ULI New York Blog

Recap: Unlocking Life Science Real Estate’s Potential in NYC

By: Vivien Wu

As a Bostonian living and working in NYC, there are few opportunities for me to convince others of Boston’s greatness. Most of the time, Bostonians are resigned to shaking their heads while others malign their city (the smaller size; the unintuitive streets and subways; the unreasonably early last call at bars). But in one area Boston has much to teach NYC: the Life Sciences industry and its real estate needs.

While New York has a very mature real estate market in general, and is far and away a leader in finance and media, the Life Sciences industry here is still in its early stages, the ULI panel opined. Therefore, it has exciting room for growth, including real estate development potential. Boston and San Francisco have had more examples of spinning out innovative companies from their universities which catapulted local economic growth, and therefore clusters of those industries, whereas New York City and its academic institutions are not as well-known for that pattern.

Doug Thiede from NYCEDC’s Life Sciences & Healthcare team moderated a panel of 3 participants: Sam Globus of Celmatix, a women’s health tech company; Kate Merton of JLABS, the Johnson & Johnson innovation incubator initiative; and Rob Albro of King Street Properties, a private real estate investment firm specializing in Boston-area life science real estate.

Major themes the panel covered were:

  • Physical attributes of life sciences workspaces
  • Specific characteristics of the tenants
  • How NYC is different from and could further differentiate itself from other life sciences hubs

Physical attributes of Life Sciences real estate:

The optimal buildings for Life Science tenants are not high rise, because of the ventilation required. Panelists stated that optimal floor plates would be 30,000 – 50,000 square feet, to accommodate communal spaces and meeting spaces. Kate mentioned that each JLABS (there are currently eleven around the world) is designed in zones to correspond to different zones of activity for the occupants. Sam stated that 20,000 square feet would be sufficient for a health data/tech company but that would be a minimum. This feature is a challenge for older buildings in Manhattan to accommodate.

In addition, most spaces designed for these users should plan to have a mix of wet lab and dry lab space. Currently the JLAB NYC has a 60%/40% breakdown of wet/dry lab space because it was designed based on observations of usage from other cities; however, Kate has observed that the mix of users in NYC probably would be well served with a higher ratio of dry lab space. Rob added that the lab component, if built right, can be used multiple generations of tenants; and that from the landlord perspective in Boston, he has observed tenants use their Tenant Improvement allowance mostly on the office space updating than renovating the labs.

Life Sciences tenant needs:

Panelists and audience members emphasized that tenants need step-out space. The expensive nature of leasing office in NYC/Manhattan may be a challenge to this type of user. However, Sam said that from the tenant point of view, his company in early stages was in a WeWork and would have been quite willing to share office space with tenants in their ecosystem. Kate observed that Life Sciences users may have key people who are affiliated with both academic and corporate institutions, and therefore need to travel uptown and downtown or have easy access to those institutions in Manhattan, which made their Tribeca JLABS location in NYC very apropos.

Speaking of the tenant attributes, Sam pointed out that the distinction between a scientist and an office worker is blurring. Rob stated that there is often a misconception that life science or lab users are in sealed basements with lab coats but they do not necessarily want to be in a bunker-like office setting, they want amenities, access, and convenience just like any other tech firm.

How NYC can differentiate itself as a Life Science hub:

While the Life Science cluster in NYC is still not mature, compared to Boston/Cambridge or SF or San Diego, NYC has the advantage of elevated global appeal. Many international scientists and academics would rank NYC as a top destination for locating their operations, because of the airports, connectivity, and rapid transit options. In addition, as Doug commented, the talent pool that currently exists in NYC is unprecedented. There is more tech talent and skilled labor and more of a focus on academic collaboration than ever before. In addition, NYC is well-positioned for interesting partnerships. For example, while J&J is a pharmaceutical company, it may want to partner with telecom or media or electronics companies for digital health ventures. Finally, the diverse and large population in the whole Tri-State area is a big boon for life science companies or start-ups which seek access to a population to test or sample.

While Boston has led the way so far, there is room for more competition and innovation at the top. The ULI members who turned out for this event from institutional investors, brokerages, architecture firms, and universities showed the intense interest and growth for this sector in NYC.

Click here to read exclusive coverage of this event on Urban Land Magazine.

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