Why Life Sciences Will Drive Robust Office Growth In New York City
New York City has always attracted talent and a hub for progress. And yet, while New York graduates one of the highest numbers of STEM talent each year, the city ranks only sixth in life sciences square footage—behind the Bay Area, Boston and the Research Triangle in the Raleigh/Durham area of North Carolina, among other metro areas.
Now, New York has taken notice. Mayor de Blasio started a billion dollar investment into the industry in hopes of bringing more companies to the five boroughs as part of LifeSci NYC, launched to build up New York City as a leader in life sciences. Recent office development and leasing activity momentum suggests New York is poised to rise up the rankings—and the Life Sciences segment diversification is changing the dynamics of the city’s commercial market.
Major Growth Numbers for Life Sciences
Nationally, the life sciences industry bucked lagging employment trends, growing 1.4% as overall employment dropped 5.1% from 2019 to 2020. Venture capital funding into the industry also set a new high of $10 billion in Q1 2021, doubling the investment in the previous year’s quarter. Additionally, there’s been a dramatic increase in demand for life science and lab space in New York in the first quarter of this year. Even during the pandemic, NYC saw over $900 million in venture capital investment in the industry, the second-highest total ever, along with yearly increases in rent and leasing activity. In its entirety, employment in the industry has grown 67 percent since 2001.
New York City’s Numbers Suggest Strong Growth Ahead
In addition to being a leader in STEM graduates, New York City is also a leader in bioscience professionals but only seventh in available or under-construction spaces for this kind of work. New York City is still behind a number of other cities in terms of investment and space for the life sciences industry. Per the Times, only 2 million square feet of Manhattan is used for this sort of research, while in Boston, there is 30 million square feet demarcated for this purpose. Further, though over 30 percent of buildings in the city are available to be used or converted into lab space, less than 3 percent are functionally ready to be used in this way.
Life Sciences Location Needs Create New Markets
Life Sciences companies demand proximity to universities, colleges, and hospitals, therefore, location is key. Because of this, the industry is finding that these ideal environments for life sciences tenants are reshaping the Midtown- and Financial District-centric office ecosystem of New York. While some labs in the life sciences industry have set up shop on the far edges of Midtown, such as the Hudson Research Center near Hell’s Kitchen, Cure from Deerfield Management in the Flatiron District and the Alexandria Center in Kips Bay, the demand for life sciences space is drawing new attention to areas of the city. Long Island City is home to Innolabs, under development by King Street, while West Harlem is focal point of the Janus Property Company, which has been delivering life sciences spaces across multiple buildings at the Manhattanville Factory District, a master-planned commercial development.
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With so much development underway or already finished, the life sciences market is set to continue its rapid growth post-pandemic. Purpose-build spaces for life sciences buildings are both requisite and a major investment for owners. From powerful backup generators and air ducts to waste removal capabilities and climate control, labs require a great deal of foresight and planning from owners and developers. This requisite adds to the trend defining New York’s commercial office market in 2021 and the flight to quality as top tenants look for spaces in trophy-class buildings that have seamless digital infrastructure, offer state-of-the-art technology and turnkey spaces and present co-branding opportunities for sustainability and design.
West Harlem’s Expanding Innovation Ecosystem
West Harlem presents a fascinating case study because it is winning a large share of the life sciences leases. Recent tenant Hemogenyx is one such tenant. According to a statement from their CEO and founder Dr. Vladislav Sandler, “I personally toured every life sciences option in the New York City area and the choice for our lab’s continued growth was clear. With several current and future vivarium options, the opportunity to collaborate with Columbia University and City College, the exceptional location for my staff that come from several locations, and Janus’s commitment to both the life sciences industry and our company in particular, the Mink Building represents a perfect combination that could not be matched.”
“The innovation corridor in West Harlem from Mt. Sinai’s Morningside campus to Columbia University’s historic campus and the Manhattanville expansion to City College and the New York Structural Biology Center, to New York Presbyterian and Columbia University Medical Center, is just unmatched in New York City,” said Scott Metzner, Principal, Janus Property Company. Metzner and fellow Janus principal Jerry Salama have created one of New York’s largest life sciences/innovation districts.
“The combination of West Harlem’s location matched with the quality of construction and economic benefits are unique,” says Metzner. “In addition to direct access to young STEM talent at Columbia and CCNY, our West Harlem location is not only the most convenient life sciences neighborhood for New Yorkers and those coming from New Jersey, Upstate or Connecticut, but it’s also a wonderful and, by New York standards, affordable place for people to live as well as work, with thriving retail and culture.”
In addition to Hemogenyx, Janus has already landed numerous lab, medical and related tenants including Harlem Biospace incubator, Quentis Therapeutics, Volastra Therapeutics, Renal Research Institute, Quicksilver Therapeutics, Hypothekids, BioBus and a New York State facility. Janus has recently completed the Taystee Lab Building, a 350,000-rentable square foot, new construction, LEED-certified life-sciences building and the 200,000-rentable square foot Malt House. (The buildings’ unique names reflect their previous lives as a brewery and a confectionery. All of the sites were largely vacant or abandoned and Janus has worked extensively with the community, engineers and landscape architects to preserve as much of the buildings as possible and integrate them into an open, ungated urban campus)
“Importantly, West Harlem boasts a world famous, robust arts, cultural and nonprofit scene that exists in concert with our STEM tenants,” says Salama. “The Studio Museum is here, as are the Harlem Stage, the Apollo Theater, SoHarlem Creative, Lenfest Center for the Arts, Wallach Art Gallery, and soon, the Urban Civil Rights Museum. There is a tremendous sense of excitement with all of the growth that’s been occurring, even with the pandemic. It’s all coming together at the same time!”
New York is rapidly expanding its life sciences industry, as noted, and though the market has not reached the high bar set by Boston, this year represents a vital benchmark in the progress the market has made recently. With a combination of important factors, namely available talent, industry expansion and openness to advancements, and lab space, the market should remain robust and resilient moving forward. Now, more than ever, companies will be looking for prime, quality space and energy- and eco-efficient options amid an active life sciences landscape.