy rate of 12.4% in the same 12 markets. LAB VACANCY RATE COMPARED WITH OFFICE VACANCY (LAB SPACES VS. OFFICE MARKET)

Lab Office

$100 $120

$0 $20 $40 $60 $80

18%

Lab Office

14%

Boston

Greater

Puget Sound Chicago

Philadelphia Research Triangle

East Bay

Baltimore

Maryland

Oakland /

Suburban

San Diego

Seattle /

Manhattan

10%

New Jersey

San Francisco Peninisula

All 12 Markets

6%

Source: Cushman & Wakefield Research

2%

As third quarter of 2019, average asking rent for lab space in these markets is $43.10 per square foot (psf), ranging from a low of $22.85 psf in New Jersey to as high as $108 psf in Boston. Average asking rents for office space in these markets is approximately $40.30 psf. However, the office rent calculation is heavily skewed by a large volume

-2%

U.S.

Boston

Chicago

East Bay

Baltimore

New York

San Diego

New Jersey

San Francisco Peninsula

Philadelphia

Research Triangle

Suburban Maryland

Seattle / Puget Sound

Source: Cushman & Wakefield Research

12 / CUSHMAN & WAKEFIELD

of space available at high rents in Manhattan. If Manhattan is removed from the calculation, the average rent for the rest of the markets is 32.02 psf. Importantly, the strong underlying growth trend, driven by innovation and capital, has led to resilience even in economic downturns. Since 2000, employment in life sciences has increased 87.9% compared to 14.4% for the U.S. as a whole. In each of the two economic downturns since 2000, employment in the life sciences industry has continued to increase, outperforming employment in the economy as a whole and the tech sector.

This employment resilience strongly suggests that the powerful fundamental drivers of growth—an aging population, rising investment in medical and life sciences research and rapidly evolving technology—are likely to support life sciences lab values even in the event of an economic downturn. In Summary With the strong underlying fundamentals it looks like the life sciences era is here. Over the past decade there has been an explosion of new technologies, processes and innovations in life sciences, setting the stage for strong growth for lab space for the foreseeable future. Will there be cyclical swings? Yes—most likely. But the life sciences industry is better able to weather the inevitable ups and downs of economy compared to other sectors.

EMPLOYMENT CHANGE IN RECESSIONS

Total

Technology Life Sciences

-6.5% -5.0% -3.5% -2.0% -0.5% 1.0% 2.5% 4.0%

2.5%

0.3%

-0.3%

-0.8% -1.2% -1.7%

-2.7%

-5.0%

-6.0% 2001

1990-91

2007-2009

Source: U.S. Bureau of Labor Statistics

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MARKET-BY-MARKET ANALYSIS Primary Life Sciences Clusters

14 / CUSHMAN & WAKEFIELD

PHILADELPHIA

SEATTLE

MONTREAL

TORONTO

SAN FRANCISCO & PENINSULA

OAKLAND/EAST BAY

BOSTON

CHICAGO

RESEARCH TRIANGLE

NEW YORK CITY

SAN DIEGO

NEW JERSEY

WASHINGTON D.C. METRO (SUBURBAN MARYLAND)

BALTIMORE

/ 15

MARKET SUMMARY

• Baltimore is a very balanced market when it comes to its life sciences companies. Biotech, Big Pharma and start-ups all have a strong presence in the market. • The talent pool, as well as research funding, is generated by programs at the University of Maryland and Johns Hopkins. These programs are driving the majority of the success in the life sciences market for Baltimore. They create a pipeline of funding and talent to supply to companies while providing a cheaper alternative to markets like Washington D.C., Philadelphia and New York. • Near-term, the life sciences sector in Baltimore should continue to tighten. Baltimore as a whole is generally slow to build. This dearth of development will result in a tighter life sciences sector as limited new inventory is coming to the market in the near future.

FAST LAB STATS

6.5 MSF MARKET SQUARE FOOTAGE AVERAGE RENT (PER SF) $25.49 ~14.9K TOTAL EMPLOYEES 8% VACANCY

BALTIMORE • Programs at Johns Hopkins and the University of Maryland will continue to drive growth in Baltimore’s CBD. These two programs have industry leading incubators that typically grow within the CBD and surrounding submarkets.

TOP LIFE SCIENCES COMPANIES

LIFE SCIENCES TALENT POOL: 9,200

9,500

COMPANY

TYPE

Meridian Medical Technologies

Med Device

9,000

Osiris Therapeutics

Biotech

8,500

Martex Biosciences, Corp

Biotech

8,000

Lupin Pharmaceuticals

Big Pharma

Average Annual Growth Rate: 2001-2018: 1.5%

Acell, Inc.

BioTech

Number of Persons 7,000 7,500

Emergent Biosolutions

Big Pharma

Nutramax Laboratories, Inc

Vitamin

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

Personal Genome Diagnostics

Big Pharma

Source: EMSI

TOP NIH-FUNDED INSTITUTIONS, 2014-2018

JOHNS HOPKINS UNIVERSITY $3.1B

UNIVERSITY OF MARYLAND, BALTIMORE $770M

HUGO W MOSER INSTITUTE AT KENNEDY KRIEGER $77M

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TOP VC-FUNDED COMPANIES (2019)

COMPANY

ROUND

MONEY RAISED LEAD INVESTORS

Elixirgen Therapeutics

2

$5.0M

AsclepiX Therapeutics

1

$5.0M

Barer & Son Capital

Sonavi Labs

Angel

$0.6M

Gardner Industries (Baltimore)

1

$0.2M

TEDCO

OncoSTING

1

$0.2M

TEDCO

Sonoval

1

$0.2M

TEDCO

Glyscend

$0.1M

National Science Foundation

Glyscend

2

Breakout Labs

Sonavi Labs

$0.03M

TEDCO

Sonavi Labs

$0.6M

JLABS

INVENTORY/GROWTH PROJECTION

RENT VS. VACANCY COMPARISON

Asking Rents

Vacancy Rate

With limited new inventory coming to the market, rents should continue to grow in 2019 and beyond. The proposed properties that are in the market should deliver close to fully vacant as many are being brought to the markets by the University of Maryland and Johns Hopkins for continued program development.

$26.00

10% 15% 20% 25%

$25.00

Vacancy Rate

$24.00

$23.00

0% 5%

$22.00 Average Asking Rent $/sf

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Source: Cushman & Wakefield Research

SUBMARKET STATS

AVG. ASKING RENT ($/SF)

INVENTORY (TOTAL SF)

VACANCY

Downtown Baltimore

$30.00

2.0M

4.3%

BWI Airport

$25.83

1.2M

6.6%

Greater Annapolis

$32.00

345,000

6.5%

Harford County

$26.00

83,000

10.5%

Howard County

$25.36

2.2M

12.0%

Suburban West

$20.00

443,000

10.0%

Suburban North

$24.50

234,000

7.1%

NOTABLE LEASE TRANSACTIONS (2019)

TENANT

SF

LANDLORD ADDRESS

SUBMARKET

LEASE TYPE

Paragon Bioservices

45,750

Ventas, Inc

7565 Harmans Road BWI Airport

Expansion

Illumina, Inc

13,000

Ventas, Inc

801 Baltimore Street

Baltimore City

New to the market

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Contributor: David Spragg, david.spragg@cushwake.com

MARKET SUMMARY

FAST LAB STATS

• Boston’s life sciences sector benefits from an incredible talent pipeline with MIT and Harvard and from its position as a global leader in healthcare with Massachusetts General Hospital, Boston Children’s Hospital, Brigham & Women’s Hospital and Dana Faber Cancer Institute, among others. This has led to the construction of a large volume of lab inventory. • The market is dominated by a mix of both Big Pharma and small start-ups. Lab incubators help to grow small companies that have historically grown organically and/or have been acquired by the larger players. The war for talent has forced deep pocketed, venture- capital-backed, smaller companies to continue to locate in Cambridge even though rents have become prohibitively expensive for many. • The large concentration of lab inventory is very attractive to life sciences companies. Additionally, the market draws a large percentage of venture capital and NIH funding. The Cambridge market in particular is a magnet for VC funding, trailing only the state of California in venture capital investment. • There is plenty of life sciences supply under construction or proposed. The lab market could grow by 55% to 32 msf by 2024. While the market is incredibly tight, it is one of the few markets in the country that is building aggressively enough to placate demand.

20.6 MSF MARKET SQUARE FOOTAGE

AVERAGE GROSS RENT $108 39K TOTAL

EMPLOYEES +53% TOTAL EMPLOYEES

BOSTON

SINCE 2010 0.8% VACANCY

LIFE SCIENCES TALENT POOL: 36,196

TOP LIFE SCIENCES COMPANIES

Number of Persons 14,000 16,000 18,000 20,000 22,000 24,000 26,000 28,000 30,000 32,000

COMPANY

TYPE

Pfizer Inc.

Big Pharma

Novartis

Big Pharma

TESARO, a GSK company

Big Pharma

Sanofi

Big Pharma

AbbVie

Big Pharma

Average Annual Growth Rate: 2001-2018: 4.5%

Takeda Pharmaceuticals

Big Pharma

Thermo Fisher Scientific Inc.

Med Device

Amgen

Big Pharma

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

Bristol-Myers Squibb

Big Pharma

Source: EMSI

Biogen

Big Pharma

TOP NIH-FUNDED INSTITUTIONS, 2014-2018

MASSACHUSETTS GENERAL HOSPITAL $1.9B

BRIGHAM AND WOMEN’S HOSPITAL $1.8B

HARVARD MEDICAL SCHOOL $993M

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TOP VC-FUNDED COMPANIES (2019)

SUBMARKET STATS

MONEY RAISED LEAD INVESTORS

INVENTORY (SF)

AVG. ASKING RENT (NNN)

COMPANY ROUND

VACANCY

Ginkgo Bioworks

6

$290.0M T. Rowe Price

BOSTON

3.2M

1.4%

Beam Therapeutics Thrive Earlier Detection

2

$135.0M F-Prime Capital Partners, ARCH Venture Partners

Charlestown

896,000 3.7%

$50.00

1

$110.0M Third Rock Ventures

Fenway

228,000 0.0%

$65.00

Longwood Medical Area

Egenesis

2

$100.0M Fresenius Medical Care Ventures

1.4M

0.0%

$80.00

Seaport

FORMA Therapeutics Motif FoodWorks

281,000 4.2%

$85.00

6

$100.0M RA Capital Management

South End

321,000 0.0%

N/A

1

$90.0M General Atlantic

CAMBRIDGE

11.2M

0.8%

Oncorus

3

$89.5M Cowen Healthcare

Investments, Perceptive Advisors

Alewife/West Cambridge

890,000 8.5%

$89.00

Inari

3

$89.0M Flagship Pioneering, EDBI

East Cambridge

6.8M

0.0%

$97.97

GreenLight Biosciences Black Diamond Therapeutics

5

$88.8M Baird Capital, BlueIO, S2G Ventures

Mass Ave Corridor

3.5M

0.3%

$91.00

2

$85.0M New Enterprise

Associates, RA Capital Management

SUBURBS

6.2M

8.2%

128 Central

3.6M

9.8%

$53.00

RENT VS. VACANCY COMPARISON

495 North

202,000 0.0%

$25.00

$50.00 $60.00 $70.00 $80.00 $90.00 $100.00 $110.00

10.0% 12.0% 14.0%

495 West

659,000 13.1%

$23.00

Inner Suburbs

1.2M

1.9%

$81.00

Vacancy Rate

0.0% 2.0% 4.0% 6.0% 8.0%

Metrowest

512,000 8.5%

$45.00

Average Asking Rent $/sf

2008

2009

2010 Asking Rents 2011 2012

2013

2014

2015 Vacancy Rate 2016 2017

2018

2019

Source: Cushman & Wakefield Research

NOTABLE LEASE TRANSACTIONS (2019)

TENANT

SF

LANDLORD

ADDRESS

SUBMARKET LEASE TYPE

Foundation Medicine

585,000 WS Development

400 Summer Street

Seaport

BTS (New)

bluebird bio

267,278 Alexandria RE

50 Binney Street

East Cambridge Sublease from Sanofi

NOTABLE SALE TRANSACTIONS (2018-YTD 2019)

ADDRESS SUBMARKET SF

BUYER

SELLER PRICE PRICE/SF CAP TENANTS

Osborn Triangle

East Cambridge

676,947 Harrison Street

MIT/MCO $1.1B $1,625 4.3% Pfizer, Novartis, LabCentral

Capital JV Bulfinch Cos JV MIT/MCO

1030 Mass Avenue

Mass Avenue Corridor

77,805 Ventas Inc

Longfellow RE JV Bain Capital RE

$128.0M $1,707

4.5% Astellas, Mitobridge,

Obsidian TX, Potenza TX

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Contributor: Ashley Lane, ashley.lane@cushwake.com

MARKET SUMMARY

FAST LAB STATS

• Chicago and its suburbs host some of the world’s leading pharmaceutical and biotechnology companies including Astellas, Abbvie, Horizon Therapeutics, and Fresnius Kabi. It is also home to medical device and diagnostics companies such as Abbott and Baxter. Chicago is attractive to the life science industry for two key reasons. First, Chicago boasts a multitude of life sciences-oriented research and educational institutions that provide a consistent pipeline of talent and innovation. Second, Chicago’s cost of doing business is significantly lower than peer cities like New York, Boston, and Los Angeles. • Along with major industry presence, Chicago is also an incubator market, with many life sciences startups spinning out of university research initiatives such as Apintyx, Exicure and Pyxis Oncology. The market is seeing rising investment to create better infrastructure for these start-ups, with developers planning to build state-of-the-art spaces to attract them. For example, Rosalind Franklin University created the Innovation and Research Park, a 100,000-sf facility dedicated to research labs, industry, and startups. • While lab/R&D development activity has been stagnant for several years, tightening the market, momentum will pick up over the next decade. Local developers have released plans to create districts focused on biomedical research and life sciences in order to attract a more companies, startups and labs, and substantially expand Chicagoland’s life sciences real estate footprint. Life sciences clusters are planned near the University of Chicago in Hyde Park, Illinois Medical District, Lincoln Park, Bronzeville, and Fulton Market – Chicago’s hottest neighborhood. • Chicago, as the #1 metro for venture capital returns, continues to be a hotbed of venture capital. Chicago developer Sterling Bay created a new investment arm, Prysm Life Sciences, that plans to put millions of dollars into emerging life sciences companies.

5.4 MSF MARKET SQUARE FOOTAGE OVERALL OFFICE MARKET AVERAGE RENT (PER SF) $27.00 3K TOTAL LIFE SCIENCES EMPLOYEES

CHICAGO

+54%

TOTAL EMPLOYEES SINCE 2010

1.3% OVERALL VACANCY

TOP LIFE SCIENCES COMPANIES

LIFE SCIENCES TALENT POOL: 16,224

16,500

COMPANY

TYPE

Pfizer, Inc.

Big Pharma

16,000

Abbvie Inc

Big Pharma

15,500

Abbott Laboratories

Big Pharma

Baxter International

Med Device/Biotech

15,000

Takeda Pharmaceuticals

Big Pharma

Number of Persons 14,000 14,500

Average Annual Growth Rate 2001-2018: 0.5%

Medline Industries, Inc

Med Device

Hill-Rom Holdings, Inc. Med Device Fresenius Kabi Pharmaceuticals Big Pharma Horizon Therapeutics Big Pharma Vyaire Med Device Astellas Big Pharma Hollister Med Device

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

Source: EMSI

TOP THREE NIH-FUNDED INSTITUTIONS

NORTHWESTERN UNIVERSITY AT CHICAGO $1.2B

UNIVERSITY OF CHICAGO $858M

UNIVERSITY OF ILLINOIS AT CHICAGO $568M

/ 20

TOP VC-FUNDED COMPANIES (2019)

COMPANY

ROUND

MONEY RAISED

LEAD INVESTORS

SkinCure Oncology TRACT Therapeutics

3

$30.0M $15.0M

Seacoast Capital

1

Level Ex

5

$4.0M $4.0M $3.0M $2.9M $1.5M $1.5M $1.1M $1.0M

Surgical Innovation Associates

Angel

Level Ex

6

Vivacelle Bio

Angel Angel Angel

AltaThera Pharmaceuticals

Metritrack

Dystrogen Therapeutics

1

StarFinder

rMark Bio

2

RENT VS. VACANCY COMPARISON

SUBMARKET STATS

Asking Rents

Vacancy Rate

AVG. ASKING RENT (NNN)

INVENTORY (SF)

$30.00

8.0%

VACANCY

North Michigan Avenue North Corridor

$25.00

NA

2,277,000 0%

6.0%

Vacancy Rate

$20.00

$22.87

1,215,000 5.7%

4.0%

Chicago (non-CBD) Northwest Corridor

NA

763,000

0%

$15.00

2.0%

NA

834,000

1.5%

$10.00

Average Asking Rent $/sf

$5.00

0.0%

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Source: Cushman & Wakefield Research

NOTABLE LEASE TRANSACTIONS (2019)

TENANT

SF

LANDLORD

ADDRESS

SUBMARKET

LEASE TYPE

AveXis

28,260

Fulcrum Asset Advisors Three Parkway North Central North/Tri-State New/Sublease

Lanza Tech

35,163

American Landmark

3045 Lamon Avenue Near North

New/Sublease

Valent Biosciences

35,024

BECO Management Inc.

1950 Innovation Way Central North/Tri-State New

AveXis

38,555

BECO Management Inc.

1950 Innovation Way Central North/Tri-State New

AveXis

38,700

BECO Management Inc.

1950 Innovation Way Central North/Tri-State New

NOTABLE SALE TRANSACTIONS (2018-2019)

ADDRESS

SUBMARKET

SF

BUYER SELLER

PRICE

CAP TENANTS

26525 N. Riverwoods Boulevard, Mettawa, IL

Central North 558,859 AbbVie

UBC Realty Investors

$154M ($276 psf)

NA AbbVie

/ 21

Contributor: Linsey Smith, linsey.smith@cushwake.com

MARKET SUMMARY

• The life sciences sector in Montreal has numerous internationally acclaimed fields of expertise such as biomanufacturing, cellular therapy and regenerative medicine; and precision medicine such as genetics, genomics and proteomics. • There is a growing pool of highly qualified talent in Montreal with 11 higher education institutions located within the city. The most notable of these institutions are McGill University, Université de Montréal, and the Institut National de la Recherche Scientifique (INRS). • There is strong support from venture capital and major public investment for life sciences, and the sector has major hubs to boost business partnerships such as Technoparc Montreal in Saint- Laurent, Cité de la Biotech in Laval and the Quartier de l’Innovation. • The province of Quebec offers many competitive advantages to life sciences companies looking to operate there. The province has one of the lowest corporate effective tax rates in Canada and the U.S., and companies have access to a multitude of government incentives such as grants and interest-free loans for major projects and innovations, along with sector tax credits and labor development grants. • Montreal is also home to Canada’s only artificial intelligence research superclusters (and is one of the largest in the world). Every level of government has come together to nurture an incredible culture of innovation to create a unique, interconnected and collaborative ecosystem that is now providing key expertise for the health industry’s future, with AI applications in biotech/pharmaceuticals, medical technologies and digital health.

MONTREAL TOP LIFE SCIENCES COMPANIES COMPANY TYPE

98 MSF TOTAL MARKET SQUARE FOOTAGE* FAST OFFICE STATS AVERAGE ASKING RENT (PER SF, NET) $16.86

Pfizer

Big Pharma

Roche

Big Pharma/Diagnostics

Sanofi

Big Pharma

GlaxoSmithKline

Big Pharma

Novartis

Big Pharma

AbbVie

Big Pharma/ Biopharmaceutical

Merck

Big Pharma

AstraZeneca

Big Pharma/ Biopharmaceutical Biopharmaceutical Research

45K

Gilead

TOTAL EMPLOYEES

Teva

Big Pharma

10.3% VACANCY

TOP NIH-FUNDED INSTITUTIONS According to the Canadian Institutes of Health Research, during the period from 2008/2009 to 2018/2019 the province of Quebec received $2.8 Billion (CDN) for 9,633 new and ongoing funded research projects. This is the second-highest level of provincial funding after Ontario.

* Montreal office market, Life Sciences lab space is not broken out

/ 22

TOP VC-FUNDED COMPANIES (2019)

COMPANY

ROUND MONEY RAISED LEAD INVESTORS

Repare Therapeutics

2

$82.5M

Cowen Healthcare Investments (Kevin Raidy)

Laurent Pharmaceuticals

$3.0M

Cystic Fibrosis Foundation Therapeutics

My Intelligent Machines

1

$1.9M

Laurent Pharmaceuticals

3

$1.3M

DropGenie

1

NA

enGene

5

NA

Lumira Ventures (Gerry Brunk)

Genia Photonics

1

NA

In-Q-Tel

MyX Therapeutics

NA

JLABS

Optina Diagnostics

2

NA

MEDTEQ

Tavec Pharmaceuticals

2

NA

Sanderling Ventures (Robert McNeil)

RENT VS. VACANCY COMPARISON

SUBMARKET STATS

Asking Rents

Vacancy Rate

AVG. ASKING RENT ($/SF)

INVENTORY (TOTAL SF) VACANCY

$10.00 $12.00 $14.00 $16.00 $18.00

10.0% 12.0% 14.0% 16.0%

Laval

$18.23 Net

4,350,250 13.7%

Vacancy Rate

St. Laurent

$14.26 Net

7,091,374 20.8%

0.0% 2.0% 4.0% 6.0% 8.0%

$0.00 $2.00 $4.00 $6.00 $8.00

Average Asking Rent $/sf

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Source: Cushman & Wakefield Research

NOTABLE LEASE TRANSACTIONS (2019)

TENANT

SF

LANDLORD

ADDRESS

SUBMARKET

LEASE TYPE

Innovaderm

37,245 Terra Incognita

3530-3540 Saint-Laurent Boulevard

Downtown East

New

Prometic Life Sciences Inc.

16,745 Cominar

440 Armand-Frappier Boulevard

Laval

Renewal

Theratechnologies

14,992 Yale Properties Inc.

2015 Peel Street

Financial Core

New

NOTABLE SALE TRANSACTIONS (2019)

ADDRESS

SUBMARKET SF

BUYER

SELLER

PRICE

TENANTS

255 Norman Street

Lachine

65,000 Groupe Shapiro

Anachemia Canada Co.

$3.4M

N/A

(9396-9319 Québec Inc)

3014 Anderson Street

Terrebonne 8,000 Emco-Inortech ULC Gestion Larmarc inc.

$1.3M

N/A

/ 23

Contributors: Kristina Bowman, kristina.bowman@ca.cushwake.com; George Meletakos, george.meletakos@ca.cushwake.com

MARKET SUMMARY

17.7 MSF MARKET SQUARE FOOTAGE AVERAGE RENT (PER SF) $22.86 15K TOTAL EMPLOYEES +63% TOTAL EMPLOYEES SINCE 2010 14.3% VACANCY FAST LAB STATS

• Big Pharma mergers and consolidations have continued both nationally and locally, including Bristol Myers Squibb’s recent acquisition of Celgene. As a result, New Jersey has recorded an increase in the number of small and mid-tier pharma and biotech companies in recent years, including some spinoffs from larger life sciences firms. • The state has had organic growth throughout the years from these companies including Celgene, Insmed, and more recently PTC Therapeutics, which have been able to attract talent from those Big Pharma corporations that have downsized. • The highly educated labor force in the area has been a key factor in the industry’s attraction to the area. Also, the presence of numerous medical schools, research universities and top-rated hospitals has kept the Garden State on the radar. The state is home to more than 27,000 life sciences graduates annually. • The lab/R&D market in New Jersey is anticipated to tighten in the near future as small and mid-sized biotech and pharma occupiers continue to expand and relocate within the state, specifically in the key submarkets of the greater Princeton Area, I-78 Corridor and Morris County. However, the number of proposed new developments for R&D facilities are limited. • The state has been focused on the growth of the R&D and innovation-based sector, which should bode well for the life sciences industry in general as firms look to either grow, relocate into or move within New Jersey.

NEW JERSEY

TOP LIFE SCIENCES COMPANIES

LIFE SCIENCES TALENT POOL: 28,473

COMPANY

TYPE

Number of Persons 25,500 26,000 26,500 27,000 27,500 28,000 28,500 29,000 29,500 30,000 30,500

Bayer

Big Pharma

Bristol Myers Squibb

Big Pharma

Celgene

Biotech

Eli Lilly

Big Pharma

GlaxoSmithKline

Big Pharma

Average Annual Growth Rate 2001-2018: 0.6%

Johnson & Johnson

Big Pharma

Merck

Big Pharma

Novartis

Big Pharma

2001 2004 2007 2010 2013 2016 2019

Source: EMSI

Pfizer

Big Pharma

Sanofi

Big Pharma

TOP NIH-FUNDED INSTITUTIONS, 2014-2018

RUTGERS, THE STATE UNIV OF N.J. $293M

PRINCETON UNIVERSITY $227M

RBHS-NEW JERSEY MEDICAL SCHOOL $217M

/ 24

TOP VC-FUNDED COMPANIES (2019)

COMPANY

ROUND

MONEY RAISED LEAD INVESTORS

Oyster Point

2

$93.0M

Flying L Partners, The Invus Group

PMV Pharma

4

$62.0M

Nextech Invest

Onkos Surgical

2

$22.6M

Canaan Partners

Linnaeus Therapeutics

3

$12.0M

Kairos Ventures

Vascular Therapies

3

$7.4M

Engage Therapeutics

2

$7.0M

Vuja De Sciences

Angel

$5.0M

Genomic Prediction

2

$4.5M

Nimble Ventures

Durin Technologies

2

$3.5M

Linnaeus Therapeutics

2

$2.2M

SUBMARKET STATS

TOTAL INVENTORY

VACANCY

ASKING RENT ($/SF)

Greater Princeton Area

5,342,362

24.8%

$20.43

Route 78 Corridor

2,551,647

14.3%

$21.01

Morris County

1,503,221

26.3%

$28.78

Upper 287 Corridor

634,576

24.6%

$17.87

Bergen County

555,066

38.3%

$15.22

RENT VS. VACANCY COMPARISON

INVENTORY/GROWTH PROJECTION Currently, a 250,000-sf build-to-suit for Quest Diagnostics is underway at the ON3 Campus in Clifton with an expected completion of Q2 2021.

$10.00 $12.00 $14.00 $16.00 $18.00 $20.00 $22.00 $24.00

11.0% 13.0% 15.0% 17.0%

Asking Rents Vacancy Rate

Vacancy Rate

5.0% 7.0% 9.0%

Average Asking Rent $/sf

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Source: Cushman & Wakefield Research

NOTABLE LEASE TRANSACTIONS (2019)

TENANT

SF

LANDLORD

ADDRESS

SUBMARKET

LEASE TYPE

CMIC CMO

223,936 Matrix Development

270 Prospect Plains Road

Greater Princeton Area New Lease

PTC Therapeutics

185,000 Bristol Myers Squibb

311 Pennington-Rocky Hill Road Greater Princeton Area New Lease

INC Research

48,865 ABS Partners Real Estate 301 College Road East

Greater Princeton Area Renewal

PTC Therapeutics

43,000 Thor Equities

1041 Route 202/206

Route 78 Corridor

New Lease

NOTABLE SALE TRANSACTIONS (2018-2019)

ADDRESS

SUBMARKET SF

BUYER

SELLER

PRICE CAP TENANTS

1041 Route 202/206

Route 78 Corridor

784,000 Thor Equities

Advance Realty/ Cross Harbor Capital PArtners

$152.0M N/A Ashland Chemical,

Amneal Pharma, Nestle, PTC Therapeutics

/ 25

Contributors: Jason Price, jason.price@cushwake.com

MARKET SUMMARY

• New York City’s life sciences market is gaining momentum as developers bring over 2.6 million square feet (msf) of dedicated office and lab space online over the next three years. • Alexandria Equities is leading the development charge with construction set to begin on the 550,000- sf North Tower of the Alexandria Center for Life Sciences—slated for a 2022 delivery. • Other major projects underway include Deerfield’s 326,368-sf redevelopment of 345 Park Avenue South, Janus Property’s 350,000-sf Taystee complex in Harlem, as well as GFP and King Street Properties’ 263,000-sf development at 45-18 Court Square in Long Island City. • More than $500 million in public investment pledged via the local government’s 10-year LifeSci NYC initiative has the potential to generate 16,000 new jobs. • During the 2019 fiscal year, NIH funding measured roughly $2.2 billion, up 9.0% from 2018 and 40.4% greater than five years ago. • New York City boasts one of the country’s most educated workforces and premier venture capital ecosystems; this clustering is the driving force behind recent life sciences momentum in the city as companies vie for talent and funding.

FAST LAB STATS

1.6 MSF MARKET SQUARE FOOTAGE AVERAGE RENT (PER SF) $75.35 1.9K TOTAL EMPLOYEES +251% TOTAL EMPLOYEES SINCE 2010 14.3% VACANCY

TOP LIFE SCIENCES COMPANIES

LIFE SCIENCES TALENT POOL: 7,648

NEW YORK CITY COMPANY TYPE Pfizer Big Pharma 7,500 8,000

Eli Lilly

Big Pharma

7,000

Bristol-Myers Squibb

Big Pharma

6,500

Intercept Pharmaceuticals

Big Pharma

6,000

Roche

Big Pharma

Average Annual Growth Rate 2001-2018: 2.0%

Number of Persons 5,000 5,500

Enzo Biochem

Biotech

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

Source: EMSI

TOP NIH-FUNDED INSTITUTIONS, 2014-2018

COLUMBIA UNIVERSITY HEALTH SCIENCES $1.9B

ICAHN SCHOOL OF MEDICINE AT MOUNT SINAI $1.5B

NEW YORK UNIVERSITY SCHOOL OF MEDICINE $1.1B

/ 26

TOP VC-FUNDED COMPANIES (2019)

COMPANY

ROUND

MONEY RAISED LEAD INVESTORS

Nuvation Bio

1

$275.0M

Omega Fund

Sema4

2

$127.0M

SpringWorks Therapeutics

2

$125.0M

Perceptive Advisors

Schrödinger

5

$107.8M

Bill & Melinda Gates Foundation, WuXi AppTec

Caelum Biosciences

1

$69.9M

Alexion

HiberCell

1

$60.8M

ARCH Venture Partners

X-Vax Technology

1

$56.5M

Prevail Therapeutics

3

$50.0M

Paige.ai

2

$45.0M

Stelexis

2

$43.0M

Deerfield Management

INVENTORY/GROWTH PROJECTION

RENT VS. VACANCY COMPARISON

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

Asking Rents

Vacancy Rate

4.2

$80.00

25.0%

3.3

20.0%

Vacancy Rate

2.7

$60.00

15.0%

1.6

MSF

10.0%

$40.00

5.0%

Average Asking Rent $/sf

$20.00

0.0%

2019

2020

2021

2022

Source: Cushman & Wakefield Research

2016

2017

2018

2019

Source: Cushman & Wakefield Research

SUBMARKET STATS

AVG. ASKING RENT ($/SF)

INVENTORY (TOTAL SF)

VACANCY

Manhattan

$90.33

1,054,535

12.1%

NYC-Other

$60.00

503,800

18.9%

NOTABLE LEASE TRANSACTIONS (2019)

TENANT

SF

LANDLORD

ADDRESS

SUBMARKET LEASE TYPE

HiberCell

15,094 Silverstein Properties & Taconic Investment Partners 13,892 Silverstein Properties & Taconic Investment Partners

619 West 54th Street (Hudson Research Center) 619 West 54th Street (Hudson Research Center)

Midtown

New Lease

Ichan School of Medicine (Research Facility)

Midtown

New Lease

Therapath

13,395 CentFlor Manufacturing Co.

545 West 45th Street

Midtown

Renewal

NOTABLE SALE TRANSACTIONS (2019)

TENANT

SUBMARKET

SF

BUYER

SELLER

PRICE

CAP

24-02 49th Avenue

Long Island City 830,000 Innovo Property Group/ Nan Fung Group

Westbrook Partners

$438.0M N/A

345 Park Avenue South

Midtown South 300,000 Deerfield Management

RFR Realty

$344.5M 4.30%

/ 27

Contributors: Marc Kunesch, marc.kunesch@cushwake.com; Seth Schiffman, seth.schiffman@cushwake.com

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