NYC Seeding Ground for Life Sciences Boom Despite Barriers: Forum
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The boom in life sciences is not correlated with New York City, instead clustering in research and medical hubs like Boston and San Diego. But, within the last few years, the New York metropolitan region has begun to assemble the tools — namely, talent, funding and shared knowledge — necessary for the sector to take off.
“2021 was the year for life sciences,” said Greg Cornfield, a Commercial Observer associate editor and moderator of Commercial Observer’s Dec. 1 “National Life Sciences Forum: The Year of Life Sciences.”
The pandemic’s emphasis on public health and the importance of research helped spur the acceleration of life sciences, making the industry a hot topic of discussion in recent months. Experts in the day’s opening panel, entitled “Life Sciences Market Report,” spoke to the clusters of buildings that create life sciences ecosystems and drive both tenant demand and scientific progress.
“You need to have the right amount of people in the right place to allow that market to take off — or the right amount of money,” said Brooks Slocum, a studio director at architecture firm SGA.
Clusters, such as those of Greater Boston’s academic and research institutions, enable a strong base that caters to tenants — who want a collaborative working network — as well as landlords and developers, both of which want the assurance that their supply will be met with demand.
In megalopolises like the Boston area, supply has surged, resulting in opportunities for buildings to be repurposed and built with life sciences in mind. Demand in the New York area, however, has followed a slower pace, historically lagging behind other metropolitan areas. This delay isn’t due to a lack of accessible talent, Slocum said, but rather the result of numerous barriers to entry, like zoning restrictions and a dearth of pre-built space.
“Cities like Boston and San Francisco have a lot of older stock as people graduate to the newer buildings,” Slocum said. “We don’t have that yet.”
While New York is still playing catch up, it maintains the fundamentals to become a life sciences magnet, said fellow panelist Matthew Weir, an executive vice president at developer Taconic Partners. Life sciences firms often begin as startups, and, depending on their success and direction of research, have the potential for exponential growth. Spaces that can accommodate this potential growth are therefore imperative, and New York’s proximity to New Jersey, Connecticut, Staten Island and the like creates boundless opportunities for expansion.
Other panelists included moderator Edward Suleymanov, a partner in the real estate group for accounting firm Marks Paneth; and Parikshit Sharma, a partner in IndieBio, an accelerator from venture capital firm SOSV.
The next panel — “Making Room for the Life Sciences Market: Understanding the Full Life Sciences Ecosystem” — expanded the conversation from clusters to campuses. Moderated by Nancy Kelley, founding member of booster group NYC Builds Bio+, the panel featured Daniel D’Orazi, an executive vice president and head of acquisitions at life sciences developer Breakthrough Properties; Glennis Mehra, the director of incubator BioLabs; Jonathan Schifrin, a senior vice president at CBRE; and Peter Schubert, the design partner at Ennead Architects.
“Companies actually prefer to cluster around each other in these activated multi-tenant campus environments,” D’Orazi said. “They’re typically anchored near these key research institutions in any given market that are generating all this talent, [intellectual property] and innovation.”
A campus cluster, such as that seen between the University of California at San Francisco and Berkeley and Stanford, has the potential to spur collaboration and cater to shared interests between companies of various natures, sizes and stages of research. Through this spatial design, big pharma can coexist alongside established biotech companies and newly minted startups, creating a fully fledged support network. This network not only establishes a collaborative working environment, but may also propel scientific breakthroughs.
Developing such campuses, however, can prove tricky. Progressing a life sciences market requires a skilled labor force, as well as access to partners and niche scientists. Firms often dedicate their funding rounds to these human-centric necessities, said Schifrin, but by allocating the bulk of their money toward hiring, companies may overlook the physical lab environment, forcing landlords to invest capital into their buildings ahead of time.
Yet New York landlords are hesitant to put money into life sciences, as they can’t yet guarantee demand. Nor can they guarantee that their buildings will be able to keep up with the ever-evolving demands of scientific research. The knowledge that underlies the sector changes rapidly, said Mehra, so landlords and developers must strategically design and lease buildings that can grow and evolve with the industry.
Further homing in on the logistics of financing these spaces, panelists in the next discussion, “Finance & Investment Focus,” outlined the array of funding opportunities available within life sciences.
Cornfield moderated a discussion between Zach Holderman, a senior vice president at CBRE, and William Hunter, a co-founder and principal at investment firm Outshine Properties. They agreed that funding for life sciences is unique, and can come from venture capitalists and unicorn evaluations, as well as from sponsored research with big pharma and big bio.
No venture is without financial risk, though assembling a team of seasoned veterans can help mitigate uncertainty. Individuals who have already learned the ups and downs of the constantly shifting industry can beat the learning curve that comes with the territory, overcoming what would otherwise be a high barrier to entry. Because talent is high in New York, as well as throughout top life sciences clusters across the country, employers can be selective in assembling the right team, saving themselves time and money down the road.
But employers are not the only ones calling the shots. In the final panel — “Strengthening CRE Portfolios With Burgeoning Industries” — CO’s Tom Acitelli facilitated a conversation on tenant needs. Panelists included David Kristjanson, a CBRE vice president in the brokerage’s life sciences advisory group; Clay McPhail, Argent Ventures’ vice president of acquisitions and asset management; and Colleen O’Connor, BioMed Realty’s vice president of East Coast and U.K. markets.
These panelists spoke to the subjectivity of tenant requirements; a startup’s demands drastically differ from those of an already-established research conglomerate, O’Connor said. Understanding the tenant is an important starting point for both developing and leasing a life sciences building.
Meanwhile, Kristjanson said he prefers to start with the sciences itself. Prior to the space build out, he meets with companies to determine the nature of their work, an employee headcount and the equipment required for their projects. By analyzing the parameters of a tenant’s goals and work process, Kristjanson can tally an approximate square footage that helps in coming up with the scope of possible buildings.
As for the optimal location for developing life sciences, the panelists touched upon zoning laws, as well as access to transit and clusters, before returning to the all-too-important piece for any up-and-coming firm: talent.
“Even if you have an excellent facility, if it’s not in a location where you can drive and retain talent it’s really not useful to anybody,” O’Connor said.
Anna Staropoli can be reached at firstname.lastname@example.org.