Life Sciences Outlook
United States | 2016
Table of contents
2JLL | United States | Life Sciences Outlook | 2016
Rising costs and space demands are driving real estate decisions across the country 3
Life sciences in 2016: A constantly evolving industry 4
United States life sciences: Where did the space go? Rents rising; options shrinking 5
INDUSTRY THEMES:
#1: Strategic hunt for revenue growth 6
#2: Influx of new sources of capital 7
#3: Tight markets drive new real estate solutions 8
#4: Prioritizing talent critical to growth 9
Executive summary: innovative clusters shaping industry’s future 10
LOCAL LIFE SCIENCE MARKETS:
Boston 13 New Jersey 42
Chicago 18 New York 45
Denver 21 Philadelphia 48
Greater Toronto Area 26 Raleigh-Durham 51
Long Island 29 San Diego 55
Los Angeles / Orange County 32 Seattle-Bellevue 62
Suburban Maryland / Metro DC 36 San Francisco Bay Area 66
Montréal 39 Westchester County 71
3.4%
3.5%
3.6%
3.7%
3.8%
3.9%
4.0%
4.1%
4.2%
4.3%
$72,000
$73,000
$74,000
$75,000
$76,000
$77,000
$78,000
$79,000
$80,000
$81,000
2012 2013 2014 2015
Annual Mean Wage
Employment Growth
Rising costs and space demands are driving real estate decisions across the country
M&A activity among pharmaceutical
and biotech companies saw a record
number of transactions in 2015,
totaling $520 billion.
Top U.S. submarkets Asking rent ($ NNN) Vacancy
East Cambridge (Boston) $70.12 p.s.f. 0.8%
North County (Bay Area) $57.84 p.s.f. 0.5%
I-287 West (Westchester) $52.00 p.s.f. 11.0%
Torrey Pines (San Diego) $47.40 p.s.f. 3.3%
Lake Union (Seattle) $43.87 p.s.f. 2.6%
CBD (Philadelphia) $28.00 p.s.f. 1.5%
Wages are growing as life sciences
companies compete for top talent
Rents climb in life sciences markets nationwide.
Submarket spotlight:
Mid-Peninsula – Bay Area Manhattan & Brooklyn – NYC Boulder / NW – Denver Metro
As the imbalance between tenant demand and
available lab space grows, the region is seeing
increased tenant migration toward dense life
sciences hubs in the Mid-Peninsula, driving
more than 1.6 million square feet of brand
new development.
A global powerhouse in the commercial real
estate market, New York City’s life sciences
cluster is rapidly growing. Development is
highlighted by Cornell’s new 2.1 million-
square-foot tech campus dedicated to the
applied sciences, expected to deliver in 2017.
Following recently signed lease deals this
summer, the Boulder / Northwest submarket is
anticipating a notable amount of positive net
absorption. With the support of NIH funding,
which increased by $280 million year-over-
year, the cluster is gaining attention on a
national scale.
Average lab rent (NNN): $51.87 p.s.f New Class A Lab (NNN): $90-105 p.s.f. Average lab rent (NNN): $18.77 p.s.f.Average lab vacancy: 0.7% Average lab vacancy: 14.1% Direct lab vacancy: 11.7%YOY rent growth: 41.8% Under construction: 3.6 million s.f. Total RBA: 4.0 million s.f.
$520B
$
Life sciences in 2016: A constantly evolving industry
4
Hunt for revenue leading to global consolidation through acquisitions and strategic divestmentM&A activity in the United States ascended to a record high in
2015. However, several revenue growth-inhibiting obstacles are
standing in the way of multinational corporations—patent
expirations continue to hinder the ability to generate profits,
the high costs of drug development are increasing and
strategic tax inversion is no longer a feasible option to
maximize cost savings. As a result, executives are altering their
business approach and focusing on consolidation through strategic
divestitures in an effort to maximize efficiency and return profits.
Wave of institutional capital hitting life sciences real estate marketPreviously, institutional real estate investors have looked past life
sciences properties. However, this is coming to an end as the
value of these assets becomes increasingly evident. Nestled in
markets rich in resources, these properties offer investors the
security of guaranteed cash flow from long-term leases by
credit tenants in a sustainable and growing industry.
Specialized needs and labor requirements resulting in new development and innovative space utilizationIt is imperative that companies in the life sciences sector take into
account the wants and needs of the desired talent pool, both in
terms of space utilization and location, in order to attract and retain
valued employees and enable growth. A lack of available space
is a trend being seen across the country, particularly in urban
clusters, and it is driving real estate solutions ranging from
new development to creative renovations of first-generation
space.
High demand for top talent influencing real estate and
business prioritiesToday’s work force is evolving and the ability to adapt is essential
to the survival and longevity of life sciences companies.
Accordingly, employees are greatly influencing real estate both
in terms of site selection as well as infrastructure and
amenities. As one of the most challenging and innovative
industries, companies are increasingly prioritizing the invaluable
asset of human capital.
JLL | United States | Life Sciences Outlook | 2016
Rank ClusterWeighted
score
1 Greater Boston 87.5
2 San Francisco Bay Area 75.2
3 Raleigh-Durham 60.7
4 San Diego 58.3
5 Seattle-Bellevue 56.3
6 Maryland Suburbs / D.C.
Metro53.2
7 Philadelphia 49.4
8 Los Angeles / Orange County 44.7
Life sciences employment concentration:
Weight: 20.0%
Measured as the percent of industry employment
against total metro private employment.
Life sciences employment growth:
Weight: 10.0%
Life sciences establishment concentration:
Weight: 10.0%
Measured as the percent of industry establishments
against total metro private establishments.
Life sciences venture capital funding:
Weight: 15.0%
National Institutes of Health funding:
Weight: 15.0 %
Market Occupancy Rate:
Weight: 10.0%
Average Asking Rent (NNN):
Weight: 10.0%
Rentable Lab Supply:
Weight: 10.0%
1 3
2 4
U.S. cluster rankings
Rank ClusterWeighted
score
9 Westchester County, N.Y. 41.2
10 New Jersey 40.8
11 New York City 34.7
12 Minneapolis 34.5
13 Denver 34.5
14 Chicago 30.7
15 Central & Southern Florida 30.6
16 Long Island, N.Y. 30.0
United States life sciences: Where did the space go? Rents rising; options shrinking
5
NIH funding and a growing FDA drug approval pipeline have also
supplemented industry advancement. In 2015, the FDA granted one or
more forms of expedited review—which includes priority review,
accelerated approval and orphan drug status—to 60 percent of the drugs
approved. This also typically serves as a strong indicator of future
demand for space. While the overwhelming majority of life sciences
capital has gone to establishments in Greater Boston and the San
Francisco Bay Area in the past year, the significance of drug approvals is
larger companies often have research and manufacturing facilities
spread across multiple regions. Thus, drug approval, or failure, has the
ability to have a cross-market impact.
Overall, this report looks to identify geographic shifts in innovation,
operations and investment, including an in-depth analysis of the markets
most actively devoting resources to the life sciences. More specifically,
we examine global trends and their potential implications on the real
estate industry as a whole.
JLL | United States | Life Sciences Outlook | 2016
51.6%
36.2%
23.1%20.0%19.7%19.0%
16.0%
10.9%10.4%10.3%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
U.S. submarkets - YOY rent growth
*Submarkets containing >1.5 million square feet of rentable supply
36.2%
21.3%
6.8%
6.1%
6.0%
4.3%
2.8%
2.7%
2.6%
11.1%
Life Sciences VC funding by cluster
Boston Bay AreaSan Diego New York CityLos Angeles/Orange County Seattle-BellevueRaleigh-Durham PhiladelphiaNew Jersey Other
The United States life sciences sector is constantly changing and it is
impacting all aspects of the industry. The overall cost of operating is
rising due to increased lab rents in top-tier clusters, R&D costs and
higher wages for skilled employees. Moreover, the Big Pharma industry
is projected to lose $17 billion this year in patent expirations alone,
according to PwC. These factors and more have contributed to the
world’s largest companies struggling to grow revenue, leading
companies to reassess their approach to doing business.
In an industry that is defined by its innovation, research remains a high-
risk, high-expense proposition. However, increased venture capital
funding and industry investment has led to an uptick in small and
mid-sized biopharmaceutical companies and presents a unique
opportunity for larger players to engage in niche research and
manufacturing. This has led to executives looking to buy smaller, more
specialized firms that have a finished product and are ready to
commercialize. This offloads the risk of failure (and the cost that comes
with it) while also merging two P&Ls to obtain the desired growth.
The United States saw M&A activity soar to a historic high in 2015, both
in terms of quantity of deals and aggregate deal volume. This can be
attributed in part to market-friendly dynamics. Low interest rates, which
have enabled pharmaceutical companies to borrow at historically low
rates, in concomitance with an influx of capital and heightened stock
valuations have helped facilitate cash flow throughout the industry.
However, a number of cost-inducing obstacles have forced companies to
alter business strategies. Among these, the increasing influence of
pharmacoeconomics (legally & socially) and the notorious patent cliff—
the point when revenues severely drop off as a result of established
products going off-patent and can be sold at a much cheaper rate by
competitors—has significantly impacted the revenue of Big Pharma and
left them searching for new avenues of growth.
Enter: strategic tax inversion—the practice of becoming a subsidiary of
a new parent company in a foreign country for the purpose of
redomiciling and aligning under beneficial tax laws. It has contributed to
the historic spike in activity seen in the chart below, and according to
Deloitte, has resulted in pharmaceutical and biotech companies churning
$520 billion worth of transactions, including Medtronic’s $50-billion
acquisition of Ireland-based Covidien in January 2015. This practice has
come under scrutiny due to recent steps taken by the U.S. Treasury
Department to curb tax-avoiding corporate inversions, which were
created to impede a $160-billion merger between Pfizer and Allergan
that would have resulted in the largest inversion deal ever.
There were 304 pharma-related transactions recorded in the first half of
2015, totaling $221 billion, which is 256 percent higher than in the same
period in 2014. Fast-forward to a slow down in the second half of 2015
upon shifting market dynamics.
Industry themes:#1: Strategic hunt for revenue growth
6
Patent expirations continue to hinder corporations’ ability to drive profits
and high drug development costs remain a burden on the bottom line of
doing business. Additionally, tax-incentivized shortcuts are no longer a
viable cost-savings option for executives under pressure to generate
revenue for investors and shareholders.
Enter: strategic business swaps—the spinning-off and tucking-in of a
business line or asset for the purpose of driving value. Fueled by market
conditions and a need for more specialized business lines, multinationals
are refocusing on core business services and turning to smaller strategic
deals that entail buying and selling assets to demonstrate growth and
return profits. This trend can be traced back to last July when Allergan
sold off its generics division for $40.5 billion to the world’s largest
generics company, Teva Pharmaceuticals. This transaction enabled
Allergan to become more dynamic while also allowing them to
concentrate on working toward being the leader in Branded Growth
Pharma.
The concept of “business swaps,” or the divestiture of business lines, is
not a new one, but it is becoming more prevalent now that many of the
large players in the industry have already teamed up. Other examples:
• Celgene purchased Receptos for $7.2 billion; gained promising drug
and transformational opportunity to impact multiple therapeutic areas.
• Johnson & Johnson sold off Cordis (heart devices unit) to Cardinal
Health for $1.9 billion.
A highly active acquisitions environment and the reallocation of
business lines has the potential to significantly impact real estate.
Tenants with large footprints looking for business swap opportunities,
such as Biogen putting its hemophilia portfolio on the market, will
contribute to the disposition of real estate. Whether this will fuel new
development or cause an uptick in vacancy will vary by market, but
either way it will inevitably drive different real estate solutions.
JLL | United States | Life Sciences Outlook | 2016
Source: Dealogic; Bain
Total Healthcare M&A Deals
$0
$100
$200
$300
$400
$500
$600
2010 2011 2012 2013 2014 2015
< $500M $500M to $5B $5B to $20B > $20B
Traditionally, institutional real estate investors have looked past life
sciences properties—however, this is rapidly changing. Money is
increasingly flowing to the life sciences sector and investors are
recognizing the value this creates for related real estate assets.
What is changing how investors look at these assets? First and
foremost, leading clusters boast self-sustaining ecosystems that
house world-class universities, high concentrations of life sciences
professionals and top-notch research centers. This is supplemented by
local, knowledgeable landlords and mature VC communities that
collaborate with tenants and work to understand the products being
created in their neighborhood. This increases the willingness to fund
startups, enables them to find space to build a foundation and positions
them for acquisition. 2015 was a record year for biotech VC funding with
more than $10 billion invested nationally. While investment has slowed in
2016, this is in line with global trends and not reflective of the industry.
This environment is commanding the attention of real estate investors
seeking trustworthy assets to place their money. In the past nine months,
Morgan Stanley Real Estate Investing, a core investment vehicle,
acquired two lab buildings in West Cambridge. This included 200
CambridgePark Dr. for $165.5 million, or $746 per square foot, and 733
Concord Ave. for $680 per square foot, both from local landlord King
Street Properties. The significance of these acquisitions is not just that
they were sold to a major institutional real estate investor, but also that
the properties were acquired as part of Morgan Stanley’s Prime
Property Fund, which primarily targets core U.S. real estate, and
includes trophy office towers in New York City and Boston. This
demonstrates a level of confidence and commitment not previously seen
in the world of life sciences real estate.
Industry theme:#2: Influx of new sources of capital
7JLL | United States | Life Sciences Outlook | 2016
700
750
800
850
900
950
1,000
$0
$2
$4
$6
$8
$10
$12
2007 2008 2009 2010 2011 2012 2013 2014 2015
Bill
ions
Biotech VC funding
Investment volume Total Deals
The inflow of capital is occurring in other premier clusters as well,
including Raleigh-Durham where $111 million was invested into biotech
companies in Q1 2016. Institutional investment has been highlighted
by Longfellow Real Estate Partners acquiring two notable lab
assets in Durham in the past year. Last September, the firm
purchased Keystone Technology Park, an 11-building portfolio, for
$117.7 million. Several months later, they further expanded their footprint
with the acquisition of the Venture Center at 4117 Emperor Blvd. The
former GSK building contains 138,000 square feet of vacant lab space
and presents an opportunity to transform an older property in the heart of
the Research Triangle area through capital improvements. Chicago-
based REIT Ventas, is also breaking into the life sciences scene with the
$1.5 billion acquisition of Wexford Science’s portfolio. The 23-property
portfolio is 97 percent leased and set to close later this year.
Possibly the most significant indication that laboratories are transitioning
into an institutional asset class is the Blackstone Group’s (BX) purchase
of BioMed Realty Trust (BMR). This represents the largest private equity
real estate firm in the world buying the leading provider of real estate
solutions in the life sciences community. BMR’s 18.9-million-square-foot
portfolio, which Blackstone inherited as part of the $8 billion transaction,
contains top quality properties with long lease terms and credit
tenants. With assets spread across 12 of our clusters, it is also symbolic
of JLL’s cluster rankings. It includes 3.9 million square feet in the San
Francisco Bay Area, 3.3 million square feet in Greater Boston and 2.5
million square feet in San Diego, as well as a sizeable footprint in
Westchester County, Suburban Maryland, Philadelphia and Seattle.
The built-out ecosystems of top clusters offer first-rate properties that
are generating growing cash flows. With institutional-quality tenants, low
vacancy rates and a resilient, global industry, life sciences real estate
will continue to attract the attention of core investors.
Landlords across the United States are adapting to the increasingly
specialized space requirements of life sciences companies. While the
goal of fostering innovative and collaborative work space remains, tenant
needs now go beyond the value of design and infrastructure. Driven by
fierce competition for space and labor, tenants are putting more
emphasis on the importance of site selection and amenities, which
play a key role in attracting talent and capital.
Low vacancy is a trend in almost every cluster, but how demand is being
accommodated varies by market. Ample investor interest and bullish
market perspectives in traditional clusters like Boston and the Bay Area
have led to a major construction boom. With open, flexible floor plans
becoming standard in these areas, the focus has turned toward
amenities as companies desire more interactive spaces intended
for downtime and socializing among peers. “The Cove,” located in
South San Francisco, is the largest life sciences development currently
underway in the United States. The seven-building campus will feature a
full-service amenities center that includes fitness and exercise rooms, a
bowling alley and a café as well as bocce ball courts, an Amphitheatre
and hotel space. The two-phase project, which has already experienced
strong pre-leasing activity, will total 1 million square feet upon
completion. On the opposite coast in Boston, shovels are in the ground
at the Alexandria Center at Kendall Square (ACKS). This includes
500,000 square feet of rentable office and lab space at 50-60 Binney St.,
with Bluebird Bio set to occupy the lab portion, as well as 430,000
square feet at 100 Binney St., where pharmaceutical giant Bristol-Myers
Squibb will be the anchor tenant. In addition to being in the heart of East
Cambridge, ACKS includes restaurants, shops, state-of-the-art fitness
centers, a bus shuttle service and an ice-skating rink.
The importance of knowledgeable landlords who understand the unique
needs of life sciences tenants cannot be overstated. Accordingly,
established life sciences real estate providers act as a gateway for
second-tier markets to grow and attract brand-name tenants from
out of market. At the University City Science Center in Philadelphia’s
CBD, Wexford Science & Technology is currently developing a 320,000-
square-foot lab and office tower in an effort to retain its incubated tenants
as well as to entice companies located in larger clusters that are limited
by a lack of large blocks of space. Meanwhile on the West Coast, BMR
is addressing the demand of Seattle’s often overshadowed biotech hub,
where they have finalized 43,000 square feet of space on the second
floor of the Omeros Building. Recognized as The Labs @ 201 Elliott, the
space offers suites ranging from 3,800 to 13,200 square feet, and was
designed specifically to meet the needs of biotech startups, fully
equipped with chemical-resistant counters, multiple sinks as well as a
mixture of fixed and mobile casework stations.
Industry themes:#3: Tight markets drive new real estate solutions
8
While primary markets are reaping the benefits of institutional
capital, life sciences companies in secondary clusters are seeking
new ways to utilize space. An example of this is in Denver’s
Boulder / Northwest submarket where the majority of product is first-
generation conversion lab space and flex / office-to-lab conversion
space. This has led to smaller companies looking toward optimizing
different types of space, such as second-generation restaurant space or
clean tech space. Despite a growing life sciences industry, a lack of new
construction has also been a strain on the Los Angeles / Orange County
cluster. As a result, the region’s biotech companies are focusing on more
affordable, low-rise flex buildings that can adapt to fit their unique needs.
JLL | United States | Life Sciences Outlook | 2016
Development by cluster
Source: JLL Research
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
Construction pipeline
0
5
10
15
20
25
Num
ber
of U
nive
rsiti
es
In today’s constantly evolving workforce, the ability to attract,
develop and retain top talent is fundamentally important to
company growth. Companies are recognizing what it takes to put
themselves in a situation to hire and acquire skilled workers. This is
where the function of clusters unquantifiably benefits tenants. Highly
concentrated with life sciences establishments and the individuals that
come with them, these communities present an opportunity to recruit and
even lure employees from competitors with minimal disruption to the
personal life of prospective candidates.
While location is a theme for development, it is also at the forefront of
talent prioritization. Proximity to higher education institutions is
crucial for life sciences firms and weighs heavily into real estate
decisions, as shown by the high correlation between top life sciences
clusters and top educational hubs. Seven of the top 10 biological science
programs are at graduate universities located in the top clusters of
Boston, the Bay Area and San Diego. However, these programs are not
limited to the United States and it is important to recognize the talent
pool available internationally.
Industry themes:#4: Prioritizing talent critical to growth
9
The increasingly competitive landscape and demand for highly skilled
labor has led to sustained wage growth for life sciences employees.
Annual wages have exhibited 7.6 percent growth since 2011, with the
average salary being just shy of $80,000 in 2015. This increases the
already high cost of doing business for these companies; however, this
continued upward growth reveals just how much of a priority talent is.
This trend is likely here to stay due to a confined labor pool and need for
candidates with advanced educational degrees.
JLL | United States | Life Sciences Outlook | 2016
Wage and employment growth in life sciences
Source: Bureau of Labor Statistics
3.4%
3.5%
3.6%
3.7%
3.8%
3.9%
4.0%
4.1%
4.2%
4.3%
$72,000
$73,000
$74,000
$75,000
$76,000
$77,000
$78,000
$79,000
$80,000
$81,000
2012 2013 2014 2015
Annual Mean Wage
Employment Growth
Top 50 life sciences universities by country
Companies are also focused on finding space that has the ability to
improve the well being of their employees. This is supported by the rise
of on-site amenities, such as fitness centers and day care centers. It is
essential to not only understand what is best for the company, but
also to understand the individual aspirations of the talent pool
being recruited. As one of the most innovative and challenging
industries, it is clear the underlying value of human capital is driving the
prioritization of talent across the globe.
Source: QS World University Rankings
As discussed, the acquiring and divesting of business lines is disrupting
the life sciences real estate market and has enabled surrounding tenants
to leverage the disposition of quality infrastructure (lab, pilot plant and
manufacturing space). New Jersey, which serves as a hot bed for
suburban life sciences campuses, is a prime example of this. GSK
Consumer Healthcare, formed through the merger of GlaxoSmithKline’s
and Novartis’ consumer health care businesses, recently absorbed
nearly 150,000 square feet of space in the Central NJ submarket.
However, this same M&A activity has resulted in a surplus in vacant lab
inventory and is leading to the repurposing of old buildings, or “adaptive
re-use,” to meet demand trends and remain competitive. At the former
Bell Labs complex in Holmdel, home to the invention of the cell phone
and background radiation, there is now a vacant, 2-million-square-foot
steel and glass facility. Once recognized as America’s most innovative
laboratory, the property is in the process of being rebranded and
renovated for alternative commercial use. M&A activity will continue to
impact life sciences real estate, but the repurposing of these stranded
assets into mixed-use facilities also has the ability to contribute to the
long term health of the local commercial market.
Life sciences real estate vacancy rates remain unfathomably low in top
clusters (see: table on bottom right) as asking rents continue to rise.
Development of laboratory space is at an all time high thanks to low
interest rates and tenant demand for space. This has led to an
increase in demand for rental properties and contributed to the
severe tightening of market fundamentals. Meanwhile, secondary
markets like Denver are seeing an uptick in leasing activity, and as
vacancy rates slide these clusters are quickly becoming supply-
constrained as well. This is resulting in the use of outsourced labs for
drug development due to Big Pharma cuts on research spending.
Furthermore, limited labor supply is driving up wages in the construction
industry and the overall cost of construction is rising. This is making it
increasingly expensive to develop sizable lab facilities, particularly built-
to-suit projects, and although construction costs are less expensive in
non-major markets, the companies looking and able to develop are
primarily focused on major life sciences hubs. This has led to the
emergence of secondary submarkets within primary clusters,
where tenants can still benefit from the life sciences ecosystem in
place at less of a cost. This is evident in Boston where late last year the
first speculative suburban lab development broke ground at 115 Hartwell
Ave. in Lexington, part of Boston’s Core Suburban market. Similarly, San
Francisco is seeing development rise in Mid-Peninsula, where 200,000
square feet of office space is being converted to lab.
Executive summary: innovative clusters shaping industry’s future
10JLL | United States | Life Sciences Outlook | 2016
Largest clusters by rentable lab space (m.s.f.)
Source: JLL Research
Source: JLL Research
How rent and vacancy compare in top submarkets
2016 Vacancy
East Cambridge (Boston) $70.12 p.s.f. 0.8%
North County (Bay Area) $57.84 p.s.f. 0.5%
I-287 West (Westchester) $52.00 p.s.f. 11.0%
Torrey Pines (San Diego) $47.40 p.s.f. 3.3%
Lake Union (Seattle) $43.87 p.s.f. 2.6%
CBD (Philadelphia) $28.00 p.s.f. 1.5%
0
5
10
15
20
25
0
5000
10000
15000
20000
25000
2014 2015
Another trend that is surfacing is global U.S. cities rich in
resources making a push to increase the amount of commercial life
sciences space in their market. The Alexandria Center for Life
Science, New York’s first premier life sciences campus, is planning
expansion in Manhattan. The 728,000-square-foot development will
meaningfully boost New York City’s industry presence as Alexandria
seeks to capitalize on the area’s world renowned academic and medical
centers. The Houston metropolitan is also looking to put itself on the map
within the life sciences sector. Already home to the largest medical
complex in the world, Texas Medical Center, the city is in the process of
fundraising to build a $2 billion, 30-acre commercial campus in the heart
of Houston’s healthcare industry.
Executive summary
11JLL | United States | Life Sciences Outlook | 2016
Cost of construction in major markets (ENR Construction Index)
RLB Comparative Cost Index tracks the bid cost of construction, including: labor,
materials, contractor and overhead costs.
Source: JLL Research, RLB
Over the past few years, there has been a lot of discussion surrounding
the future of personalized medicine—the concept of producing a drug
specific to the needs of an individual patient rather than the traditional
approach of “one-drug-fits-all”—and the effect it could have on the life
sciences industry. Regulatory policies have made it difficult to navigate
these waters, and there are still many hurdles to overcome, particularly
in terms of the reimbursement and payment process. Even so, 70
percent of industry executives are looking to acquire companies with
personalized medicine businesses in the next year, according to Reed
Smith. This is a trend worth keeping an eye on due to the fact that it
could notably alter real estate as it relates to supply chains and
manufacturing.
Looking forward to 2017, we have identified several rising trends that
may impact real estate decisions and strategy in life sciences clusters:
• Continued acquisition and consolidation activity will offer
opportunities for small and mid-sized firms to secure space in
tightening primary clusters.
• The practice of business swaps will result in an increase in vacant
space in secondary markets and lead to the renovation of older
space to meet the needs of tenants.
• Life sciences tenants will continue to seek out affordable options in
top clusters, resulting in secondary submarkets emerging within
primary clusters, such as Boston’s Core Suburbs and the Bay Area’s
Mid-Peninsula, where a moderate number of space options and
development opportunities still remain.
• Advances in medicine and global demographic trends point to an
overall expansion of the life sciences industry. With demand still
outweighing supply, asking rents for lab space will continue to rise in
premier clusters.
• The second tier of clusters, such as Seattle, Philadelphia and
Westchester County, will exhibit more interest from developers as
institutional capital floods top markets, leading more established
companies to entertain the cost-savings benefits of rising markets.
Local Life Sciences markets
12JLL | United States | Life Sciences Outlook | 2016
16LOCAL
MARKETS
Greater Boston
JLL | Boston | Life Sciences Outlook | 2016 13
Cambridge
As the global hub of the life sciences industry, the Cambridge market has become competitive in the past year as more companies seek space. The
core of Cambridge’s advantage lies in its self-sustaining ecosystem, which encompasses major academic institutions, top-notch research facilities,
venture capital firms, startups and global corporations.
Core Suburbs
Life science tenants have recognized the added value the suburbs provide. In contrast to the older stock available in Cambridge, the suburbs have
afforded occupants the opportunity for office-to-lab conversions as well as brand new development projects at a lower cost.
CBD
The tightened Kendall Square market has led several big-name tenants to explore potential lab space downtown, such as in the Seaport District. Given
its urban location, the CBD offers a uniquely attractive option for those in the life sciences market.
Major lab supply:Clusters of established lab stock with long-time industry presence
Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing
Emerging lab supply:Areas with limited lab stock today that are poised for growth
95
495
90
Cambridge
North
Northwest
Longwood
Medical Area
128/Mass Pike
495/Mass Pike
Greater Boston possesses the largest concentration of life
sciences researchers in the United States, and has more than
3.75 million square feet of requirements.
Home to many of the global leaders in tech and life sciences,
the Kendall Square neighborhood in East Cambridge has been
touted as “the most innovative square mile on the planet.”
14
Economic scorecard
WORKFORCE Total life sciences% life sciences to private
employment
Year-over-
year growth
Employment 86,235 4.5% 1.3%
Establishments 2,136 4.3% 12.7%
FUNDING Total life sciences % to total U.S.
VC funding $2,580M 38.01
NIH funding $2,057M 18.72%
SUPPLY Rentable lab supply % direct vacancy
19,940,871 s.f. 5.9%
Cluster score:
87.5Greater Boston is home to
many elite academic and
research institutions, as well
as world-class medical
facilities. This includes the
top three NIH-funded
hospitals in the United States.
The region also boasts
250,000 students across 52
higher education institutions,
such as internationally
renowned Harvard University
and MIT.
Life sciences employment composition
Life sciencesemployment
86,235
non-labusing
labusing
Boston’s economy is fueled
by a large concentration of
healthcare professionals,
including more than 30,000
scientists and other workers
employed directly in biotech.
Over the last decade, the life
sciences industry has added
more than 22,000 jobs,
putting Boston at the top of
tech and science capabilities.
Life sciences establishment composition
Life sciences establishments
2,136
As a result of the region’s
focus on direct access to top
talent, the cluster boasts an
active investor community.
This makes Boston a highly
attractive destination to
entrepreneurs. Accordingly,
Boston ranks #1 in patent
ownership per capita, #2 in
venture capital funding and
#2 in number of IPOs.
JLL | Boston | Life Sciences Outlook | 2016
9.93%
24.15%
7.74%
2.41%
43.73%
12.04% Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
5.76%
12.97%
8.33%
5.76%
59.27%
7.91% Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
Cambridge
East Cambridge
Unrelenting demand leading to lab
conversions
• Despite virtually no vacant space, velocity in the Cambridge lab
market remains strong with nearly 300,000 square feet of leasing
activity in Q1 2016. Direct vacancy is at 0.8 percent, dipping below 1
percent for the first time since 2001.
• Even with most of the premier space occupied, the average asking
rent in East Cambridge continues to reach new record highs jumping
to $70.12 per square foot NNN.
• In an effort to meet the market demand, Biomed Realty, now under
the Blackstone name, is converting 90,000 square feet from office to
lab at 50 Hampshire St. The leading life sciences services provider
inked three leases in the second quarter of 2016.
• The largest deal over the past year belonged to Moderna
Therapeutics, who renewed and expanded into 125,000 square feet
at 200 Technology Square. Seres Therapeutics followed behind
them, signing for 83,000 square feet down the road at 200 Sidney St.
• Continued competition for space has led to landlords pushing rents.
Due to either M&A activity, organic growth or product set backs,
sublease space makes up the majority of the viable options for
tenants desiring a Cambridge address.
West Cambridge
Blockbuster sales lead headlines
• Transit-accessible, amenity-rich West Cambridge continues to grow
and establish its own identity as a high quality alternative to Kendall
Square at a more affordable price.
• Local real estate investment powerhouse, King Street Properties,
successfully repositioned 200 Cambridge Park Dr. into one of the
most desirable locations in the market and completed a $165.5-
million deal with Morgan Stanley. Several months later, the two
teamed up again, with King Street selling Morgan Stanley 733
Concord Ave. for $30 million, or $680 per square foot.
• In the second half of last year, Good Start Genetics renewed for
32,000 square feet at 19 Blackstone St. in Mid-Cambridge. Farther
down the Charles River, global biotech tenant Celgene expanded at
200 Cambridge Park Dr. for 21,539 square feet.
• The remaining vacant space in the submarket was absorbed this
past quarter, leaving less than 10,000 square feet of rentable lab
space available in Mid- and West Cambridge.
MODERNA THERAPEUTICS
200 Technology Square
East Cambridge
125,000 square feet
Class A
610 Main St – North Building
East Cambridge
Built-to-Suit
RBA: 272,801 square feet
Owner: MIT
Anchor Tenant: Pfizer
Expected Delivery: Q4 2016
SERES THERAPEUTICS
200 Sidney St.
East Cambridge
83,000 square feet
Class A
200 Cambridge Park Drive
West Cambridge
RBA: 221,845 square feet
Seller: King Street Properties
Buyer: Morgan Stanley
$165.5 million ($746 per square
foot)
Activity key:
Facilities scorecard
SUPPLYEast Cambridge
Lab
West Cambridge
Lab
Rentable lab stock
(% of total stock)
7.81M s.f.
39.2%
725K s.f.
3.6%
Direct vacancy
(Change year-over-year)
0.8%
(-4.5) ppts
0.0%
(-12.4) ppts
# of large blocks over 50,000 s.f. 2 0
Under construction (s.f.) 1.2M s.f. 220,000 s.f.
DEMAND
# of requirements
Total s.f. requirements
18
1.3M s.f.
5
312,000 s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$70.12 p.s.f.
10.3%
n/a
Leasing
Sales
Under construction
Large blocks of space
15JLL | Boston | Life Sciences Outlook | 2016
Suburbs
16
115 HARTWELL AVE.
Core Suburbs, Lexington
91,000-square-feet, speculative
Owner: King Street Properties
Leasing: JLL
Expected delivery: Q1 2017
Core Suburbs
First spec development breaks ground
as direct vacancy hits 9.9 percent
• The core suburban lab market, which contains rentable space in
Bedford, Lexington and Waltham, is home to numerous blue chip lab
tenants. This ranges from ThermoFisher and PARAXEL International
in Waltham, to Hologic in Bedford as well as Shire in Lexington.
• In terms of leasing activity, Metamark Genetics kicked off the year by
signing for 26,270 square feet at 285 Bear Hill Rd. in Waltham.
• Brammer Biopharmaceuticals, a manufacturing organization serving
companies seeking to develop and commercialize cell and gene
therapies, signed for 50,578 square feet at 45 Hartwell Ave. in
Lexington.
• However, the largest suburban lab deal in the past year belonged to
MultiPlan, Inc. who moved into 75,077 square feet at 4G Crosby Dr.
in Bedford.
• Investors remain bullish on the market, evident by King Street
Properties' decision to break ground on a 91,000-square-foot spec
development at 115 Hartwell Ave. in Lexington. It represents the first
speculative lab building in the suburbs and is expected to deliver in
Q1 of 2017.
Rest of the Suburbs
Outer suburbs benefitting from established market demand spillover
• A mix of more established corporations as well as mid-size tenant
spillover from Cambridge and the core suburbs has led to rents
increasing in Greater Boston’s surrounding suburbs.
• Many big players in the life sciences space call the Boston suburbs
home, including Boston Scientific and Quest Diagnostics in
Marlborough, EMD Millipore in Billerica and AbbVie in Worcester.
• BioMed Realty recently benefitted from a 21,225-square-foot lease
by SQZ Biotech at 134 Coolidge Ave. in Watertown.
• Biodegradable plastic company, Metabolix, Inc., absorbed 30,000
square feet in Woburn’s premier life sciences building at 19
Presidential Way.
• Average asking rent in the towns with the largest concentration of lab
supply are at historic highs, with Beverly (2.1 million square feet) and
Woburn (1.1 million square feet) reaching $22.80 and $27.56 per
square foot NNN, respectively.
1 PATRIOTS PARK
Core Suburbs, Bedford
144,000 square feet
Owner: Longfellow RE Partners
Seller: Spire Corporation
$11.3 million
BRAMMER BIO
45 Hartwell Ave., Lexington
Core Suburbs
50,758 square feet
Relocation and expansion
Activity key:
Facilities scorecard
Leasing
Sales
Under construction
Large blocks of space
JLL | Boston | Life Sciences Outlook | 2016
SUPPLYCore Suburbs
Lab
Total Suburban
Lab
Rentable lab stock
(% of total stock)
2.76M s.f.
13.8%
8.21M s.f.
41.2%
Direct vacancy
(Change year-over-year)
9.9%
1.6 ppts
12.2%
1.0 ppts
# of large blocks over 50,000 s.f. 1 5
Under construction (s.f.) 1.6M s.f. 1.6M s.f.
DEMAND
# of requirements
Total s.f. requirements
36
2.1M s.f.
51
3.4M s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$32.32 p.s.f.
3.3%
$25.42 p.s.f.
2.5%
METABOLIX, INC.
19 Presidential Way, Woburn
North Suburbs
29,622 square feet
Relocation
Boston CBD
17
BUILDING FOR THE FUTURE
60 Fernwood Rd.
Longwood Medical Area
620,000 square feet
Brigham & Women’s Hospital
Expected delivery: Q4 2016
The Seaport District
Urban lab space in demand
• Formerly a railroad and docking yard, the Seaport District has
transformed into a hot bed for commercial development as cranes
hover over the neighborhood’s waterfront landscape.
• The wheels started turning in 2014 when Vertex Pharmaceuticals
completed its global HQ, relocating from East Cambridge into 1.1
million square feet at 50 Northern Ave. and 11 Fan Pier Blvd.
• Due to its accessibility to Downtown and Cambridge, as well as its
proximity to South Station, the Seaport, New England’s second-
largest transportation center, has become an increasingly attractive
option for life sciences tenants compared to the suburbs.
• Additionally, there is 280,000 square feet of lab space at 27 Drydock
Ave. in the Marine Industrial Park, currently 85 percent leased.
• Gingko Bioworks, which was startup specialist Y Combinator’s first
biotech investment, raised more than $150 million in the past 18
months and has now quadrupled its footprint by signing a 70,000-
square-foot lease at the Innovation and Design Building at Drydock
Center.
Longwood Medical Area
Best-in-class life science community
• The LMA contains more than 18 million square feet of clinical,
research and administrative space packed inside 215 acres.
However, the majority of buildings are institutionally owned and there
is limited rentable lab space available.
• The largest leasable space is the Center for Life Sciences at 3
Blackfan Circle. The fully leased, 18-story, 702,940-square-foot
building boasts a tenant list that includes Beth Israel Deaconess and
Boston Children’s Hospital.
• In an effort to alleviate excess demand, The Longwood Center
project was delivered in 2015, adding 414,000 square feet of supply
and Dana Farber as its anchor tenant. There is still 102,000 square
feet of vacant space – the largest block of space available.
• There is 620,000 square feet of commercial space at Brigham
Building for the Future, slated to deliver in late 2016. The goal of the
project is to bring the world’s top clinicians and scientists in the
neurosciences, orthopedics and rheumatology under one roof to
promote collaboration and accelerate advancements.
LONGWOOD CENTER
360 Longwood Area
Class A
Anchor Tenant: Dana-Farber
Vacant: 101,946 square feet
Asking Rent: $75 NNN
50 Northern Ave. & 11 Fan Pier
Seaport District
1,100,000 square feet
Class A
$1.1 billion
GINKGO BIOWORKS
21-25 Drydock Ave.
Seaport District
69,439 square feet
Relocation and Expansion
Activity key:
Facilities Scorecard
Leasing
Sales
Under construction
Large blocks of space
JLL | Boston | Life Sciences Outlook | 2016
SUPPLYSeaport District
Emerging Lab
Longwood
Medical Lab
Rentable lab stock
(% of total stock)
1.38M s.f.
6.9%
1.12M s.f.
5.6%
Direct vacancy
(Change year-over-year)
3.0% 9.1%
# of large blocks over 50,000 s.f. 0 1
Under construction (s.f.) 0 s.f. 620,000 s.f.
DEMAND
# of requirements
Total s.f. requirements
1
50,000 s.f.
0
0 s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
n/a $75.00 p.s.f
(0.0%)
Chicago
JLL | Chicago | Life Sciences Outlook | 2016 18
Chicago Metro Overview
Dominating Chicago’s life sciences industry are large publicly traded multinationals, such as Baxter International, Abbott Laboratories and Horizon
Pharma, which have a corporate presence as well as The Federal Government, who maintains a significant footprint with two research sites, Argonne
National Laboratory in Woodridge and Fermi National Accelerator Laboratory in Batavia. In addition, Chicago hosts a number of world-renowned
academic institutions contributing to scientific research and benefits from the 23-acre Illinois Science & Tech Park in Skokie that focuses on emerging
biosciences. Chicago is also home to a number of hospitals including Rush University Medical Center, University of Chicago Medical Center and
Northwestern Memorial Hospital, which provide excellent testing grounds for innovative medical research. The majority of these users prefer to own
their Chicago facilities and cluster them within suburban campuses, which translates to a minimal impact on the local leasing market.
Suburban North Shore
Northern Cook County through Lake County has R&D-heavy firms clustering along the suburban North Shore – and with more than 100
biotechnology/pharmaceutical companies, including 10 corporate headquarters, Lake County is at the heart of Chicago’s life sciences cluster. These
100 + firms employ more than 19,000 people, or nearly 6.3 percent of the county’s workforce. Lake County is home to five full-service hospitals,
averaging 228 beds each, as well as to five ambulatory surgical centers.
Major lab supply:Clusters of established lab stock with long-time industry presence
Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing
Emerging lab supply:Areas with limited lab stock today that are poised for growth
Chicago was recently ranked on Genetic Engineering and
Biotechnology News’ list of Top 10 U.S. Biopharma Clusters and has
hosted the annual BIO International Convention three times in less
than a decade (2006, 2010 and 2013).
Chicago has six world-renowned schools of medicine, the largest
concentration of physicians and two major federal research labs. The
Chicagoland area has the core competency and critical mass for
innovation in the biopharmaceutical industry.
355
90
88
294
80
19
Economic scorecard
WORKFORCE Total life sciences% life sciences to private
employment
Year-over-
year growth
Employment 53,054 1.7% 0.0%
Establishments 1,482 0.6% 3.3%
FUNDING Total life sciences % to total U.S.
VC funding $76M 1.11%
NIH funding 661.40M 5.75%
SUPPLY Rentable lab (s.f.) % direct vacancy
3,506,785 4.7%
Cluster score:
30.7Chicago is home to life
sciences users who occupy a
significant amount of space
throughout the market, most
notably the North Shore.
These users benefit from their
close proximity to five
hospitals and five ambulatory
surgical centers.
Furthermore, these users
received more than $661
million in funding from the
National Institutes of Health
(NIH).
Life sciences employment composition
Life sciencesemployment
53,054
non-labusing
labusing
More than 19,000 life sciences
employees across more than
100 firms make up more than
6 percent of employment in
Lake County. The majority of
these employees are
clustered in pharmaceuticals
and medicine manufacturing,
while medical equipment and
supplies manufacturing make
up the second largest
employment cluster. These
large clusters are partly due
to the headquarter presence
of several firms, including
Baxter International and
Abbott Laboratories.
Life sciences establishment composition
Life sciences establishments
1,482
Medical equipment and
supplies manufacturing
drives the number of
establishments in the life
sciences sector, followed by
medical and diagnostic
laboratories, which represent
about 20.4 percent of total
establishments. These
establishments find little
difficulty in finding skilled
labor, as more than half of the
population in Lake County
have at least a bachelor’s
degree, and more than 12
percent have earned a
master’s degree.
JLL | Chicago | Life Sciences Outlook | 2016
29.9%
15.0%
21.0%
7.1%
18.7%
8.3% Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & Supplies MFG
Testing Laboratories
R&D
Medical & Diagnostic Laboratories
4.6%
16.1%
26.3%
12.7%
19.8%
20.4%
Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
North Shore:
North Cook County & Lake County
Lake County
High quality of life retains tenants
and attracts others
• The North Shore’s vacancy rate declined slightly to 5.1 percent since
2015, while rents declined 5.2 percent year-over-year.
• While large blocks remain available, Valent Sciences plans to utilize
98,000 square feet of research space at the former Motorola campus
at 600 N. U.S. Highway 45 in Libertyville.
• The submarket continues to retain tenants, including Hospira who
just renewed more than 137,000 square feet at 600 N. Field Dr.
• Lake County enjoys a median income of $80,525 per year and part of
this is largely due to the life sciences industry, where employees earn
just over $86,000 per year.
• Life science businesses have access to an educated and highly
skilled labor pool with more than half of the population (51.9 percent)
having earned a Bachelor’s degree or higher.
North Cook
Strong workforce and connectivity
boost life sciences
• North Cook County life sciences firms have access to an educated
labor pool, due to a close proximity to Northwestern University and
Loyola University. In addition to the Illinois Technology and Science
Park in nearby Skokie, this location offers space designed
specifically for research and biosciences.
• The submarket’s close proximity to downtown provides life sciences
firms with a high level of connectivity to other Midwest markets as
well as international markets through nearby O’Hare International
Airport.
• Currently, North Cook County has 135,000 square feet of lab space
available, with life sciences users occupying 600,000 square feet.
Hospira
600 N. Field Dr.
Lake Forest
137,498 square feet
Class A
$18.50 NNN
Horizon Pharma
Lake Forest
133,000 square feet
Class A
$14.00 NNN
Valent Sciences
600 N. U.S. Highway 45
Libertyville
98,000 square feet
Class A
1400 Busch Parkway
Buffalo Grove
Available: 60,480 square feet
Class B
Activity key:
Facilities scorecard
SUPPLY North Shore Metro Chicago
Rentable lab stock
(% of total stock)
1.3 s.f.
26.0%
3.5 M s.f.
42.3%
Direct vacancy
(Change year-over-year)
5.05%
-0.55 ppts
4.6%
-0.4 ppts
# of large blocks over 50,000 s.f. 32 44
Under construction (s.f.) 0 0
DEMAND
# of requirements
Total s.f. requirements
1
25,000 s.f.
5
350,000 s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$10.54 p.s.f.
-5.2%
$10.64 p.s.f.
-0.03%
Leasing
Sales
Under construction
Large blocks of space
20JLL | Chicago | Life Sciences Outlook | 2016
Denver
JLL | Denver | Life Sciences Outlook | 2016 21
Boulder / Northwest
The Boulder and Northwest submarket cluster comprises 71.7 percent of Denver Metro’s inventory for lab space and is considered among the top two
life sciences clusters in the entire region. Product in this cluster is comprised primarily of second generation lab space and flex / office-to-lab
conversion space. The majority of tenant requirements in this area are small, falling in the 5,000- to 15,000-square-foot range.
SE / Southeast Suburban
The Southeast and Southeast Suburban submarkets are home to 10.4 percent of Denver’s lab space. Although these submarkets are not the most
active within the life sciences industry, the area is home to the Fitzsimons Life Science District and Anschutz Medical Campus—considered to be the
epicenter of Colorado’s bioscience community. Here, many startups benefit from shared creative and incubator space while in growth mode.
West Suburbs / Southeast Suburban
The West and Southwest Suburban submarkets encompass 17.9 percent of the market’s lab space. Within these submarkets, space tends to be both
second-generation lab space and flex / office-to-lab conversion product. Tenant requirements in these submarkets are smaller in size, typically ranging
from 2,500 to 10,000 square feet.
Major lab supply:Clusters of established lab stock with long-time industry presence
Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing
Emerging lab supply:Areas with limited lab stock today that are poised for growth
With college graduates at 41.3 percent and high school graduates at
90.5 percent, Colorado has the nation’s second most highly
educated workforce. A consistent, high flow of in-migration has
boosted the workforce from which companies can recruit.
Access to numerous higher education and research facilities, which
boast ample bioscience infrastructure, allows the Denver metro to
act as an incubator for various life sciences startup companies.
Centennial
Lafayette
Aurora
Lakewood
Commerce
City
Brighton
Arvada270
70
225
70
25
6
85
285
36 7
470
Broomfield
76
Longmont
Westminster
Southeast
Northeast
West
Southwest Suburban
CBD Midtown
Boulder
Northwest
Southeast Suburban
22
Economic scorecard
WORKFORCE Total life sciences% life sciences to private
employment
Year-over-
year growth
Employment 27,666 2.1% 1.7%
Establishments 1,190 1.1% 11.5%
FUNDING Total life sciences % to total U.S.
VC funding $55M 0.8%
NIH funding $325.37M 2.83%
SUPPLY Rentable lab supply % direct vacancy
4,020,547 s.f. 9.4%
Cluster score:
34.5Users and real estate
professionals alike often
compare the search for
appropriate lab space in
Denver to “finding a needle in
a haystack.” Existing, in-place
infrastructure in lab buildings
are extremely scarce, so life
sciences companies will often
use second-generation
restaurant space or clean
tech space. Often smaller
users must opt to share lab
space.
Life sciences employment composition
9.2%
25.3%
8.0%
2.5%
51.1%
4.0% Pharma & medicine manufacturing
Electromedical instrument manufacturing
Medical equipment & supplies manufacturing
Testing laboratories
Research & development
Medical & diagnostic laboratories
Life sciencesemployment
82,075
non-labusing
labusing
Across the board, nearly all
sectors of the life sciences
industry are growing in
Denver. This is most notable
in the pharmaceuticals sector,
which has experienced
employment contraction in
three of the past five years.
The sheer amount of time and
capital required to turn a
profit, coupled with a
challenging regulatory
environment, have been
factors in regional companies
choosing to consolidate.
Life sciences establishment composition
47.2%
52.6%
0.2%
Medical equipment & instruments
Pharmaceuticals & biotechnology
Crop science
Life sciences patents1,879
A healthcare technology
campus named “Stride” is
under construction in the
River North neighborhood of
Denver, where the project’s
developers are renovating a
former warehouse near
Brighton Blvd. and 38th Ave.
The campus will serve as a
hub for healthcare technology
companies, similar to office
collaborative spaces like the
notably successful “Industry”
project.
JLL | Denver | Life Sciences Outlook | 2016
Boulder / Northwest
Boulder / Northwest
Cuts to Big Pharma threaten to reduce
requirement demands
• Boulder / Northwest submarket cluster encompasses the cities of
Broomfield, Boulder, Lafayette, Louisville, Westminster and
Longmont, and is home to the University of Colorado at Boulder.
• The submarket is home to a campus that recently ranked tenth
among U.S. public institutions for science & engineering research
and development expenditures. It is also fourth for federally funded
research expenditures and includes one of the nation’s top 25
institutions in total NIH funding.
• Through 2015, Boulder and Broomfield counties combined to
represent the largest share of medical device and diagnostics
(engineering, researching, designing and manufacturing)
employment in the nine-county region, accounting for nearly one in
three jobs for this subsector.
• However, pharmaceuticals and biotechnology employment is down
4.3 percent year-over-year and 6.8 percent since 2010.
• In 2015, the cluster recorded 49,394 square feet of positive
absorption, and already has experienced 69,507 square feet of
positive net absorption in the first half of 2016.
• During the last 12 months, this market has tightened considerably,
with vacancy rates in major lab space trending sharply downward,
currently settling at 11.8 percent.
• Available options for users seeking lab space are believed to be
notably tighter than the recorded vacancy rate figure.
• Longmont and Gunbarrel are beginning to be good, low-cost
alternatives with access to the Boulder workforce. Longmont has a
supply of flex and light industrial buildings that have infrastructure in
place to convert to lab space.
• Looking forward, expect increased absorption, reflecting both the
physical occupancy of users who have inked deals in the past
quarter and the increased volume of leasing activity, particularly as
the convergence of healthcare and technology ramps up.
• Vacancy rates will slide, prompting a more noticeable shift to
landlord-favorable conditions in an increasingly supply-constrained
market. Leasing market momentum may be slightly curbed due to a
reduction in drug production.
• There have been cuts on research spending in Big Pharma, and as
drug companies consolidate, the area has shown it is not immune to
the larger, national trend of using outsourced labs for drug
development and the subsequent deceleration of employment growth
in research and testing labs.
GREATBATCH MEDICAL
105 Edgeview Dr.
Northwest
13,219 square feet
Class A
$19 NNN
371 CENTENNIAL PARKWAY
CO State Board of Land Commiss
Northwest
RBA: 73,485
Class B
$174 per square foot
MOLECULAR PRODUCTS
6837 Winchester Circle
Boulder
38,814 square feet
Class B
$8.70 NNN
VIROCYT, INC.
100 Technology Dr.
Northwest
4,349 square feet
Class C
$11.50 NNN
Activity key:
Facilities scorecard
SUPPLY Boulder Northwest
Rentable lab stock
(% of total stock)
1.8M s.f.
42.5%
1.2M s.f.
29.2%
Direct vacancy
(Change year-over-year)
7.9%
(-1.1) ppts
17.4%
(-3.5) ppts
# of large blocks over 50,000 s.f. 0 1
Under construction (s.f.) 0 s.f. 0 s.f.
DEMAND
# of requirements
Total s.f. requirements
21
400,000 s.f.
22
375,000 s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$18.31 p.s.f.
10.9%
$19.08 p.s.f.
0.6%
Leasing
Sales
Under construction
Large blocks of space
23JLL | Denver | Life Sciences Outlook | 2016
SE / Southeast Suburban
SE / Southeast Suburban
Anchoring Colorado's life sciences
cluster with Fitzsimons Innovation
Campus
• The submarket possesses only a fraction of the rentable lab space of
Boulder / Northwest.
• Located at the southeastern quadrant of Denver metro, it boasts the
Fitzsimons Life Science District and Anschutz Medical Center, the
only lab-ready space in the area.
• Together, these two areas comprise one of the largest bioscience
developments in the country. Upon completion, the campus will be
among the nation’s most preeminent patient care and research
learning centers.
• Home to the University of Colorado Hospital, the University of
Colorado Denver’s Health Science Schools and Children’s Hospital
Colorado.
• Also included will be the 1.1-million-square-foot U.S. Veterans Health
Administration Hospital, currently under construction.
• Already, more than 16,000 people work within the district; plans
estimate a total workforce that will measure in excess of 45,000 and
include professions in teaching, patient care and biotech research
and development. Approximately 700,000 patients travel in and out of
the complex annually.
• The Southeast and SE Suburban submarkets combined for 7,245
square feet of negative net absorption during 2015, and 6,837 square
feet of negative net absorption during the first half of 2016, leading to
vacancy increasing 2.1 percent to 14.9 percent.
• Rental rates in the submarkets are currently at $18.00 and $9.25 per
square foot NNN—marking flat movement year-over-year.
• Historically, tenants have held the upper hand in negotiations, and
increasing vacancy will help them maintain control.
• Typical users include startups occupying shared, creative and
incubator space throughout their growth-mode phase.
• As more VC funding finds its way into the vicinity during the second
half of the year, expect an increase in like-kind occupiers to seek
space as close to Fitzsimmons and Anschutz as operating budgets
will allow.
• Looking forward, much of the currently vacant space will need to be
absorbed before any further new development will commence.
• District will continue to put Denver on the proverbial map of top U.S.
markets for life sciences in the years ahead.
RIA
8200 E Belleview Ave
Southeast Suburban
29,130 square feet
Class A
$19.25 NNN
ILIFF COMMONS BUS. PARK
MIG Real Estate, LLC
SE
RBA: 130,748
Class B
$93 per square foot
EMERGE
400 S. Colorado Blvd.
SE
5,018 square feet
Class B
$21.50 FSG
8585 CONCORD CENTER DR.
Hannay Realty Advisors
Southeast Suburban
RBA: 55,680
Class A
$151 per square foot
Activity key:
Facilities scorecard
SUPPLY SESoutheast
Suburban
Rentable lab stock
(% of cluster stock)
0.2M s.f.
5.0%
0.2M s.f.
5.4%
Direct vacancy
(Change year-over-year)
8.6%
(+4.0) ppts
20.8%
(+3.0) ppts
# of large blocks over 50,000 s.f. 0 0
Under construction (s.f.) 0 s.f. 0 s.f.
DEMAND
# of requirements
Total s.f. requirements
3
70,000 s.f.
14
1,360,750 s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$18.00 p.s.f.
0.0%
$9.25 p.s.f.
0.0%
Leasing
Sales
Under construction
Large blocks of space
24JLL | Denver | Life Sciences Outlook | 2016
West Suburbs / Southwest Suburban
West Suburbs / Southwest Suburban
A once sedentary submarket has
gained momentum with new tenants
• The West and Southwest Suburban submarkets are largely aligned
with the Jefferson County boundaries.
• Long considered a leading area for bioscience with renowned
research institutions and global companies, JeffCo boasts Colorado’s
second-highest concentration of medical device manufacturers at
29.5 percent.
• It is home to the Colorado School of Mines, where pioneering
research is being conducted in the field of nanomedicine and biofuel.
• Located in Golden, the National Bioenergy Center serves as the
nation’s central point of contact for bioenergy and bioproducts with its
state-of-the-art lab facilities spread across multiple federal agencies.
• JeffCo is increasingly a go-to locale for growing biotech companies
due to easy access from neighboring Boulder, Broomfield and
Denver counties.
• Space tends to be both second-generation lab space and flex/office-
to-lab conversion space, and as momentum has picked up over the
last year, the West Suburbs are on the cusp of containing major
lab supply.
• Tenant requirements are smaller in size, typically ranging from 2,500
to 10,000 square feet.
• Higher interest in the area could boost new development. A
confidential medical device company outside of Colorado is looking
to lease 10,000 square feet in Golden, and an existing pharma
company is looking to expand in the area as well.
• West Suburbs recorded positive 34,839 square feet of net absorption
during 2015 and positive 8,400 square feet of net absorption for the
first half of 2016.
• Southwest Suburban recorded positive 42,354 square feet of net
absorption in 2015 and positive 1,701 square feet of net absorption
during the first half of 2016.
• Vacancy in the West Suburbs increased due to the delivery of 150
Capital Dr., and would otherwise be 100 percent occupied.
• Vacancy in the Southwest Suburbs decreased 21.7 percent and
dipped below 10 percent for the first time since 2010.
• Rental rates are currently $10.00 per square foot NNN in the West
Suburbs, reflecting a 1.1 percent decrease from the previous year.
The submarket offers one of the lowest rates in the market.
• Rental rates are currently $11.47 per square foot NNN in the
Southwest Suburbs, a 6.9 percent increase from the previous year.
• Given the historically elevated vacancy rate, the life sciences market
pendulum has rested mostly with tenants for the past several years,
but is likely to swing toward landlords as more space is absorbed.
BIODESIGN, INC.
2460 W 26th Ave.
West Suburbs
2,627 square feet
Class B
$19 FSG
150 CAPITAL DR.
West Suburbs
110,520 square feet
Class B
$11.50 NNN
Delivered Q2 2016
90,520 square feet available
BIO MEDICAL APPLICATIONS
9139 S Ridgeline Blvd.
Southwest Suburban
7,795 square feet
Class B
$19.50 FSG
8015 W ALAMEDA AVE
American Realty Capital, LLC
West Suburbs
RBA: 31,306
Class C
$201 per square foot
Activity key:
Facilities scorecard
SUPPLY West SuburbsSouthwest
Suburban
Rentable lab stock
(% of cluster stock)
0.6M s.f.
13.2%
0.2M s.f.
4.7%
Direct vacancy
(Change year-over-year)
16.3%
(+14.4) ppts
8.5%
(-21.7) ppts
# of large blocks over 50,000 s.f. 1 0
Under construction (s.f.) 110,520 s.f. 0 s.f.
DEMAND
# of requirements
Total s.f. requirements
10
140,000 s.f.
3
80,000 s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$10.00 p.s.f.
-1.1%
$11.47 p.s.f.
6.9%
Leasing
Sales
Under construction
Large blocks of space
25JLL | Denver | Life Sciences Outlook | 2016
Greater Toronto Area
JLL | Greater Toronto Area | Life Sciences Outlook | 2016 26
Downtown Toronto – Discovery District
Toronto’s Discovery District is a unique 2.5 square kilometre research park and one of the most concentrated mix of research, biomedical companies,
finance and business support services in the world. The University of Toronto, which is ranked 4th in North America for medical research spending, is
also located in this node. More than $1 billion is directed annually to research activities and the area continues to see major new infrastructure
development that will support the commercialization of new scientific discoveries in the Toronto area.
Mississauga
Commonly known as the ‘Pill Hill’, the Meadowvale node within Mississauga has developed a substantial reputation for its life sciences cluster. It is a
highly concentrated node of pharmaceutical companies that base their sales, marketing, clinical studies and manufacturing within the node.
Mississauga is home to more than 353 life sciences companies that employ more than 24,800 people across the region.
Markham
Located just north of the city of Toronto, Markham is a bustling technology hub currently looking to leverage its strengths in high technology and
software development to grow its life science sector. Notable companies include Johnson & Johnson, Huawei and Abbott Laboratories.
Major lab supply:Clusters of established lab stock with long-time industry presence
Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing
Emerging lab supply:Areas with limited lab stock today that are poised for growth
The Greater Toronto Area is home to Canada’s largest combined life
sciences sector. It is the Canadian home for 6 of the top 10 global
pharmaceutical companies including Roche, Johnson & Johnson
and GlaxoSmithKline. It is also home to Canada’s most
concentrated life sciences research node, the Discovery District,
which has seen significant expansion over the past decade.
Toronto is expected to maintain its attractiveness as a major life
sciences hub as it continues to invest in major infrastructure
developments and leverage the cost advantage from the federal and
provincial grants, public sector incentive programs and tax credit
system. Federal and provincial government grants and public sector
incentive programs can reduce research and development (R&D)
costs by up to 60 percent. Toronto also offers significant labour cost
savings over established life sciences clusters in American cities.
Brampton
Mississauga Toronto
403
400
427
27
53
27
Economic scorecard
WORKFORCE Total life sciences% life sciences to private
employment
Year-over-
year growth
Employment 44,100 1.4% 32.8%
Establishments 1,296
FUNDING Total life sciences % to all of Canada
VC funding $196.2 million 37.5%
Small companies dominate
the life science industry (63.0
percent of Ontario companies
employ less than 10 people)
so the direct impact on real
estate is limited. Pharma
manufacturers have the
largest percentage of medium
and large companies who are
most likely to drive real estate
demand. Ontario’s share of
Canadian venture capital (VC)
funding has declined 20%
since 2001.
Life sciences employment composition
32%
16%18%
17%
17%Pharma & medicine manufacturing
Electromedical instrument manufacturing
Medical equipment & supplies manufacturing
Research & development
Medical & diagnostic laboratories
Life sciencesemployment
44,100
non-labusing
labusing
The Pharmaceutical sub
sector anchors the overall life
sciences ecosystem,
consisting of a number of
large multi-national
enterprises that focus on
sales, marketing, clinical
trails, operations support and
manufacturing in the GTA.
The research, testing and
medical laboratory segments
are relatively small, but one of
the fastest growing sectors
within life sciences and
poised for future growth.
Life sciences historical employment (‘000s) In 2015, the life science sector
is at a peak level of
employment with 44,100
employees in the GTA. We
expect long-term growth in
the GTA as firms are
receiving increasing levels of
support by academic
organizations and
government agencies alike.
This backing will allow the
GTA to continue to be a major
force in North American life
science sector.
JLL | Greater Toronto Area | Life Sciences Outlook | 2016
0
5
10
15
20
25
30
35
40
45
50
Downtown Toronto/Mississauga
Downtown Toronto
Tightening market conditions• Toronto's Discovery District, located within the Downtown North
submarket, has experienced considerable tightening in the last 12
months. Total vacancy in the Downtown North submarket has
contracted to its lowest levels since Q3 2012 at 3.7 percent.
• MaRS Centre has leased or contractually leased over 120,000
square feet since the beginning the year, contributing to the
tightening market conditions.
• In the spring of 2016, Johnson & Johnson opened its first JLABS
outside the United States at the MaRS West Tower, which will
provide 40,000 square feet of shared cutting edge lab space.
• Landlords in the University Avenue corridor are increasing net rental
rates and decreasing inducements. This trend will continue as
options in the area diminish and landlords react to the tightening
market conditions.
Mississauga
Available lab space in
Mississauga is rare
• Commonly known as the ‘Pill Hill’, the Meadowvale node in
Mississauga has developed a substantial reputation for its life
sciences cluster, that focus on sales, marketing, clinical trails,
operations support and manufacturing for companies like Amgen,
Baxter, McKesson, GlaxoSmithKline, Hoffman La-Roche (Roche),
and Bayer.
• One interesting trend over the past year has been the life science
leasing activity is the Airport Corporate Centre node of Mississauga
as Fresenius Kabi, McKesson Canada and PointClickCare all signed
major leases in the area.
• PointClickCare took Target’s former space in the recently completed
5570 Explorer Drive while Fresenius Kabi leased brand new space at
165 Galaxy Blvd. and McKesson Canada completely renovated
Sobeys former headquarters at 6355 Viscount Rd.
• The research and development hub of Sheridan Park in south west
Mississauga contains the bulk of the cities lab space with major
tenants such as Exova, Vale and Suncor, however, the majority of
that space is currently not being used by life science tenants.
• With very limited lab vacancy and no new lab construction currently
underway, new proposed lab space will be key to expanding lab
presence of the life science industry in Mississauga.
PointClickCare
5570 Explorer Drive
Airport Corporate Centre
185,088 s.f.
Class A
$21.75 Net
McKesson Canada
6355 Viscount Road
Airport Corporate Centre
93,000 s.f.
Class B
$16.00 Net
Cancer Care Ontario
525 University Ave.
Downtown North
74,000 s.f.
Class A
$25.00 Net
Fresenius Kabi
165 Galaxy Boulevard
Airport Corporate Centre
25,500 s.f.
Class A
$21.50 Net
Activity key:
Facilities scorecard
SUPPLY Toronto Mississauga
Rentable lab stock
(% of total stock)
2.1 m.s.f.
74.9%
720,000 s.f.
93.4%
Direct vacancy
(Change year-over-year)
0.0%
-1890 bps
1.2%
N/A
# of large blocks over 100,000 s.f. 0 0
Under construction (s.f.) 0 s.f. 0 s.f.
DEMAND
# of requirements
Total s.f. requirements
2
80,000 s.f.
0
0 s.f.
PRICING
Average asking rent (Net)
(Change year-over-year)
$30.00 p.s.f.
0.0%
$24.00 p.s.f.
N/A
Leasing
Sales
Under construction
Large blocks of space
28JLL | Greater Toronto Area | Life Sciences Outlook | 2016
Long Island
JLL | Long Island | Life Sciences Outlook | 2016 29
Nassau County
The life sciences industry in Nassau County is well positioned for growth as innovation-focused funding from the state solidifies groundbreaking bio-
science initiatives and research projects. Nassau County serves as headquarters for Cold Spring Harbor Laboratory, a 125-year-old biomedical
nonprofit laboratory, and is home to many lab-based companies such as Mirimus and Certerra. Great Neck-based Northwell Health, the largest
employer on Long Island, is expanding rapidly along with its research wing, The Feinstein Institute for Medical Research.The Nassau County life
sciences market is mainly comprised of owner-occupied laboratory facilities.
Suffolk County
Stony Brook University serves as an integral part of the research corridor initiative of Long Island. The National Institutes of Health has awarded Stony
Brook University’s Center for Biotechnology a three-year, $3 million grant to create the Long Island Bioscience Hub along with Cold Spring Harbor,
Brookhaven Laboratories, Codagenix, Traverse Biosciences and Marrowsource. Suffolk County is also home to Brookhaven National Laboratory, a 4
million-square-foot multipurpose research lab facility funded by the U.S. Department of Energy, founded in 1947. The majority of life sciences
establishments are in owner-occupied facilities in a campus setting. In recent years, pharmaceutical companies have dominated commercial activity
growth with the majority concentrated in Western and Central Suffolk.
Major lab supply:Clusters of established lab stock with long-time industry presence
Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing
Emerging lab supply:Areas with limited lab stock today that are poised for growth
The Long Island life sciences landscape will continue to fuel the
economy as firms emerge from Cold Spring Harbor Laboratory in
Nassau County, as well as Stony Brook University and Brookhaven
National Lab in Suffolk County.
Broadhollow Bioscience Foundation is actively seeking space across
Long Island for growing biotech firms, cementing Long Island as a
leading research corridor.
Huntington
Longisland
BayshoreHempstead
Freeport
106
27
111
25
25A
25A
27
495
30
Economic scorecard
WORKFORCE Total life sciences% life sciences to private
employment
Year-over-
year growth
Employment 28,274 2.6% -2.3%
Establishments 540 0.5% 0.9%
FUNDING Total life sciences % to total U.S.
VC funding $167.4M 2.44%
NIH funding $126.4M 1.19%
SUPPLY Rentable lab supply % direct vacancy
596,399 s.f. 13.9%
Cluster score:
30.0The number of
pharmaceutical and medicine
manufacturing
establishments in Suffolk
increased more than 25
percent since 2004.
The expanding chemical
manufacturing industry in
Long Island is the largest of
10 regions in the state and
has the second-fastest
employment growth rate.
Life sciences employment composition
Life sciencesemployment
28,274
non-labusing
labusing
Long Island biotech jobs have
grown approximately 60
percent since 1960, according
to the Long Island Index.
Pharmaceutical and medicine
manufacturing employment
lead life sciences employment
growth, having increased
more than 50 percent since
2004 in Suffolk. In Nassau,
employment in medical and
diagnostic laboratories
increased more than 40
percent since 2004.
Life sciences establishment composition
Life sciences establishments
540
Life sciences patents for
drug, bio-affecting and body
treating compositions
increased more than 20
percent since 2000 in the
metro area. Stony Brook
University faculty accounts
for numerous patents, and in
2014, the University received
157 rewards from the NIH,
worth $48.1 million.
JLL | Long Island | Life Sciences Outlook | 2016
35.1%
17.0%5.8%
29.4%
12.7%Pharma
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
18.7%
3.8%
19.2%
7.1%0.5%
50.6%
Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & Supplies MFG
Testing Laboratories
R&D
Medical & Diagnostic Laboratories
Long Island
Nassau County
Northwell Health fuels economic
growth on Long Island
• The Feinstein Institute for Medical Research, the research wing of
Northwell Health, recently joined the Long Island Bioscience Hub.
They are the fourth member institution of the national REACH
initiative as of April 2016.
• The $300 million Center for Bioelectronic Medicine is being planned
for the Nassau Hub area in Uniondale, and will convene scientists
and medical experts to commercialize non-drug treatments and
research neurodegenerative diseases and cancer.
• In April 2015, Cold Spring Harbor Laboratory and Northwell Health
formed a cancer research partnership in Lake Success, Western
Nassau. Northwell Health has invested more than $175 million to
expand cancer treatment centers throughout Long Island.
Suffolk County
Pharmaceutical industry thrives in
Hauppauge, drives sales activity
• Bactolac Pharmaceutical and sister company Sciegen
Pharmaceuticals plan to renovate and add 50,000 square feet of
storage space onto their recently purchased 92,000-square-foot
facility at 330 Oser Ave. in Hauppauge.
• A&Z Pharmaceutical is planning a $4.9 million expansion at its two
buildings in the Hauppauge Industrial Park. The firm wants to add
26,700 square feet to its facility at 350 Wireless Blvd., purchased in
2014, for use as a headquarters. A&Z also plans to lease 6,500
square feet at 180 Oser Ave., where it has offices and manufacturing.
• Fougera Pharmaceuticals plans to consolidate its local operations
into a new $88 million Melville plant that will retain nearly 400 jobs
and provide room for additional growth. The project includes
expanding, renovating and constructing 30,000 square feet at the
Melville facility, and is scheduled to break ground at the end of 2016
to be completed in 2020.
• Canon USA, Inc. is looking to open a genetic testing research center
on Long Island in a strategic effort to enter a burgeoning healthcare
market amid slowing sales revenues. The proposed laboratory would
be part of Canon BioMedical, Inc., a Melville-based subsidiary
formed in 2014.
ANGION BIOMEDICA CORP.
51 Charles Lindbergh Blvd.
Uniondale
40,000 square feet
Term: 15 years
Broadhollow Bioscience Park
West Cambridge
60,000 square feet
Class B
Direct Options
INVAGEN PHARMACEUTICALS
275 Carleton Ave.
Islip
125,000 square feet
Expected delivery: 2016
Bactolac Pharmaceutical
330 Oser Ave.
Hauppauge
100,000 square feet
Class C
$110 per square foot
Activity key:
Facilities scorecard
SUPPLY Nassau County Suffolk County
Rentable lab stock
(% of total stock)
261,276 s.f.
77.0%
335,123 s.f.
22.6%
Direct vacancy
(Change year-over-year)
14.8%
(0.4) ppts
13.2%
(0.1) ppts
# of large blocks over 100,000 s.f. 0 0
Under construction (s.f.) 0 270,000.f.
DEMAND
# of requirements
Total s.f. requirements
0
0 s.f.
2
180,000 s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$25.50 p.s.f.
0.7%
$16.95 p.s.f.
0.0%
Leasing
Sales
Under construction
Large blocks of space
31JLL | Long Island | Life Sciences Outlook | 2016
Los Angeles / Orange County
JLL | Los Angeles / Orange County | Life Sciences Outlook | 2016 32
Los Angeles overview
In the Los Angeles market, life sciences clusters are spread among West Los Angeles, South Bay, Los Angeles North, San Gabriel Valley and the
Santa Clarita Valley submarkets, and are typically centered near leading educational or large biotech firms. Leading private research institutions, such
as Cedar Sinai Medical Center, the City of Hope National Medical Center, Huntington Medical Research Institute, the Children’s Hospital of Los Angeles
and Kaiser Foundation Hospital are located in the Los Angeles basin. Two of the five University of California campuses with medical schools are located
in the Los Angeles / Orange County market: UCLA and UC Irvine. In addition, the region is home to major research universities. These include UC
Santa Barbara, Cal Tech and the University of Southern California (USC), which provide a large labor pool but does not necessarily attract venture
capital. Los Angeles County employs approximately 56,250 people in the life sciences sector.
Orange County Overview
Orange County became a hotbed for the life sciences industry initially in the 1950s when Allergan, Beckman Coulter and Edwards Life Sciences
founded their operations in the Airport Area. The county has now attracted more than 1,100 life sciences companies, and the industry employs more
than 115,000 people. Positive employment and company growth is expected, given the growing venture capital funding environment, expansion of UC
Irvine’s medical and research division, as well as venture capital entities like OCTANE, which connects new medical innovators to angel investors.
Major lab supply:Clusters of established lab stock with long-time industry presence
Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing
Emerging lab supply:Areas with limited lab stock today that are poised for growth
The Los Angeles / Orange County life sciences industry is
responsible for more than $27.3 billion in annual economic activity,
and employs more than 117,000 people. The metro is a leader in
patent generation but must better partner with the private sector to
commercialize research regionally.
There are more than 25 research institutes, universities and colleges
in the region that conduct research and train future generations of
scientists and entrepreneurs. This, coupled with the prevalence of
leading biotech companies in the market, positions this cluster as a
major industry player.
Downey
Simi Valley
Beverly Hills
Long Beach
West Covina
Laguna Niguel
405
405
210
110605
33
Economic scorecardWorkforce Total life sciences % life sciences to private employment
Year-over-
year growth
Employment 120,688 2.38% 3.1%
Establishments 3,059 0.5% 2.0%
Funding Total life sciences % to total U.S.
VC funding $427M 6.22%
NIH funding $1,002.2M 8.71%
SUPPLY Rentable lab supply % direct vacancy
2,003,262 s.f. 23.4%
Cluster score:
44.768.1 percent of Southern
California’s NIH funding went
directly to the top three
medical research universities:
UCLA, USC and UCI.
Surrounding UC Irvine are
campus office buildings that
continue to be filled with top-
tier medical corporations that
partner with the university for
research and partnership
purposes.
JLL | Los Angeles / Orange County | Life Sciences Outlook | 2016
Life sciences employment composition
Life sciencesemployment
120,688
non-labusing
labusing
Despite a recent drop in
employment attributable to
consolidations, the region’s
life sciences sector has been
one of the most explosive
drivers of employment since
the 2007 recession. Factors
driving employment are
medical-based companies
entering the Los Angeles /
Orange County market as well
as companies currently based
and aggressively expanding
operations.
Life sciences establishment composition
Life sciences establishments
3059
The Los Angeles / Orange
County Life Sciences cluster
produces 31 percent of all
U.S. patents, yet the metro
accounts for only 16.2
percent of the VC funding and
9 percent of NIH funding.
Much of the innovation
comes from leading academic
research institutions, which
may lack the experience in
commercializing research.
Also, L.A. lacks a centralized
cluster to bring innovation
and capital together.
9.8%
31.4%
21.6%
5.1%
19.6%
12.4%Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
5.2%
13.6%
21.3%
10.6%
24.5%
24.7%
Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
Los Angeles
JLL | Los Angeles | Life Sciences Outlook | 2016 34
Los Angeles
Market vacancy lowest since
last peak
• The Los Angeles life sciences market covers 4.4 million square feet
of life sciences inventory, 1.2 million square feet of which is lab
space. The balance of the space is commercial office space.
• The region’s biotech companies typically focus on low-rise / flex
buildings, which are more affordable and can be adapted to fit these
companies’ unique needs such as floor size, loading capabilities,
ceiling height and ability to vent. Los Angeles County has few multi-
tenant life sciences buildings given the overall size of the market.
• The Los Angeles life sciences market vacancy is at 2.9 percent, the
lowest since the last market peak when vacancy reached 2 percent
in 2006.
• Despite limited inventory, current lab space construction is minimal,
suggesting that the supply should remain tight in Los Angeles.
• Presently, there are three active requirements in the market, totaling
257,000 square feet.
• Quest Diagnostics is in the market for 160,000 square feet.
• Los Angeles-based Kyte Pharma opened a 43,000-square-foot CAR
T-Cell Therapy manufacturing facility in El Segundo.
• Culver City start-up NantHealth, initiated a public offering in June
2016. The company is focused on developing DNA sequencing tests
designed to better guide cancer treatments.
• Monrovia-based Xencor signed a $150 million transaction with Swiss
pharmaceutical company Novartis to develop and commercialize two
experimental cancer drugs.
• UCLA Clinical and Scripps Translational Science Institute received a
$69.6 million grant from the National Institutes of Health (NIH).
• Thousand Oaks-based Amgen announced that it has entered into an
exclusive contract with Tokyo-based pharmaceutical company
Daiichi Sankyo to commercialize nine biosimilar drugs in Japan.
• Given the market emphasis on research, the demand for lab space
should be strong, second only to device manufacturing. The high
number of utility patents generated in Los Angeles will ensure future
growth in the manufacturing sector.
Cedars
The Runway
Playa Vista
40,000 square feet
Term: 11 years
Molina Healthcare
1 World Trade Center
73,500 square feet
Long Beach
Term: 2 years
Providence Health
12555 Jefferson Blvd.
Playa Vista
33,775 square feet
Term: 15 years
Facilities scorecard
SupplyLos Angeles
Major Lab
Rentable lab stock
(% of cluster stock)
1,163,972 s.f.
26.6%
Direct vacancy
(Change year-over-year)
2.9%
(-140) ppts
# of large blocks over 50,000 s.f. 0
Under construction (s.f.) 0 s.f.
Demand
# of requirements
Total s.f. requirements
3
257,000 s.f.
Pricing
Average asking rent (NNN)
(Change year-over-year)
$30.67 p.s.f.
(3.0)%
2100 W. 3rd St.
Mid-Wilshire
140,054 square feet
Class A
$52.2 million / $373.10 per square
foot
Activity key:Leasing
Sales
Under construction
Large blocks of space
Orange County
JLL | Orange County | Life Sciences Outlook | 2016 35
Orange County
Medtech growth adds new dynamic
to Orange County economy
• The Orange County life sciences market covers 3.8 million square
feet of life sciences inventory, of which 403,262 square feet is lab
space. A heavy majority (85 percent) of the inventory base is
from flex buildings, with the remaining properties classified as office
or industrial.
• With the life sciences industry growing at a swift pace in Orange
County, competition to lease or purchase lab space should remain
strong, particularly with the lack of new construction in the market.
• Some of the largest life sciences companies have a presence in
Orange County, which include Allergan, Edwards Lifesciences,
Applied Medical Resources Corporation, B. Braun Medical
and Beckman Coulter. These firms have a total of 10,100
Orange County employees.
• As of Q2 2016, $319,741,300 of venture capital funding has been
invested in Orange County life sciences firms over the last 12 months,
according to PwC MoneyTree. Alphaeon ($80,061,100), Axonics
Modulation Technologies ($38,513,300), Reshape Medical
($38,000,200) and Sonendo ($33,266,000) are leading the way in
closed investment rounds.
• Ambry Genetics recently opened a 65,000-square-foot lab located
near its HQ in Aliso Viejo, which is being called a “super lab.”
• Japan-based Terumo has acquired Orange County-based
Sequent Medical for $280 million. Terumo also owns locally-
based MicroVention.
• The Orange County economy is becoming more diversified, and life
sciences has been one of the leading industries contributing to this
diversification. As demand for services provided by firms from this
sector grows, the local economy and commercial real estate market is
expected to continue to feel the positive impact from the industry
growth.
Image Options
80 Icon
Foothill Ranch
100,643 square feet
Term: 7.3 years
Masimo
15776 Laguna Canyon Rd.
Irvine
70,722 square feet
Term: 10 years
Facilities scorecard
SupplyOrange County
Emerging Lab
Rentable lab stock
(% of cluster stock)
403,262
10.5%
Direct vacancy
(Change year-over-year)
5.9%
(-150) ppts
# of large blocks over 50,000 s.f. 1
Under construction (s.f.) 0 s.f.
Demand
# of requirements
Total s.f. requirements
2
450,000 s.f.
Pricing
Average asking rent (NNN)
(Change year-over-year)
$14.16 p.s.f.
(10.3)%
MicroVention
1311 Valencia Dr.
Tustin
71,616 square feet
Term: 5 years
SGII, Inc.
19651 Alter
Foothill Ranch
49,415 square feet
Term: 7 years
Activity key:Leasing
Sales
Under construction
Large blocks of space
Suburban Maryland/Metro DC
JLL | Suburban Maryland / Metro DC | Life Sciences Outlook | 2016 36
Suburban Maryland / Metro D.C. overview
The Suburban Maryland / Metro D.C. region benefits from the abundance of large educational institutions in close vicinity, including the University of
Maryland, George Washington University, Georgetown University, George Mason University and Catholic University. The Universities at Shady Grove
offer a path for local students to transfer into programs at nine Maryland state universities. Each school is individually represented on the campus, and
with this new approach to learning, there are plans to increase the number of college graduates in the Shady Grove area.
In addition to educational institutions, the region benefits from the proximity to the federal government. Government agencies such as the National
Institutes of Health (NIH) and the U.S. Food and Drug Administration (FDA) have provided contracts for private sector companies as well as a critical
mass of scientists who have gone on to start or staff many of the region’s private bioscience companies.
Aside from its federal and educational exposure, the companies that led the region’s development into a life sciences cluster include MedImmune,
Qiagen and Emergent Biosolutions. Recently, homegrown life sciences companies have launched IPOs. These companies include MacroGenics,
Glyomimetic and RegenxBio. There are an abundance of life sciences companies located in Montgomery County, particularly along the I-270 corridor
in Maryland, where the Shady Grove micro-market is home to a majority. Washington, D.C. and Northern Virginia act as supporting clusters to life
sciences activity in Maryland, as their proximate locations keep talent and funding flowing across the region.
Major lab supply:Clusters of established lab stock with long-time industry presence
Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing
Emerging lab supply:Areas with limited lab stock today that are poised for growth
The Suburban Maryland / Metro D C. cluster is distinctive in that it
sources the vast majority of its intellectual resources from the federal
government and that the region benefits from proximity to several
large educational institutions.
This cluster of innovation has put the area at the top of the list in
regards to pay, with the average STEM salary at $100,787.
270
270
Frederick Submarket
I-270 Corridor Submarket
37
Economic scorecard
WORKFORCE Total life sciences% life sciences to private
employment
Year-over-
year growth
Employment 39,145 2.2% 4.2%
Establishments 1,656 1.2% 6.9%
FUNDING Total life sciences % to total U.S.
VC funding $154.0M 2.24%
NIH funding $506.5M 4.77%
SUPPLY Rentable lab supply % direct vacancy
9,500,000 s.f. 4.3%
Cluster score:
53.2As the Suburban Maryland /
Metro D.C. area has seen a
rise in employment, it
continues to remain a strong
market for biosciences
research and development,
including the new $510
million U.S. Army Medical
Research Institute of
Infectious Diseases in
Frederick and the expansions
of companies such as
Novavax taking close to
150,000 square feet in 2016.
Life sciences employment composition
Life sciencesemployment
39,145
non-labusing
labusing
Life Sciences employment in
the Suburban Maryland /
Metro D.C. area is largely in
the R&D category. Access to
universities and the vast
concentration of government
research facilities contribute
to the number of R&D
opportunities in the region.
Life sciences establishment composition
Life sciences establishments
1,656
The life sciences
establishment composition
reflects the employment
composition in the region, as
both comprise more than two-
thirds in each category. Life
sciences companies in
Suburban Maryland / Metro
D.C. have evolved out of the
areas universities and the
presence of federal agencies.
JLL | Suburban Maryland / Metro DC | Life Sciences Outlook | 2016
8.63%
6.93%
1.71%2.04%
67.68%
13.02%
Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & Supplies MFG
Testing Laboratories
R&D
Medical & Diagnostic Laboratories
8.63%
6.93%
1.71%2.04%
67.68%
13.02%
Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & Supplies MFG
Testing Laboratories
R&D
Medical & Diagnostic Laboratories
Suburban Maryland: I-270 Corridor and Frederick
38
I-270 Corridor
Industry growth has decreased
vacancy in the market
• Novavax expanded off Firstfield Road into 147,051 square feet at
1201 Clopper Rd. Over the pasts year, the company has hired more
than 100 new employees.
• Wellstat Biologics Corporation, which currently occupies 59,838
square feet at 930 Clopper Rd., signed a sublease for 115,000 square
feet at 14200 Shady Grove Rd.
• On the capital market’s front, the major headline was the $7.9 million
sale of 65 West Watkins Mill Rd. from Midwest Research Institute to
MRI Global, which changed the status of the building to owner-
occupied.
• Alexandria Real Estate Equities opened its new LaunchLabs at 708
Quince Orchard Rd. in Gaithersburg. ARE ventured in speculative lab
renovation to cater to early-stage life sciences companies. There was
a growing need for small lab space after Montgomery County closed
the Shady Grove Innovation Center at 9700 Great Seneca Highway,
which housed 34 biotechnology startups.
Frederick
Suburban Maryland’s emerging
market
• The city of Frederick finalized a loan package that will continue work
on MedImmune’s planned expansion in Frederick. The biotechnology
firm owned by AstraZeneca will now have the ability to expand on
Solarex Court. MedImmune anticipates to add 300 jobs with the
expansion of its manufacturing plant.
• Joint-venture partners Manhattan Construction and Torcon of Red
Bank completed the $510 million U.S. Army Medical Research
Institute of Infectious Diseases building. The 865,000-square-foot
facility features the latest in bio-containment technology to examine
threatening bacteria and viruses such as the Ebola virus. This six-
story laboratory facility will contain the largest block of Biosafety Level
(BSL) 3 and BSL 4 laboratory suites in the world. Partial occupation
started in 2015, with full occupation anticipated by 2017. Activity key:
Facilities scorecard
SUPPLYMajor lab market
(I-270)
Rentable lab stock
(% of cluster supply)
9.5M s.f.
81.2%
Direct vacancy
(Change year-over-year)
4.3%
680 bps
# of large blocks over 50,000 s.f. 2
Under construction (s.f.) 0
PRICING
Average asking rent (NNN)
(Change year-over-year)
$22.26 p.s.f.
36.2%
NOVAVAX
1201 Clopper Rd.
I-270 Corridor
147,051 square feet
Class A
5 RESEARCH COURT
I-270
54,906 square feet available
Class B
WELLSTAT
14200 Shady Grove Rd.
I-270 Corridor
115,000 square feet
Class A
Sublease from GSK
65 W. WATKINS MILL RD.
MRI Global
I-270 Corridor
RBA: 42,900 square feet
Class B
$7.9 million
Leasing
Sales
Under construction
Large blocks of space
JLL | Suburban Maryland / Metro DC | Life Sciences Outlook | 2016
Montréal
JLL | Montréal | Life Sciences Outlook | 2016 39
West Island / Saint-Laurent
The West Island / Saint-Laurent submarket cluster is home to more than 60 percent of Montréal’s occupied inventory for lab and manufacturing space.
Tenancies in this cluster are divided evenly between three hubs: Technoparc Montréal, NEXUS 40-13 and the West End. Product in these hubs
consists primarily of second generation lab and manufacturing space and new office developments. With the exception of eight large tenants that
occupy more than 50,000 square feet, the majority of the tenant requirements in this area fall in the 10,000 to 15,000 square foot range.
Laval
Laval’s Biotech City is the second largest cluster for occupied lab and manufacturing space in Montréal. With a radius of three kilometers, the area is
the most dense grouping of life sciences companies in Montréal. Laval is located in a different administrative region than Montréal, meaning
companies here benefit from a different structure of tax incentives and credits for the operation of their activities.
Downtown and periphery
The downtown and its periphery area are seeing a rejuvenation of life sciences facilities with the construction of three major hospitals and research
and development (R&D) centers. These sites are being created in partnership with local universities and represent over $5.0 billion in investments.
Major lab supply:Clusters of established lab stock with long-time industry presence
Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing
Emerging lab supply:Areas with limited lab stock today that are poised for growth
Montréal is a major pharmaceutical hub in Canada, with more than
200 corporations. It is home to the Canadian headquarters of giants
like Pfizer, Sanofi, Valeant Pharmaceuticals and Merck. The city
encompasses one-third of all life sciences companies in Canada.
Montréal sees the largest number of university graduates in Canada
per year and offers generous tax incentives to life sciences firms.
This leaves Montréal well positioned to foster partnerships between
private and public organizations. As a result, we expect ongoing
innovation and long-term growth of the industry.
40
Economic scorecard
Workforce Total life sciences % life sciences to total employmentYear-over-
year growth
Employment 39,500 1.9% 50.7%
Establishments 493 3.4%
Funding Total life sciences % to total Canada
VC funding CAD $175.1 million 33.9%
Year-over-year employment
growth has increased 38
percent in Montréal’s life
science sector. This increase is
caused by comparatively lower
labour and location costs which
remain highly attractive to
foreign companies that are
benefitting from current
exchange rates. The two main
reasons for overall growth have
been an increase of 68 percent
in VC funding along with a
weakening Canadian Dollar.
JLL | Montréal | Life Sciences Outlook | 2016
Life sciences employment composition
42%
14%
31%
13%Pharma & medicine manufacturing
Medical equipment & supplies manufacturing
Research & development
Medical & diagnostic laboratories
Life sciencesemployment
39,500
non-labusing
labusing
According to KPMG’s 2016
international comparative study
on business location costs,
Montreal ranked as the 3rd most
competitive city among major
cities in the world, just behind
Mexico City and Monterrey. This
is mainly due to the US dollar
appreciating 30 percent against
the Canadian Dollar over the
past five years. Montréal’s VC
funding continues to rise and
increased 68 percent year-over-
year, which makes up 33
percent of total Canadian VC
funding.
Life sciences historical employment (‘000s) In Quebec, 2.28 percent of the
province’s GDP is spent on
R&D. That is the highest
percentage for any province in
Canada, and in comparison to
other global markets, exceeds
the averages for France, the
Netherlands and the United
Kingdom. Since 2004, R&D
spending in proportion to
provincial GDP has been higher
in Québec than in any other
Canadian province.0
5
10
15
20
25
30
35
40
45
*Data at end of Q4 in each year
Montréal
41
Redevelopment of current lab
space accommodates market
rebound.
West Island / Saint-Laurent
• The former Merck Canada headquarters in the West End is currently
undergoing a transformation to accommodate new tenants to occupy a
portion of the only major lab space currently available in Montréal. An
international freight logistics company will take possession in November
2016, and relocate 500 employees to occupy approximately 100,000
square feet of old lab space in March 2017. Demolition has commenced
to tear down obsolete sections of the former Merck campus to
accommodate future tenants.
• The Quebec Government has made a contribution of $418,000 to
Nestle Skin Health for its medical division, Galderma, located at 19400
Route Trans-Canada. This will support the implementation of a $46
million investment project which will expand the company's current
factory and increase production capacity.
• Lundbeck, an international research-based pharmaceutical company
focused on brain diseases and oncology, has decided to relocate from
the downtown core to Saint-Laurent at 2600 Alfred-Nobel.
Laval
• Vertex Pharma, an international biotech company, has renewed their
63,140 square foot lease of high quality lab space at 275 Armand-
Frappier.
• Valeant Canada has relocated U.S. production of Jublia from Tokyo,
Japan to Laval’s Biotech City. This relocation has generated a total
investment of over $1 million for the Laval plant.
• Neomed Institute’s biological products and vaccines division, at the
Biotech City in Laval, bring together small and medium enterprises
specialized in Life Sciences. The first occupants are Biodextris, Bio-K
Plus International, and PAIRimmune.
• Duchesnay Inc. is undertaking significant work to double its production
area. In total, more than $5 million will be invested in building upgrades
and cutting edge equipment to increase production capacity.
Downtown and periphery
• McGill University Health Centre built its new Research Institute with
advanced facilities, including new laboratories. MUHC Research
Institute invested $210 million in the building and another $100 million in
equipment.
• The completion of the CHUM superhospital, located at St-Denis and
Viger Avenue, that was due April 2016, will be delayed 7 months until
November 2016.
• While demand for lab space devoted to pharmaceutical, biological or
medical device and instrument manufacturing are predominantly
clustered in the West End, Saint-Laurent and Laval, Downtown will likely
see an increase in demand for medical clinic space in alignment with the
newly MUHC and the CHUM superhospital.
Vertex Pharma
275 Boul. Armand Frappier
Laval
Class A
60,000 s.f.
Renewal
Abbvie
St-Laurent
120,000 s.f.
Class A
Q1 2017
Lundbeck
Saint-Laurent
17,583 s.f.
Class A
Relocation
16744 TRANS-CANADA HWY
(OLD MERCK HQ)
West End
600,000 s.f.
Class A
Direct
Facilities scorecard
SupplyMontréal
major lab
Rentable lab stock
(% of total stock)
0.9 m.s.f.
7.0%
Direct vacancy
(Change year-over-year)
13.0%
+0.3%
# of large blocks over 100,000 s.f. 1
Under construction (s.f.) 0
Demand
# of requirements
Total s.f. requirements
15
319,000 s.f.
Pricing
Average asking rent (NET)
(Change year-over-year)
$14.10 p.s.f.
(1.5%)
JLL | Montréal | Life Sciences Outlook | 2016
Activity key:Leasing
Sales
On the market
Large blocks of space
New Jersey
JLL | New Jersey | Life Sciences Outlook | 2016 42
Northern New Jersey
Northern New Jersey includes Bergen, Essex, Hudson, Morris and Passaic counties. The owner-occupied and leased R&D / lab inventory totals less
than 3.8 million square feet. Roche’s Clifton / Nutley research campus formerly represented one of the largest concentrations of lab space in this
market. However, after acquiring Genentech and relocating its U.S. headquarters to San Francisco in 2009, Roche ceased operations at the campus in
2013. Hackensack University Health Network and Seton Hall University plan on opening the first private medical school in New Jersey in 50 years on a
portion of the campus. Scheduled to open in fall of 2017, the new school will occupy approximately 500,000 square feet in two buildings. The joint
venture was also approved for a 10-year, $16.9 million Grow New Jersey economic incentive award for the development of the medical school, which
will anchor the 119-acre site.
Central New Jersey
More than three-quarters of the R&D / lab space in the state is focused in Central New Jersey, which includes Hunterdon, Mercer, Middlesex,
Monmouth, Somerset and Union counties. Totaling nearly 12.5 million square feet, more than 60 percent of this space is comprised of owner-occupied
R&D / lab facilities used for research, manufacturing and support operations. Most of the inventory is focused along the Route 1 corridor from North
Brunswick south to Princeton, the Bridgewater area in Somerset County and Kenilworth / Summit in Union County.
Major lab supply:Clusters of established lab stock with long-time industry presence
Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing
Emerging lab supply:Areas with limited lab stock today that are poised for growth
Over the course of the past 130 years, the pharmaceutical / life
sciences industry has developed into one of New Jersey’s leading
economic engines. The state is home to headquarters or operations
for 13 out of the 20 largest pharmaceutical / life sciences companies.
New Jersey’s large amount of peer companies combined with a
highly skilled workforce, world-class universities and top teaching
hospitals have helped make the state a hub for the
pharmaceutical/life sciences sector.
42
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Bronx
Brooklyn
Staten
Island
Queens
43
Economic scorecard
WORKFORCE Total life sciences% life sciences to private
employment
Year-over-
year growth
Employment 77,326 3.2% -1.8%
Establishments 1,712 1.0% -0.4$
FUNDING Total life sciences % to total U.S.
VC funding $183M 2.67%
NIH funding $210.3M 1.83%
SUPPLY Rentable lab supply % direct vacancy
6,707,903 s.f. 17.6%
Cluster score:
40.8Despite consolidations and
mergers among the larger
pharmaceutical companies
that caused life sciences
employment to trend lower,
New Jersey houses the
world’s highest concentration
of scientists per square mile.
The life sciences industry
employed more than 77,300
people statewide, with an
annual economic impact
estimated to be more than $30
billion.
Life sciences employment composition
Life sciencesemployment
77,326
non-labusing
labusing
Pharmaceutical and medicine
manufacturing has
historically accounted for the
largest portion of
employment in New Jersey’s
life sciences sector. Bristol-
Myers Squibb, Johnson &
Johnson, Lifecell and Merck
are among the state’s well-
known employers in the
pharmaceutical and medicine
manufacturing cluster.
Life sciences establishment composition
Life sciences establishments
1,712
New Jersey’s life sciences
industry can trace its
innovative roots back to 1886
when three brothers founded
Johnson & Johnson in New
Brunswick and the company
became the first commercial
manufacturer of sterile
surgical dressings. Today, a
growing number of life
sciences companies are
pursuing collaborative
partnerships with the state’s
academic institutions to bring
innovative products and ideas
to market.
JLL | New Jersey | Life Sciences Outlook | 2016
25.1%
9.1%
13.6%5.7%
30.5%
16.1%Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
11.7%
11.0%
16.6%
9.9%
25.5%
25.2%
Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & Diagnostic Laboratories
New JerseyNorthern New Jersey
M&A shuffling local industry players
• Hackensack University Health Network and Seton Hall University
were awarded a 10-year, $16.9 million Grow New Jersey economic
award for a future medical school at the former Roche Clifton / Nutley
research campus. The two-building campus is scheduled to open in
the fall of 2017.
• Zoetis, the Pfizer animal health company spinoff, will relocate its
global HQ from Florham Park after leasing a 125,445-square-foot
building at 10 Sylvan Way in Parsippany, which is being stripped to
its steel frame and rebuilt.
• Ascensia Diabetes Care absorbed 42,670 square feet at 5 Wood
Hollow Rd. in Parsippany. The new stand-alone company was
formed from the diabetes care business that Panasonic Healthcare
acquired from Bayer.
• Bayer HealthCare purchased 86 acres from Vision RE Partners and
Rubenstein Partners. The space will be used for future expansion
adjacent to its 675,000-square-foot East Coast HQ in Hanover.
• M&A continued to make headlines as Teva Pharmaceuticals
purchased the generic division of Allergan for $40.5 billion, while
Endo International plans to acquire Par Pharmaceuticals for $8.05
billion. In addition, Zoetis purchased PHARMAQ, a vaccine and
health products aquaculture company, for $765 million.
Central New Jersey
Somerset / Union Counties provide
center stage for pharma activity
• Valeant Pharmaceuticals leased a 310,000-square-foot building at
300 Somerset Corporate Blvd. in Bridgewater. The Canadian-based
pharmaceutical company also signed a lease extension involving
310,000 square feet at 400 Somerset Corporate Blvd.
• Daiichi Sankyo will consolidate from Parsippany and Edison following
its 305,000-square-foot lease at 211 Mount Airy Rd. in Basking Ridge
for its new U.S. headquarters.
• Nestlé Health Science leased 180,000 square feet at the New Jersey
Center of Excellence in Bridgewater, and will invest $70 million
toward the development of a new product technology center here.
• GSK Consumer Healthcare, formed from the merger of Glaxo-
SmithKline’s and Novartis’ consumer health care businesses,
absorbed 144,540 square feet at 184 Liberty Corner Rd. in Warren.
• Biotech company Celgene purchased a 1.5 million-square-foot R&D
campus from Merck & Co. in Summit, and also completed a 195,000-
square-foot expansion at its global HQ, also in Summit .
CELGENE
556 Morris Ave.
Central N.J / Route 78
1.5 million square feet
R&D campus acquisition
PURDUE PHARMA LP
Northern N.J / Route 80/23/46
330,000 square feet
Pharmaceutical manufacturing
facility disposition
NESTLE HEALTH SCIENCE
Central N.J. /Route 78
180,000 square feet
R&D facility lease
VALEANT PHARMACEUTICALS
300 and 400 Somerset Corp.
Blvd.
Central N.J. / Route 78
310,000-square-foot office lease
expansion
310,000-square-foot office lease
extension
Activity key:
Facilities scorecard
SUPPLYNorthern NJ
Major lab
Central NJ
Major lab
Rentable lab stock
(% of cluster stock)
2.3M s.f.
60.8%
4.4M s.f.
35.5%
Direct vacancy
(Change year-over-year)
31.3%
(0.7) ppts
13.5%
(1.8) ppts
# of large blocks over 50,000 s.f. 6 12
Under construction (s.f.) 0 0.7M s.f.
DEMAND
# of requirements
Total s.f. requirements
3
0.5M s.f.
4
0.3M s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$10.38 p.s.f.
-8.9%
$17.55 p.s.f.
-4.1%
Leasing
Sales
Under construction
Large blocks of space
44JLL | New Jersey | Life Sciences Outlook | 2016
New York
JLL | New York City | Life Sciences Outlook | 2016 45
New York
New York City is an emerging destination for life sciences tenants, as the local economy continues to diversify and embrace new industries. According
to the local Economic Development Corporation, the area is home to the largest concentration of medical centers, research foundations and academic
institutions. The life sciences scene in New York City is also bolstered by its close proximity to other biotech enclaves in the larger metro area—
namely New Jersey, Long Island and Westchester County.
Major lab supply:Clusters of established lab stock with long-time industry presence
Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing
Emerging lab supply:Areas with limited lab stock today that are poised for growth
New York City is emerging as a leading destination for biotech
startups and the larger life sciences industry.
Investors have committed millions of dollars throughout the city and
larger region to fuel industry growth in the life sciences and attract
top talent.
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Brooklyn
Staten
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46
Economic scorecard
WORKFORCE Total life sciences% life sciences to private
employment
Year-over-
year growth
Employment 13,947 0.4% 0.4%
Establishments 1,074 0.5% 6.8%
FUNDING Total life sciences % to total U.S.
VC funding $437.2M 6.2%
NIH funding $1,506.9M 13.10%
SUPPLY Rentable lab supply % direct vacancy
2,783,094 s.f. 32.6%
Cluster score:
34.7New York City continues to
be a leading destination for
venture capital funding and
investment by the National
Institutes of Health (NIH).
Life sciences employment composition
Life sciences13,947
non-labusing
labusing
The NYC Early-Stage Life
Sciences Funding Initiative,
sponsored by a local public-
private partnership, is
expected to create 2,000 life
sciences jobs over the next
few years.
Life sciences establishment composition
Life sciences establishments
1,074
New York City, home to a
large cluster of prominent
medical centers, research
foundations and academic
institutions, attracts global
talent to its life sciences
industry.
JLL | New York City | Life Sciences Outlook | 2016
2.23%2.79%
22.53%
4.38%
28.31%
39.76%
Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
1.46%4.59%
9.99%
0.98%
46.62%
36.36%
Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & Supplies MFG
Testing Laboratories
R&D
Medical & Diagnostic Laboratories
New York
New York City (Manhattan & Brooklyn)
Major life sciences initiative underway in
New York City
• With support from the New York City Economic Development
Corporation (NYCEDC) and the local government, New York City is
an emerging cluster for the growing life sciences industry. A number
of factors allow the sector to thrive. As a global financial leader, the
city’s direct access to capital and its rich talent pool contribute to its
status as an ideal destination. A diverse economic landscape and
proximity to the booming tech sector have also created unique
opportunities for innovation among established life sciences tenants
and smaller startups. New York City is already home to recognized
industry giants (like Roche, Pfizer and Eli Lilly), and the NYCEDC
estimates that more than 100 other life sciences companies are
located throughout Manhattan and Brooklyn. Additionally, New York
boasts the world’s largest cluster of renowned academic institutions,
research foundations and medical centers.
• The NYCEDC has continued its efforts to foster growth in the life
sciences throughout the city. It created the Early-Stage Life
Sciences Funding Initiative through a public-private partnership with
Eli Lilly, GE Ventures and Celgene, which is slated to inject $150
million into what the NYCEDC deems as “breakthrough” ventures to
spur bioscience research and development as well as create an
anticipated 2,000 jobs over the next few years. The Initiative also
plans to add approximately 450,000 square feet of commercial
bioscience research and lab space.
• Alexandria Real Estate Equities, developer of the Alexandria Center
for Life Science, recently announced the opening of LaunchLabs at
the property. LaunchLabs will serve as a 15,000-square-foot
incubator that provides shared, affordable space for pharmaceutical
and medical startups. Alexandria’s venture division will also set up a
seed fund of up to $25 million to support new firms.
• On Roosevelt Island, construction continues on Cornell’s new 2.1-
million-square-foot tech campus dedicated to the applied sciences.
Phase I of the project is expected to deliver in 2017. Elsewhere in
Brooklyn, renovation is underway at the 1 million-square-foot Building
77 in the Navy Yard. More than $140 million has been invested into
the industrial building, which is slated for delivery in 2017, to
transform it into a biotechnology and manufacturing hub.
Nestle Skin Health
New lease
430-450 E 29th St.
(Alexandria Life Center)
Gramercy Park
31,000 square feet
BioBAT
Brooklyn Army Terminal
Building A
140 58th St.
South Brooklyn Waterfront
438,000 square feet
Former Pfizer Building
630 Flushing Ave.
Flushing Ave. Corridor
438,676 square feet
Eli Lilly & Co.
Expansion
430-450 E 29th St.
(Alexandria Life Center)
Gramercy Park
30,000 square feet
Activity key:
Facilities scorecard
SUPPLY NYC
Rentable lab stock
(% of total stock)
2.8M s.f.
99.4%
Direct vacancy
(Change year-over-year)
32.6%
(8.8) ppts
# of large blocks over 50,000 s.f. 2
Under construction/
redevelopment (s.f.)3.6M s.f.
PRICING
Average asking rent (gross)
(Change year-over-year)
$27.30 p.s.f.
(19.7)%
Leasing
Sales
Under construction
Large blocks of space
47JLL | New York City | Life Sciences Outlook | 2016
Between 2010 and 2014, Philadelphia added Bachelor’s Degree-
holding individuals at a faster rate (21.8 percent) than any of the ten
largest U.S. cities, and grew its millennial population by 66,000. The
city’s talent pipeline is ideal for growing firms seeking new hires.
Philadelphia
JLL | Philadelphia | Life Sciences Outlook | 2016 48
Philadelphia overview
The Philadelphia market acts as a global anchor for the life sciences industry, boasting more than 11 million square feet of life sciences real estate.
Philadelphia’s world-renowned academic institutions, centers of excellence for medicine, clusters of venture capital firms and a diversity of startups
and mature corporations make life sciences in the region resilient.
CBD (University City & The Navy Yard)
15 percent of the region’s lab space exists in University City, which is Philadelphia’s largest lab cluster and priciest office submarket. Multiple years of
single-digit vacancy has helped catalyze new construction. The 320,000-square-foot building at 3675 Market St., of which 40.0 percent (128,000
square feet) is lab, will deliver in late 2017. Investments by major developers and institutional players make this the submarket to watch.
Suburbs (Route 202 Corridor)
The Route 202 Corridor, extending from Exton, heading east through Malvern, and finally ending in King of Prussia, is home to 37 percent of the
Philadelphia market’s lab space.
Suburbs (Bucks / Montgomery County)
Bucks / Montgomery County is the region’s largest submarket on a square-footage basis, largely because Merck & Company occupies 3.6 million
square feet, or 71 percent, of the total square footage.
Major lab supply:Clusters of established lab stock with long-time industry presence
Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing
Emerging lab supply:Areas with limited lab stock today that are poised for growth
Philadelphia’s market fundamentals are strong as a result of a
diverse ecosystem of established pharma firms and new startups,
supported and incubated by growing research institutions. Growing
local access to sources of venture capital remains a priority.
276
476
76
95
1
130
322
1
Wilmington
King of Prussia
Cherry Hill
Trenton
Philadelphia
45
49
Economic scorecard
WORKFORCE Total life sciences% life sciences to private
employment
Year-over-
year growth
Employment 53,614 2.3% -0.4%
Establishments 1,573 0.9% -0.3%
FUNDING Total life sciences % to total U.S.
VC funding $194.9M 2.84%
NIH funding $884.7M 7.69%
SUPPLY Rentable lab supply % direct vacancy
6,365,325 s.f. 10.3%
Cluster score:
49.4DIVERSITY DRAWS
DIVIDENDS: Philadelphia’s
diversified life sciences
sector is anchored by world-
renowned universities and
international corporations
that drive significant federal
and venture funding for
innovative research activities
in the region. Attracting more
venture capital to the region
would create more robust
infrastructure for nurturing
and monetizing the new ideas
coming out of the area’s
academic institutions.
Life sciences employment composition
Life sciencesemployment
53,614
non-labusing
labusing
LIFE SCIENCES
EMPLOYMENT EVENLY
SPLIT BETWEEN
MANUFACTURING AND LAB-
USING FUNCTIONS: Although
Philadelphia’s life sciences
employment base divides
more or less equally between
lab and non-lab functions, the
majority of employees are
concentrated in high value-
add, R&D-focused
companies.
Life sciences establishment composition
Life sciences establishments
1,573
Landlords in the innovation
space are working to further
diversify the life sciences
tenant base, particularly in
University City: PHL Next
Stage Med, a collaborative
workspace for specialty
medical companies that
debuted this year, currently
hosts a medical device
developer workshop, a
holding and management
group for early-stage
therapeutics companies and a
Boston-based medical
technology product
development firm.
JLL | Philadelphia | Life Sciences Outlook | 2016
8.2%
16.5%
10.3%
15.1%16.4%
33.5%
Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
25.3%
13.7%
8.7%6.7%
35.6%
10.0%Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
Philadelphia
CBD
University City: Bold innovation district
seeks to attract new tenants
• Construction is proceeding in earnest on 3675 Market St., a
320,000-square-foot lab and office tower that will grow the Science
Center’s ability to retain its incubated companies and attract top-tier
tenants from outside of the market. These tenants are currently
limited by dated inventory and few large availabilities.
• 3675 Market St. is the first phase of Wexford’s rebranding of the
Science Center area as UCity Square, a 4 million-square-foot
community of lab, office, retail and residential that will activate this
traditionally single-use area.
• Brandywine Realty Trust is partnering with Drexel University on
Schuylkill Yards, a 6 million-square-foot mixed-use, multi-phase
project that seeks to include university space and private
companies. As a first step, Drexel has welcomed PHL Next Stage
Med, a collaborative workspace for specialty medical companies,
into an existing building at 3001 Market St. that will serve to anchor
future phases of the project.
The Navy Yard: Life Sciences,
Healthcare and R&D Hub
• The Navy Yard’s unprecedented growth is attracting attention
nationally with more than 7.5 million square feet of occupied and
under-construction commercial space within the waterfront campus.
• The life sciences cluster continues to emerge into a regional leader
with 1 million square feet of privately leased space. Current
construction activity includes more than 250,000 square feet of lab
space for Adaptimmune Therapeutics and WuxiAppTec, which will
house a partnership with the University of Pennsylvania’s Gene
Therapy lab.
SUBURBS (Route 202 Corridor / Bucks & Montgomery counties)
Pharma firms fueling job growth
• King of Prussia firms DrugDev Inc. and Trevena Inc. as well as new
arrivals like Boston-based Radius Health, are contributing to job
growth that is expected to exceed 2 percent this year in
Montgomery, Bucks and Chester counties.
SPARK THERAPEUTICS
3737 Market St.
300,000-square-foot requirement
3675 MARKET
University City
320,000 square feet
Class A
$32.00 NNN
700 SCHUYLKILL AVE.*
Philadelphia
559,000 square feet
Class A
*100% institutionally leased
Activity key:
Facilities scorecard
SUPPLY
CBD
(University City,
The Navy Yard)
Suburbs
(Rt 202,
Bucks/Montco)
Rentable lab stock
(% of total stock)
2.71M s.f.
22.0%
9.63M s.f.
78.0%
Direct vacancy
(Change year-over-year)
1.5%
-450 bps
6.4%
110 bps
# of large blocks over 50,000 s.f. 0 5
Under construction (s.f.) 1,199,000 s.f. 0 s.f.
DEMAND
# of requirements
Total s.f. requirements
5
710,000 s.f.
0
0 s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$28.00 p.s.f.
16.0%
$12.35 p.s.f.
23.1%
Leasing / In the market
Sales
Under construction
Large blocks of space
50JLL | Philadelphia | Life Sciences Outlook | 2016
SHIRE PHARMACEUTICALS
730 Stockton Dr.
150,777 square feet leased
Raleigh-Durham
JLL | Raleigh-Durham | Life Sciences Outlook | 2016 51
Downtown Durham
This submarket is becoming increasingly competitive in the life sciences industry. Redevelopment and development continue to hit downtown Durham
as renovation of The Chesterfield nears completion at 56 percent pre-leased (with another 25 percent under lease negotiations) and Durham ID
starting 320,000 square feet of its planned 1 million square feet of office and laboratory space. The advantage of this submarket is that it encompasses
a major academic institution, startups and one of the top healthcare organizations in the country.
RTP / RDU
RTP / RDU is the epicenter of the life sciences industry for Raleigh-Durham, and home to more than 75 percent of Raleigh-Durham’s lab space, with a
majority in this submarket being owner-occupied. Not only a global hub for agricultural science, RTP / RDU also includes manufacturing space
dedicated to pharmaceutical, biological or medical device & instrument manufacturing.
West Raleigh
The core of West Raleigh’s advantage lies in its location directly on the educational Centennial Campus at North Carolina State University.
With the support and talent coming out of the University along with partnered research, the campus has become a core research-oriented
micro-region.
Major lab supply:Clusters of established lab stock with long-time industry presence
Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing
Emerging lab supply:Areas with limited lab stock today that are poised for growth
North Carolina has become a worldwide hub for the international life
sciences industry. It is home to more than 600 life sciences
companies statewide with 12 of the companies that opened or
expanded in the past year coming from outside the United States.
Home to three top-tier universities, Raleigh-Durham’s talent pool is a
major driver of the life sciences industry. An educated workforce in
conjunction with internal research produced by these universities gives
the Triangle competitive advantage over other regions.
Orange County
East Raleigh
Route 1
South
Durham
North
Durham
Downtown
Durham
Glenwood /
Creedmoor
RPT/RDU
Cary West
RaleighDowntown
Raleigh
6 Forks
Falls of
Neuse
85
440
40
52
Economic scorecard
WORKFORCE Total life sciences% life sciences to private
employment
Year-over-
year growth
Employment 35,073 5.4% 6.6%
Establishments 929 2.1% 6.3%
FUNDING Total life sciences % to total U.S.
VC funding $202.2M 2.95%
NIH funding $519.1M 4.51%
SUPPLY Rentable lab supply % direct vacancy
10,609,277 s.f. 20.0%
Cluster score:
60.7Investments in biotechnology
companies in the area are
growing; the second quarter
of 2016 saw more than $175
million of investments put
into N.C. companies, up 17
percent from 2015. Top
Raleigh-Durham investment
company, Hatteras Venture
Partners, ranked number 36
in the top 100 venture capital
investment firms investing in
biotech companies in the
United States, according to
Endpoints. They invested
$38.53 million in twelve deals.
Life sciences employment composition
Life sciencesemployment
35,073
non-labusing
labusing
North Carolina’s life sciences
jobs are growing three times
faster than the national
average, up 6.6 percent from
2012 to 2014. Currently, the
state has more than 70,000
life sciences jobs particularly
strong in drugs and
pharmaceuticals, as well as
research, testing and
laboratories. The majority of
job growth has been seen in
R&D, while agricultural
chemicals and feedstocks
saw a small decline.
Life sciences establishment composition
Life sciences establishments
929
Making up just under half of
the entire market’s life
sciences composition are lab-
using companies in R&D.
Housed at the center of Duke,
N.C. State and UNC-Chapel
Hill, these university research
communities are a great
resource to growing
companies across the market.
This sector has seen the
highest rate of employment
growth across the entire
industry at 18.5 percent.
JLL | Raleigh-Durham | Life Sciences Outlook | 2016
24.33%
19.58%
5.87%4.90%
37.90%
7.42% Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
4.20%6.78%
7.43%
9.80%
49.52%
22.28%
Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
Raleigh-Durham
BioLab
The Chesterfield
701 W. Main St.
Downtown Durham
42,000 square feet
Class A
Under renovation
Duke University
The Chesterfield
701 W. Main St.
Downtown Durham
100,000 square feet
Class A
Under renovation
The Chesterfield
701 W Main St.
Downtown Durham
132,877 square feet
$22.50 NNN
Under renovation
Center for Technology &
Innovation
Centennial Campus
West Raleigh
66 percent preleased
Delivers November 2016
Activity key:
Facilities scorecard
SUPPLYDowntown
Durham lab
West Raleigh
lab
Rentable lab stock
(% of cluster stock)
230,294 s.f.
2.2%
296,639 s.f.
2.8%
Direct vacancy
(Change year-over-year)
0.0%
(5.1) ppts
0.0%
0.0 ppts
# of large blocks over 50,000 s.f. 4 3
Under construction (s.f.) 284,000 s.f. 104,988 s.f.
DEMAND
# of requirements
Total s.f. requirements
1
100,000 s.f.
1
10,000 s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$27.50 p.s.f.
2.3%
$29.50 p.s.f.
0.0%
Leasing
Sales
Under construction
Large blocks of space
53JLL | Raleigh-Durham | Life Sciences Outlook | 2016
Downtown Durham
Lowest vacancy submarket has ever
experienced
• This CBD is a uniquely attractive option for those in the life sciences
market due to its urban location and new Class A developments.
• Ventas, a health care REIT out of Chicago entered the Raleigh-
Durham market as it acquires all real estate assets from Wexford
Science & Technology, including The Chesterfield. This $1.5 billion
deal is expected to close in the fourth quarter of 2016, and will be
Ventas Inc.'s first step of involvement in the life sciences field.
• Interest continues as national developers are investing in large lab
projects in downtown Durham, attracting new companies to the area
and giving current tenants the opportunity to expand.
• Do not expect to see the industry's growth slow down as BioLab’s
shared lab space model for startup and expanding life sciences
companies opens with 42,000 square feet in The Chesterfield.
• Leasing activity continues despite limited availability. Overall vacancy
is 2.8 percent with 0.8 percent sublease vacancy, while Class A is
even lower at only 1.1 percent.
West Raleigh
Keystone Corporation’s latest
development delivering late 2016
• While Research Triangle Park and downtown Durham remain the
destination of choice, the West Raleigh submarket continues to grow
and establish itself as a research and development cluster.
• Local developer Keystone Corporation expects to complete
construction on its new 104,988-square-foot lab and office building, the
Center for Technology and Innovation, on Centennial Campus in Q4
2016. Currently more than 60 percent preleased, it is anchored by The
Nonwovens Institute.
• Recently announced, Capital Associates is marketing the remaining
22,079 square feet available at the Biomedical Partnership Center.
The brand new office and wet lab building will be delivered on
Centennial Campus in the second quarter of 2017, asking $31.50 per
square foot NNN.
Raleigh-Durham
54
Braeburn Pharmaceuticals
627 Davis Dr – Tech VII
Morrisville, NC
RTP / RDU
35,000 s.f.
RTP / RDU
High volume of investment sales
• Research Triangle Park experienced the most sales transactions in
the market thus far in 2016. In the past year, the submarket traded
significant buildings such as Bradford & Berrington Centers, TBC
Place I & II and one of the largest flex building portfolios in the
market, Keystone Technology Park (Sept. 2015).
• Longfellow Real Estate Partners continues to increase its footprint in
the market by purchasing both Keystone Technology Park and
Venture Center, and plans to significantly upgrade these buildings.
They are converting common flex into specialized life sciences-
specific buildings. Along with the sale of Venture Center,
GlaxoSmithKline vacated 5 Moore Dr., causing direct vacancy to
jump 8.7 percent due to the 770,644 square feet of negative
absorption.
• Landlords are providing unprecedented construction allowances of
$100-$125 per square foot NNN, with asking rates of $22.00-$24.00
per square foot for high-credit tenants. These increased allowances
support the desired build-out for life sciences tenants.
• Renovations are complete on Alexandria's 82,480-square-foot lab
building on N.C. Highway 54. The newly renovated Class A
laboratory and office building is 89 percent leased at an average
asking rate of $23 triple net.
• Chapel Hill-based Bamboo Therapeutics has been recently acquired
by Pfizer in a deal up to $645 million. Bamboo Therapeutics is a
gene therapy startup with an 11,000-square-foot manufacturing
facility located at Quadrangle Office Park in South Durham.
• The Hamner Institute for Health Sciences, located at the Research
Triangle Park, officially shut its doors and sold assets in January
2016. The owner of the 6 Davis Dr. property, Alexandria Real Estate
Equities, has unveiled a 10-year plan to turn the campus into 1
million square feet of life sciences space.
• Eventually to be housed out of the former Hamner Institute campus,
the new AgTech Accelerator officially opened its doors in May 2016
and is currently working out of Alexandria Real Estate Equities' 7020
Kit Creek Rd. building. This accelerator is dedicated to agricultural
technology startups and will offer the ability for companies to get off
the ground with access to office, laboratory and greenhouse space.
Venture Center
4117 Emperor Blvd
Durham, NC
RTP / RDU
138,377 square feet
$7,069,500 / $51.09 p.s.f.
December 2015
Keystone Technology Park
Multi-property sale
Morrisville, N.C.
RTP / RDU
806,157 square feet
$117,693,500 / $145.99 p.s.f.
September 2015
Venture Center
4117 Emperor Blvd
Durham, NC
RTP / RDU
138,377 s.f.
$18.50 NNN
Activity key:
Facilities scorecard
Leasing
Sales
Under construction
Large blocks of space
JLL | Raleigh-Durham | Life Sciences Outlook | 2016
SUPPLYRTP / RDU
lab
Rentable lab stock
(% of cluster stock)
8.6 M s.f.
81.0%
Direct vacancy
(Change year-over-year)
19.1%
6.4 ppts
# of large blocks over 50,000 s.f. 56
Under construction (s.f.) 0 s.f.
DEMAND
# of requirements
Total s.f. requirements
7
250,000 s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$15.99 p.s.f.
2.7%
San Diego
JLL | San Diego | Life Sciences Outlook | 2016 55
Torrey Pines
Torrey Pines is home to San Diego’s largest concentration of lab space. The submarket is adjacent to the UC San Diego campus and the Pacific
Ocean. Torrey Pines acts as the epicenter of San Diego’s life sciences market. The submarket is home to a number of acclaimed research institutes,
some of the world’s largest pharmaceutical companies and a number of successful biotech companies that range from startups to mature companies.
UTC
UTC is located on the east side of UC San Diego, and is comprised of mature, publicly traded companies with advanced product development. The
submarket is located in an area that offers numerous amenities to tenants via a large upscale shopping mall and other sizable shopping centers. UTC
is also home to one of San Diego’s largest Class A office markets.
Sorrento Mesa
Sorrento Mesa caters to all tiers of life sciences companies, and sometimes acts as a value alternative to Torrey Pines or UTC. Sorrento Mesa was
formed as developers saw opportunities for greater returns through the conversion of industrial and flex buildings into wet lab facilities. The submarket
is also a regional hub for hi-tech companies.
Sorrento Valley
Sorrento Valley developed as an ancillary market to Torrey Pines, and today continues to be home to many of San Diego’s life sciences companies.
With a base of older industrial and flex buildings that have been converted to lab space, this submarket has historically provided a more economical
alternative for early- and mid-stage companies.
North County
North County is situated about 30 minutes north of San Diego’s primary life sciences cluster of submarkets. The North County life sciences submarket
is anchored by a handful of large companies, and a significant amount of the North County composition includes manufacturing. North County has
carved out a healthy niche apart from the primary San Diego life sciences cluster.
San Diego is one of the leading life sciences markets in the nation.
The San Diego market continues to see demand for life sciences
facilities, with more than 1.4 million square feet added in the past 12
months and 1.1 million square feet under construction.
Torrey Pines acts as the heart of the San Diego life sciences cluster,
and is home to such prominent institutions as Sanford Burnham
Prebys, The Scripps Research Institue, Salk Institute, Sanford
Consortium and J. Craig Venter, among others.
Torrey Pines
North County
UTC
Sorrento Valley
Sorrento Mesa
Major lab supply:Clusters of established lab stock with long-time industry presence
Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing
56
Economic scorecard
WORKFORCE Total life sciences% life sciences to private
employment
Year-over-
year growth
Employment 64,690 5.6% -3.1%
Establishments 1.414 1.4% 3.0%
FUNDING Total life sciences % to total U.S.
VC funding $485.0M 6.88%
NIH funding $780.0M 7.35%
SUPPLY Rentable lab supply % direct vacancy
11,942,578 s.f. 8.0%
Cluster score:
58.3San Diego’s start-up culture
in the life sciences market,
attracting a strong funding
stream to the market. 65
percent of total VC invested
in San Diego went to biotech
companies. San Diego is
home to a number of
successful biotech
entrepreneurs that start
multiple companies. These
entrepreneurs often find
themselves in the position to
sell to big-pharma; they then
start the cycle again.
Life sciences employment composition
Life sciencesemployment
64,690
non-labusing
labusing
Life sciences employment
grew at a faster rate than total
private employment, 5.6
percent compared to 2.7
percent, respectively. The
notable life sciences cluster
is partly attributable to the
presence of some of the
world’s largest biotech,
pharmaceutical, and non-
profit research institutes.
Moreover the University of
California, San Diego has
strong science and
engineering programs that
produce a number
of scientists.
Life sciences establishment composition
Life sciences establishments
1,414
San Diego has seen 6.0
percent year-over-year
growth in life sciences
patents. With San Diego
being home to many medical
device companies and UCSD
offering a masters program in
medical device engineering, it
is not surprising that medical
equipment and instruments
patents increased at a faster
pace (17 percent year-
over-year).
JLL | San Diego | Life Sciences Outlook | 2016
6.58%
11.60%
10.75%
6.79%
52.55%
11.74%Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
10.39%
17.83%
9.68%
2.96%
51.26%
7.89% Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
Torrey Pines
57
NAUTILUS FOUR
3565 General Atomics Ct.
41,000 square feet
Part of a complete overhaul of the
212,000-square-foot Nautilus
campus, which includes new
lobbies, a garden, new fitness
center and new upscale eatery.
Vacancy is tight in the heart of
San Diego’s life science cluster
• Torrey Pines’ vacancy rate sits at 3.3 percent, which is by far the
lowest vacancy rate among the life sciences submarkets in
San Diego.
• Torrey Pines’ low vacancy, most in-demand location and highest
rental rates among the life sciences submarkets has led to a number
of projects being upgraded. Alexandria is in the midst of major
renovations and upgrades at their Nautilus and Spectrum campuses
within Torrey Pines.
• Alexandria has also converted a 90,000-square-foot building in the
heart of Torrey Pines into The Alexandria at Torrey Pines, a building
that acts as a community center, providing Alexandria tenants with a
gym and other amenities, including a restaurant which is open to the
public. The facility also houses the local Biocom trade group.
• Another renovation project is the Torrey Ridge Science Center, a
three-building portion of the Pfizer Campus, which Steel Wave and
Walton Street Capital acquired in 2012 and repositioned into a multi-
tenant project. Over the past two years, the project has gone from
100 percent vacancy to nearly 80 percent occupancy. At the time this
report was finalized, the property was on the market for sale.
SPECTRUM II
3013 Science Center Park
63,000 square feet
Class A
Leased to The Medicines
Company, and part of a larger
renovation of the Spectrum
Campus.
VERTEX (B-T-S)
3115-3215 Merryfield Row
Spectrum III
170,000 square feet
Class A
$54.00 NNN
Build-to-suit construction.
Activity key:
Facilities scorecard
Leasing
Sales
Under construction
Large blocks of space
JLL | San Diego | Life Sciences Outlook | 2016
SUPPLY Torrey Pines
Rentable lab stock
(% of total stock)
6.0M s.f.
36.0%
Direct vacancy
(Change year-over-year)
3.3%
-4.0 ppts
# of large blocks over 100,000 s.f. 0
Under construction (s.f.) 0.1M s.f.
DEMAND
# of requirements
Total s.f. requirements
6
0.2M s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$47.40 p.s.f.
+8.2)%
REGULUS THERAPEUTICS
10614 Science Center Dr.
Torrey Ridge Science Center
59,000 square feet
Class A
$41.40 NNN
Tenant relocated its headquarters
within the submarket.
UTC
58
Illumina continues to grow in
UTC
• UTC has the highest vacancy rate among the San Diego Life
sciences submarkets, at 18.7 percent. A large portion of the vacancy
in UTC comes from new additions to the inventory.
• Genesis is a three-building life sciences project developed from
office buildings that were assembled by local developer Phase3 Real
Estate Partners. The property just finished it’s renovation and lab
build-out, and has begun the lease up process, with more than
270,000 square feet available at the time of this report.
• BioMed Realty acquired a four-building project in UTC, of which only
one building was previously built out with lab space. The project has
been refurbished abd rebranded as Axiom. Over the past year, two of
the buildings have been leased with one 78,000-square-foot building
still available. The remaining 105,000-square-foot building, which is
currently vacant, is targeted for demolition and redevelopment.
• Illumina has been the big player on the tenant side in UTC over the
past year. At the time of this report, Alexandria is under construction
on a 296,000-square-foot addition to the Illumina headquarter
campus.
• BioMed Realty is under construction on i3, a three-building, 316,000-
square-foot, ground-up speculative development project in UTC.
Originally the project was planned as a multi-tenant project, but
Illumina leased the entire project earlier this year.
Activity key:
Facilities scorecard
Leasing
Sales
Under construction
Large blocks of space
JLL | San Diego | Life Sciences Outlook | 2016
SUPPLY UTC
Rentable lab stock
(% of total stock)
3.5M s.f.
20.9%
Direct vacancy
(Change year-over-year)
18.7%
-3.4 ppts
# of large blocks over 100,000 s.f. 3
Under construction (s.f.) 1.0M s.f.
DEMAND
# of requirements
Total s.f. requirements
6
0.6M s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$46.20 p.s.f.
+8.3%
IGNYTA
Axiom
$42.96 NNN
95,000 square feet
Tenant outgrew their location in
Sorrento Valley and leased two
buildings in the Axiom project,
including a recent lab conversion.
ILLUMINA EXPANSION
4775-4785 Executive Dr. &
5200 Illumina Way
316,000 & 296,000 square feet
Two separate expansions are
under construction for Illumina:
one at the company's
headquarters, and one offsite.
10290 Campus Point Dr.
Alexandria RE Equities
Campus Pointe
274,000 square feet
$383 per square foot
Acquisition expanded neighboring
campus. Building converted to life
sciences facility for Eli Lilly.
9360 & 9390 Towne Centre Dr.
BioMed Realty
UTC/Eastgate
101,000 square feet
Class A
$381 per square foot
Sorrento Mesa
59
Sorrento Mesa stays steady in
the life sciences arena
• Sorrento Mesa has a moderate amount of vacancy at 7.0 percent for
the submarket, which is down 1.5 percentage points from the
previous year. However, Sorrento Mesa doesn’t have the lab
conversion and renovation activity seen in Torrey Pines and UTC.
• As construction, renovation and conversion projects continue to
proliferate in Torrey Pines and UTC, Sorrento Mesa has been a more
stable figure in the local life sciences landscape, acting as an
economical alternative to Torrey Pines and UTC.
• Investors have seen the value in Sorrento Mesa’s stability with
Cypress Office Properties acquiring the four-building, multi-tenant
Oberlin Tech project in mid-2015 for $232.00 per square foot. The
project is a mix of office, R&D and lab users.
• 4939 & 4955 Directors Pl., two Class A office / lab buildings totaling
138,000 square feet, is in escrow with an investor as well. This
project is the only 100,000+-square-foot availability in Sorrento
Mesa.
5555-5627 Oberlin Dr.
Cypress Office Properties
101,000 square feet
Class B
$232 per square foot
Four-building, multi-tenant project,
100 percent leased at time of
sale.
TANDEM DIABETES
10151 Barnes Canyon Rd.
44,000 square feet
Class A
Expansion for tenant based in the
Sorrento Valley submarket.
Activity key:
Facilities scorecard
Leasing
Sales
Under construction
Large blocks of space
JLL | San Diego | Life Sciences Outlook | 2016
SUPPLY Sorrento Mesa
Rentable lab stock
(% of total stock)
3.9M s.f.
23.6%
Direct vacancy
(Change year-over-year)
7.0%
+1.5 ppts
# of large blocks over 100,000 s.f. 1
Under construction (s.f.) 0M s.f.
DEMAND
# of requirements
Total s.f. requirements
9
0.4M s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$36.00 p.s.f.
+5.5%
LA JOLLA PHARMACEUTICAL
7473 Lusk Blvd.
24,000 square feet
Class A
Short-term sublease.
4939 & 4955 Directors Pl.
138,000 square feet
Class A
Two freestanding buildings
available for lease. (In escrow
with investor at time of report.)
Sorrento Valley
60
Sorrento Valley continues to act
as an incubator submarket
• Sorrento Valley is the smallest and least glamorous life sciences
submarket in San Diego, and in many cases, it continues to act as an
incubator for the local life sciences market.
• Sorrento Mesa’s Tandem Diabetes recently leased an additional
44,000 square feet, but they did so in neighboring submarket,
Sorrento Mesa.
• Ignyta outgrew their location at BioMed Realty’s Coast 9 project in
Sorrento Valley, and found the room they needed in Axiom, BioMed’s
new lab conversion project in UTC.
• While life sciences tenants continue to expand and migrate into other
submarkets, the vacancy rate among life sciences inventory remains
in the single digits at 8.7 percent.
PRECISION TOXICOLOGY
4215 Sorrento Valley Blvd.
56,000 square feet
Class B
$36 NNN
Activity key:
Facilities scorecard
Leasing
Sales
Under construction
Large blocks of space
JLL | San Diego | Life Sciences Outlook | 2016
SUPPLY Sorrento Valley
Rentable lab stock
(% of total stock)
1.1M s.f.
6.9%
Direct vacancy
(Change year-over-year)
8.7%
-3.2 ppts
# of large blocks over 100,000 s.f. 0
Under construction (s.f.) 0M s.f.
DEMAND
# of requirements
Total s.f. requirements
3
0.03M s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$35.40 p.s.f.
+7.5%
North County
61
Manufacturing continues to
thrive in North County
• The North County submarket is a half-hour drive north of the other
four life sciences submarkets in San Diego, and is not considered
part of the primary life sciences cluster in San Diego. There is
however, a sizable life sciences presence in North County.
• North County continues to stand out as a choice location for San
Diego County manufacturers. In mid-2015, Gilead Sciences
expanded their North County presence with the acquisition of a
204,000-square-foot manufacturing facility in Oceanside. More
recently, MilliporeSigma (formerly SAFC) announced a 47 percent
increase in its Carlsbad footprint to boost production capacity. DNAe
just relocated to from Albuquerque to Carlsbad, and doubled its U.S.
headcount as it plans to begin a clinical trials and manufacturing
phase.
• Carlsbad-based medical device manufacturer, Actus Medical, was
involved in one of the market’s most significant venture capital
transactions of 2016. Actus Medical raised $75 million in venture
capital funding at the end of Q1 2016.
• Prominent companies with a North County presence include: Gilead
Sciences, Oceanside based Genentech, Carlsbad-based Ionis
Pharmaceuticals (formerly Isis Pharmaceuticals) and Invitrogen
(currently a ThermoFisher brand, formerly Carlsbad-based Life
Technologies).
4010 Ocean Ranch Blvd.
Gilead Sciences
Oceanside
204,000 s.f.
Class B
$122/s.f.
Owner-user acquisition.
AutoGenomics
1600 Faraday Ave.
Carlsbad
60,0000 square feet
Class B
Activity key:
Facilities scorecard
Leasing
Sales
Under construction
Large blocks of space
JLL | San Diego | Life Sciences Outlook | 2016
SUPPLY North County
Rentable lab stock
(% of total stock)
2.1M s.f.
12.6%
Direct vacancy
(Change year-over-year)
5.1%
(-0.4) ppts
# of large blocks over 100,000 s.f. 1
Under construction (s.f.) 0.0M s.f.
DEMAND
# of requirements
Total s.f. requirements
2
0.3M s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$18.00 p.s.f.
(0.0)%
5781 Van Allen Way
Carlsbad
328,700 s.f.
Class A
$57.4 million
DNAe
1891 Rutherford Rd.
Carlsbad Research Center
24,000 square feet
Class B
Tenant relocating from
Albuquerque.
Seattle-Bellevue
JLL | Seattle-Bellevue | Life Sciences Outlook | 2016 62
Major lab supply:Clusters of established lab stock with long-time industry presence
Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing
Emerging lab supply:Areas with limited lab stock today that are poised for growth
Seattle CBD
Belltown/Denny Regrade
Pioneer Square Water Front
Bellevue CBD
Suburban Bellevue
Mercer
Island
Ballard/
University
District
Redmond
South Seattle
Queen Anne
Capitol
Hill
90
5
405
Lake
Union
Bothell
Although home to many large life sciences institutions, the Puget
Sound life sciences industry is driven by small to mid-sized
companies that are experiencing dynamic growth driven by
significant innovation.
The market continually ranks in the top 10 nationally in VC and NIH
funding, as well as patents issued, further demonstrating its position
as an innovation hub supported by some of the world’s largest
philanthropic organizations.
Regional overview
Washington’s life science industry is the fifth largest industry in the state and is responsible for more than $12.5 billion of the state’s gross domestic
product. As the industry continues to expand and captures a wider range of emerging sectors, such as digital health, the trade organization formerly
known as Washington Biotechnology & Biomedical Association has rebranded itself as Life Science Washington. This name change, coupled with
the establishment of the Life Science and Global Health Advisory workforce panel and the declaration of June 1st as Life Sciences Day in
Washington, signals an overall commitment from the local life science community to make the industry more competitive on a global level.
A number of world-renowned life science research institutions and companies based in Washington are clustered in the Seattle area, one of the
nation’s premier life sciences markets. This list includes the Allen Institute for Brain Science, Fred Hutchinson Cancer Research Center, Seattle
Biomedical Research Institute, the Institute for Systems Biology, Juno Therapeutics, and PhaseRX among others. This concentration can be strongly
attributed to the presence of some of the world’s largest philanthropic organizations and educational institutions, such as the Bill & Melinda Gates
Foundation and the University of Washington. The Gates Foundation has funded several major grants to Seattle-based research institutes and the
University of Washington consistently ranks in the top five of institutions receiving NIH funding nationally.
63
Economic scorecard
WORKFORCE Total life sciences% life sciences to private
employment
Year-over-
year growth
Employment 24,320 1.8% 1.0%
Establishments 959 0.9% 8.1%
FUNDING Total life sciences % to total U.S.
VC funding $310M 4.52%
NIH funding $829.1M 7.21%
SUPPLY Rentable lab supply % direct vacancy
4,646,383 s.f. 5.1%
Cluster score:
56.3At $829.1 million, the Seattle
cluster ranked sixth in NIH
funding. Additionally, the $310
million in VC funding raised by
life sciences companies was the
sixth highest. Employment has
grown by 1 percent year-over-
year, as life sciences startups
continue to pop up and
established companies such as
Seattle Genetics and NanoString
Technologies continue to ramp
up hiring. Also, Juno
Therapeutics has increased its
headcount by nearly 50 percent
in 2016.
Life sciences employment composition
9%
25%
8%
3%
51%
4% Pharma & medicine manufacturing
Electromedical instrument manufacturing
Medical equipment & supplies manufacturing
Testing laboratories
Research & development
Medical & diagnostic laboratories
non-labusing
labusing
PhaseRx, a Seattle-based
preclinical biopharmaceutical
company that develops products
to treat deficiencies in the liver,
went public in May 2016. This
was the first IPO in Washington
state since another biotech
company, Juno Therapeutics,
went public in December 2014. In
August, Aptevo Therapeutics
completed a spinoff from
Emergent BioSolutions, making
it the second Seattle-area
biotech company to go public
this year.
Life sciences establishment composition Research and development
companies comprise the majority
of life sciences institutions in the
area. Available lab space has
been virtually non-existent in the
region. Seeking to provide a
solution, San Diego-based
BioMed Realty recently held its
grand opening for The Labs at
201 Elliott, an approximately
43,000-square-foot newly
renovated biotech startup space,
with suites ranging from 3,818
square feet to 13,288 square feet.
Spaces come with chemical-
resistant counters, multiple sinks
and a combination of fixed and
mobile casework stations.
JLL | Seattle-Bellevue | Life Sciences Outlook | 2016
4.38%
13.03%
15.85%
11.57%
43.59%
11.57%
Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & Supplies MFG
Testing Laboratories
R&D
Medical & Diagnostic Laboratories
non-labusing
labusing
Seattle
64
Allen Institute for Brain Science
Lake Union
272,408 square feet
Vulcan
Delivered Q4 2015
Lake Union
New inventory provides some space
relief – but it comes with a price
• The Vue Research Center, a 140,000-square-foot state-of-the-art
laboratory and office building, was delivered at a time when available
lab space in Lake Union was virtually impossible to find. As tenants
have limited options for growth, space in this speculative facility was
67 percent preleased at delivery and was quickly leased upon
opening. Tenants include NanoString Technologies, Novo Nordisk,
Presage Biosciences and Blaze Biosciences.
• Although the delivery of the new facility helped push vacancy up to
2.6 percent in the last 12 months, the new space comes with a hefty
price tag. The presence of the life sciences community plays a large
role in Lake Union being the most expensive submarket in the region,
as evidenced by the Vue Research Center achieving rents in excess
of $60 per square foot.
• Juno Therapeutics, the rapidly growing cancer immunotherapy
company, has also exercised its option to expand and lease all the
office / lab space in the Alexandria Center, a 288,850-square-foot life
sciences building. This is the only life sciences project currently
under construction in Lake Union and will deliver 100 percent leased.
Expect continued downward pressure on vacancy, which will in turn,
keep rental rates escalating in the area.
Capitol Hill
No room on Pill Hill
• While its life sciences inventory is just a fraction of the size of Lake
Union, Capitol Hill is the home to Harborview Medical Center,
Swedish Medical Center, as well as Benaroya Research Institute,
Theraclone Sciences, CellNetix and PharmaIN, among others.
• The Capitol Hill submarket is currently 100 percent occupied, with no
existing lab product being marketed.
• This submarket is likely to remain significantly space-constrained as
there have been no news of space becoming available and no
construction announcements for any deliveries in the near future.
Vue Research Center
Lake Union
140,000 square feet
GLY Construction
Delivered Q1 2016
Juno Therapeutics
The Alexandria Center
Lake Union
183,623 square feet
Class A
Term: TBD
Deal type: Expansion
1st Hill Medical Pavilion
Capitol Hill
227,628 square feet
Class B
$185.7M / $816 per square foot
Activity key:
Facilities scorecard
Leasing
Sales
Under construction
Large blocks of space
JLL | Seattle-Bellevue | Life Sciences Outlook | 2016
SUPPLYLake Union
Major Lab
Capitol Hill
Emerging lab
Rentable lab stock
(% of cluster stock)
2.1M s.f.
56.2%
0.5M s.f.
64.0%
Direct vacancy
(Change year-over-year)
2.6%
2.6 ppts
0.0%
(10.0) ppts
# of large blocks over 50,000 s.f. 0 0
Under construction (s.f.) 0.3M s.f. 0
DEMAND
# of requirements
Total s.f. requirements
2
20,000
0
0
PRICING
Average asking rent (FS)
(Change year-over-year)
$43.87 p.s.f.
1.6%
$42.20 p.s.f.
-1.6%
Suburbs
65
Veritox
Eastlake Business Park
Redmond
18,454 square feet
Class B
Term: 66 months
Deal type: Renewal/Expansion
Bothell
Economical options available for space-
constrained users
• Bothell’s location in the suburbs offers quality, low-cost alternatives
to the more expensive Lake Union and Capitol Hill submarkets in
Seattle. Spillover demand from the two submarkets combined has
contributed to the relatively strong leasing activity, totaling 105,299
square feet of space.
• Vacancy in Bothell continues to decline and currently stands at 10.5
percent. This represents a decrease of 80 basis points year-over-
year and is the lowest it has been since the last recession. Although
there have been no blocks of available space larger than 100,000
square feet in the last year, Bothell remains the one submarket in the
region with plentiful available lab space.
• With approximately 194,000 square feet of active life sciences
requirements and limited available space in virtually every
other submarket, Bothell will continue to be a viable and
economical solution for both smaller and more established life
sciences companies.
• Alder Biopharmaceuticals, a Bothell-based biotech company, is
currently gathering ideas for a new campus location and is open to a
build-to-suit option or a conversion of an existing facility.
Redmond
Infrastructure and affordability
• Redmond is a strong and vibrant market that boasts excellent
infrastructure, amenities as well as a highly educated in-place
workforce. The area is being considered by companies seeking a
suburban atmosphere at a substantially discounted cost of business.
• However, due to a lack of large available spaces, Redmond will likely
attract small to mid-size users looking for locations that are
proximate to the Bellevue CBD. This allows companies to attract
talent with access to nearby amenities at a significantly discounted
cost of business.
• Vacancy in Redmond currently stands at 8.1 percent with the
largest contiguous block of available space being just under 15,000
square feet.
Nexus Research Center
Bothell
93,756 square feet
Class B
Direct
Alder Biopharmaceuticals
North Creek Parkway Center
Bothell
25,440 square feet
Class B
Term: 17 months
Deal type: Extension
QILU Puget Sound
Biotherapeutics
Nexus Research Center
Bothell
10,564 square feet
Class B
Term: 62 months
Deal type: Expansion
Activity key:
Facilities scorecard
Leasing
Sales
Under construction
Large blocks of space
JLL | Seattle-Bellevue | Life Sciences Outlook | 2016
SUPPLYBothell
Manufacturing
Redmond
Manufacturing
Rentable lab stock
(% of cluster stock)
1.5M s.f.
74.6%
0.5M s.f.
100%
Direct vacancy
(Change year-over-year)
10.5%
(0.8) ppts
8.1%
(1.7) ppts
# of large blocks over 50,000 s.f. 1 0
Under construction (s.f.) 0 0
DEMAND
# of requirements
Total s.f. requirements
4
194,000
4
194,000
PRICING
Average asking rent (NNN)
(Change year-over-year)
$20.92 p.s.f.
10.4%
$14.05 p.s.f.
-7.0%
Northern California Bay Area
JLL | Northern California Bay Area | Life Sciences Outlook | 2016 66
Major lab supply:Clusters of established lab stock with long-time industry presence
Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing
Emerging lab supply:Areas with limited lab stock today that are poised for growth
Innovative talentThe Northern California Bay Area has one of the largest aggregation
of research universities and incubators, drawing young talent from
UC Berkeley, Stanford and UC San Francisco.
Established and well-funded life sciences sectorIn addition to its 25 venture-backed biotech companies, the Bay Area
boasts some of the largest life sciences companies.
680
280
880
880
580
580San Francisco
Hayward
Oakland
Richmond
Lafayette
Walnut Creek
Redwood City
San MateoFremont
Pleasanton
Union City
Bayview
San Bruno
Alameda
San Francisco Mid-Peninsula
The Mid-Peninsula is the birthplace of genetics engineering that began with Genentech more than four decades ago. Today the largest players in the
life sciences industry, including Roche (Genentech), Gilead, Illumina, Merck, Amgen, Abbott and the life sciences arm of Google (Verily) have a
foothold in the area, which boasts one of the densest concentration of highly qualified life sciences professionals.
Oakland / East Bay
The Oakland / East Bay is home to anchor research institutions, prestigious universities and major healthcare companies like Novartis and Bayer
Healthcare. The Oakland Enterprise Zone was established in 1993 to revitalize the business area by offering tax incentives. The creation of the
Enterprise Zone led to the emergence of Berkeley and Emeryville, which today represent two of the largest life sciences markets in the Bay Area.
San Francisco Mission Bay
Mission Bay has a smaller life sciences cluster relative to the rest of the Bay Area, however, the region is home to major life sciences tenants such
as Medivation, Illumina and Clovis Oncology. San Francisco’s prestigious UCSF attracts talent from around the world, further enhancing a well-
educated labor pool.
67
Economic scorecard
Workforce Total life sciences % life sciences to private employmentYear-over-
year growth
Employment 67,738 3.7% 6.4%
Establishments 1,601 0.9% 5.7%
Funding Total life sciences % to total U.S.
VC funding $1,518.8M 22.13%
NIH funding $891.5M 7.75%
SUPPLY Rentable lab supply % direct vacancy
19,303,587 s.f. 2.9%
Cluster score:
75.2
JLL | Northern California Bay Area | Life Sciences Outlook | 2016
Life sciences employment composition
Life sciencesemployment
67,738
non-labusing
labusing
TalentIn addition to fostering the next
generation of life sciences
companies, some of the nation’s
existing top talent live and work
in the Bay Area. With 50 percent
of the workforce focused on the
research and development of
new technology, the region
attracts some of the nation’s
best and brightest scientists,
researchers and engineers.
Life sciences establishment composition
Life sciences establishments
1,601
Future innovationFrom an innovation standpoint,
the region accounts for a
majority of U.S. patent filings.
New devices today are capable
of much more than just
connecting to the internet. Heart
rate monitoring and biometric
apps have connected life
sciences to technology, and
many startups are investing in
developing software to further
bridge the gap between the
two industries.
20.2%
11.1%
8.0%
3.9%
50.6%
6.0% Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
4.7%
11.4%
12.6%
7.6%
48.9%
14.8%Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
Strong employmentEmployment growth in the
life sciences sector has
improved since the last
recession, driven by rapid
expansion of technology. The
region is a major life sciences
center, accounting for a
significant share of venture
capital funding and patent
activity. For this reason, the
Bay Area remains at the
forefront of innovation.
San Francisco Mid-Peninsula
JLL | Northern California Bay Area | Life Sciences Outlook | 2016 68
South County
Tech giants reduce inventory amid
tight market
• Pacific Biosciences, the largest life sciences tenant in Menlo Park, is
currently building out an Office Depot warehouse next door after
Facebook acquired 56 acres of space in the Menlo Science &
Technology Park.
• Tenants in the market seeking sizeable lab spaces face a
challenging environment with total vacancy below the two percent
mark in 2016. There are currently two existing options offering more
than 20,000 square feet of lab space.
• The imbalance between tenant demand and available lab space,
combined with some tenant migration away from expensive Silicon
Valley submarkets, will further prompt overspill into the Mid-
Peninsula where there is still a moderate number of space options.
North County
Google enters largest life sciences
cluster in Bay Area
• Strong pre-leasing activity at Phase I of The Cove at Oyster Point
prompted the development of the remainder of the buildings, totaling
more than 1 million square feet of new Class A lab / office space.
• Simultaneously, large blocks of space that had long been vacant and
available for sublease were leased by NGM Biopharmaceuticals,
Prothena and Verily, Google’s life science arm. These transactions,
along with strong leasing activity, have pushed vacancy levels to
historical lows.
• The increase in demand occurs after a wave of initial public offerings
started in 2010. The North County is currently headquarters to at
least 20 life sciences companies that launched IPOs within the past
three years.
• Current levels of demand for Class A space could provide grounds
for further development on a speculative basis. For instance, Phase
3, which included the acquisition of two office buildings in South San
Francisco in 2015, is currently transforming more than 200,000
square feet of Class A office to lab space.
Verily (Google)
249 E. Grand Ave.
South San Francisco
400,000 square feet
Term: 7 years
THE COVE
South San Francisco
1,000,000 square feet
Class A
CytomX and Denali pre-leased
116,000 square feet
Healthcare Properties (HCP)
Phase I delivers in Q3 2016
Activity key:Leasing
Sales
Under construction
Large blocks of space
Facilities scorecard
Supply South County North County
Rentable lab stock
(% of cluster stock)
2.6M s.f.
16.4%
5.9M s.f.
60.8%
Direct vacancy
(Change year-over-year)
1.1%
(-0.7) ppts
0.5%
(0.4) ppts
# of large blocks over 50,000 s.f. 0 0
Under construction (s.f.) 217,000 1,414,100
Demand
# of requirements
Total s.f. requirements
5
185,000 s.f.
1
20,000 s.f.
Pricing
Average asking rent (NNN)
(Change year-over-year)
$45.72 p.s.f.
19.0%
$57.84 p.s.f.
51.6%
Prothena
Oyster Point Blvd.
South San Francisco
128,000 square feet
Term: 8 years
NGM Bio
Oyster Point Blvd.
South San Francisco
121,000 square feet
Term: 8 years
Mission Bay / China Basin
Mission Bay / China Basin
Development providing opportunity
amidst supply constraints
• San Francisco’s Mission Bay remains a target for life science tenants
due to its access to top tier talent and proximity to innovative
companies.
• Limited space in Mission Bay is forcing life science and lab, users
most notably incubators who have maxed out their space, to focus on
non-traditional life-science submarkets like SOMA. Many are looking
to be creative and get smart on San Francisco’s zoning laws,
concentrating on buildings that allow for life science and lab uses and
subsequently building lab space, but may not be traditional lab
buildings.
• Limited space availability is exacerbated by the demand from non-life
science users. Lyft and Stripe recently leased a combined 300,000
square feet of office space at 185 Berry Street, Dropbox’s former
headquarters.
• Kilroy's The Exchange broke ground in Q1 2016 with an expected
completion date of Q3 2017. The 680,000 square-foot development
is garnering significant attention from both life science and office
users. It offers the only large block availability in the submarket.
• Mission Bay will continue to evolve as developments deliver and
receive entitlements; future projects include San Francisco Giants’
Mission Rock, Orton Development’s Phase I Pier 70, and Forrest
City’s Phase II Pier 70 to the south. All of which have significant
commercial and residential components that will lend to developing
Mission Bay into a denser, more connected environment.
The Exchange
1800 Owens Street
Mission Bay/China Basin
680,000 s.f.
Kilroy
Delivers Q3 2017
499 Illinois Street
Mission Bay/China Basin
40 percent interest sale
455,069 s.f.
Buyer: TIAA-CREF Seller: ARE
Class A
$1,042 psf
1500 Owens
Mission Bay/China Basin
49 percent ineterst sale
158,267 s.f.
Buyer: TIAA-CREF Seller: ARE
Class A
$928 psf
499 Illinois Street
UCSF
Mission Bay/China Basin
97,000 s.f.
Class A
$65 NNN (sublease from Illumina)
Activity key:
Facilities scorecard
SupplyMission Bay / China
Basin
Rentable lab stock
(% of cluster stock)
1.49M s.f.
60.0%
Direct vacancy
(Change year-over-year)
0.0%
(0) ppts
# of large blocks over 100,000 s.f. 1
Under construction (s.f.) 680,000
DEMAND
# of requirements
Total s.f. requirements
4
500,000 s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$65.00 p.s.f.
8.3%
Leasing
Sales
Under construction
Large blocks of space
69JLL | Northern California Bay Area | Life Sciences Outlook | 2016
Oakland / East Bay
70
Aduro Biotech
740 Heinz Ave.
Berkeley
110,000 square feet
Term: 12 years
EmeryStation
Emeryville
250,000 square feet of office / lab
space
Wareham Development
Est. Delivery 2017
EmeryTech Centre
Emeryville
228,110 square feet
Mix of lab, office, flex and parking
garage
$87.8 million
Santen Pharmaceuticals
6401 Hollis St.
Emeryville
31,000 square feet
Term: 10 years
Facilities scorecard
SupplyEast Bay
Major lab
East Bay
Emerging lab
Rentable lab stock
(% of total stock)
4.1M s.f.
51.3%
3.8M s.f.
50.3%
Direct vacancy (%) 8.1% 4.3%
# of large blocks over 100,000 s.f. 1 0
Under construction/renovation (s.f.) 250,000 s.f. 0
Demand
# of requirements
Total s.f. requirements
26
900,000 s.f.
2
30,000 s.f.
Pricing
Average asking rent (NNN)
(Change year-over-year)
$42.00 p.s.f.
(16.7)%
$36.00 p.s.f.
(20.0)%
Oakland Metro
93.7 percent of lab space is
occupied
• Oakland Metro is a vital market to large users in the Bay Area,
especially for companies in the life sciences sector. The vacancy
rate currently sits at 8.1 percent, driven mostly by large occupiers
such as Aduro Biotech, Novartis, Lawrence Berkeley National Labs
and Bayer Healthcare.
• Oakland Metro has experienced a steady flow of venture capital
funding in the last few rounds, an indication of a strong life
sciences community and increased confidence and interest from
investors.
• While occupancy rates remain high, companies can look forward to
newer inventory coming to the market. EmeryStation West is
currently under construction, slated to deliver in 2017. The
250,000-square-foot project is situated in the heart of Emeryville’s
life science cluster on the corner of Horton and 59th Streets,
neighboring core tenants in the market.
• The East Bay life sciences labor force stems from UC Berkeley,
where life sciences-related technologies and developments are
imagined and examined.
East Bay suburbs (680 Corridor)
Tri-Valley emerging as life
sciences hub
• Several notable biotech companies are headquartered in the Tri-
Valley, including 10X Genomics, Unchained Labs and SFJ
Pharmaceuticals, Inc.
• Biotech and pharmaceutical companies in the area have generated
more than $100 million in VC funding so far this year, indicating
that the Tri-Valley is emerging as a powerful life sciences hub in
addition to neighboring cities in the East Bay. These emerging
suburban cities have grown to make up 50.3 percent of the total
East Bay life sciences inventory.
• As occupancy rates remain high in Emeryville and Berkeley, the
suburbs should anticipate a spillover of demand for life sciences
tenants looking to expand.
Activity key:Leasing
Sales
Under construction
Large blocks of space
JLL | Northern California Bay Area | Life Sciences Outlook | 2016
Westchester County
JLL | Westchester County | Life Sciences Outlook | 2016 71
Westchester Overview
With its proximity to major research institutions and to New York City, Westchester County has been a home to the life sciences sector for nearly 13
years, employing approximately 10,000 biomedical professionals. For the past decade, companies such as Regeneron and Acorda have headlined the
life sciences activity in the area. Regeneron is currently expanding at its Old Saw Mill River Rd. complex by another 300,000 square feet. There are
also 500,000 square feet of future redevelopment and development potential that could accommodate multiple tenants at Ardsley Park, where Acorda
calls home. With few large life sciences-suitable blocks on the market, this will be a highly sought after space. Some of the larger projects that are
coming soon to Westchester include the North 60 and a recent transit-oriented development study for a portion of Southern Westchester. The planned
North 60, which will be located at the Grassland’s Reservation, will encompass 60 acres of biotech and medical space. This will include New York
Medical College’s $12.6 million biotechnology incubator and Fareri Associates’ $500 million, 2 million-square-foot biotech and medical park. The
transit-oriented development study proposed for Southern Westchester developments would include 1.4 million square feet of research and
development space, while repositioning more than 1 million square feet of functionally obsolete office space.
Major lab supply:Clusters of established lab stock with long-time industry presence
Life Sciences manufacturing supply:Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing
Emerging lab supply:Areas with limited lab stock today that are poised for growth
Just a short distance from Manhattan, Westchester County is an
ideal location to many firms looking to attract and retain talent. The
access to transportation is plentiful, especially in White Plains and
along the 287 corridor.
Life sciences was one of the only growth sectors in the area during
the recession and its subsequent recovery. Regeneron drove the
majority of this activity with a massive expansion at 777 Old Saw Mill
River Rd.
15
987 117684
87
287
95
72
2015 Economic scorecardCluster score:
41.2The life sciences market has
seen explosive growth in the
last year in terms of
employment. The companies
that have found a home in
Westchester are expanding
their operations in many
cases; Regeneron alone has
created an additional 1,200
jobs.
This market is dominated by
lab tenants, which account
for nearly 75 percent of all
employment in the life
sciences industry. The overall
employment numbers
experienced growth for the
third consecutive year.
The local life sciences
industry is transitioning from
larger pharmaceutical players
to one where demand is
driven by mid-sized
pharmaceutical,
biotechnology and generic
drug companies. Growing
biotech companies have
tapped the pool of skilled
employees that were
downsized following mergers
among the larger companies.
JLL | Westchester County | Life Sciences Outlook | 2016
Life sciences employment composition
Life sciencesemployment
7,761
non-labusing
labusing
Life sciences establishment composition
Life sciences establishments
214
WORKFORCE Total life sciences% life sciences to private
employment
Year-over-
year growth
Employment 7,761 2.2% 3.9%
Establishments 214 0.6% 0.0%
FUNDING Total life sciences % to total U.S.
VC funding $167.4M 2.44%
NIH funding $23.4M 0.20%
SUPPLY Total lab supply (s.f.) % direct vacancy
2,660,000 12.0%
0.8%
7.1%
5.9%
32.9%
53.3%
Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
2.8%
11.1%
9.3%
7.2%
18.7%
21.6%
Pharma & Medicine MFG
Electromedical Instrument MFG
Medical Equipment & SuppliesMFG
Testing Laboratories
R&D
Medical & DiagnosticLaboratories
Westchester County
I-287 West Corridor
89.7 percent of lab space in the
I-287 West Corridor is occupied
• Companies occupying more than 400,000 square feet will look for
build-to-suit in upcoming months.
• Regeneron has the biggest life sciences footprint in Westchester
County. They currently occupy approximately 700,000 square feet
and are in the process of building an additional 300,000 square feet
at 777 Old Saw Mill River Rd. in Tarrytown.
• Vacancy in this area is around 11 percent due to a significant number
of long-term leases. There has not been much turnover as a result of
this.
• Life science companies consider Westchester County and the
Hudson Valley an important cluster to meet space requirements in
this sector.
Westchester South
Limited activity slows down industry
growth, but build-to-suits available
• Start-Up NY was created in an attempt to try and attract large
companies to New York by giving them 10, tax-free years of
operation on or near eligible university or college campuses. To
date, it has yielded few results, but continues to be on the radar
screen of life sciences and technology companies circling the
Westchester market.
• Acorda remains the largest tenant in the market.
• 500,000 square feet of potential space can be built in Ardsley Park.
• Lab space vacancy in this submarket has remained flat as a result of
limited recent activity.
REGENERON
777-A Old Saw Mill River Rd.
The Landmark at Eastview
28,837 square feet
767 OLD SAW MILL RIVER RD.
The Landmark at Eastview
78,414 square feet
777 OLD SAW MILL RIVER RD.
The Landmark at Eastview – B
157,500 square feet
BioMed Realty
Expected delivery: 12-18 months
Activity key:
Facilities scorecard
Leasing
Sales
Under construction
Large blocks of space
73
777 OLD SAW MILL RIVER RD.
The Landmark at Eastview – C
139,500 square feet
BioMed Realty
SUPPLYI-287 West
major lab
Westchester
South major lab
Rentable lab stock
(% of cluster stock)
2.0M s.f.
39.6%
0.66M s.f.
17.5%
Direct vacancy
(Change year-over-year)
11.0%
(0.0%)
15.2%
(0.0%)
# of large blocks over 50,000 s.f. 0 2
Under construction (s.f.) 300,000 s.f. 0 s.f.
DEMAND
# of requirements
Total s.f. requirements
0
0 s.f.
0
0 s.f.
PRICING
Average asking rent (NNN)
(Change year-over-year)
$52.00 p.s.f.
(0.0%)
$45.00 p.s.f.
(0.0%)
JLL | Westchester County | Life Sciences Outlook | 2016
Life Sciences contacts
74JLL | United States | Life Sciences Outlook | 2016
5CONTACTS
Contacts
75JLL | United States | Life Sciences Outlook | 2016
For more information, please contact:
Roger Humphrey
Executive Managing Director
Life Sciences
+1 (908) 698-2867
Dan Loughlin
Managing Director
Brokerage, New Jersey
+1 (973) 939-3869
Richard McBlaine
International Director
Corporate Client Development
+1 (312) 228-2793
Lisa Strope
Director, New England Research
Americas Research
+1 (617) 531-4243
Wes Simon
Analyst, Boston Research
Americas Research
+1 (617) 531-4216
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Incorporated. For further information, visit www.jll.com.
About JLL Research
JLL research team delivers intelligence, analysis and insight through market-leading reports and services that illuminate today’s commercial real estate
dynamics and identify tomorrow’s challenges and opportunities. Our more than 400 global research professionals track and analyze economic and
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