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