Hedging Against Slow Office Market, Taconic Turns to Life Sciences
By Mark Hallum June 21, 2022 3:50 pm
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Taconic Partners will shift from developing office space for tech companies into focusing more on the life sciences sector as a hedge against work-from-home trends.
Taconic will split off its life sciences portfolio into its own subsidiary, Elevate Research Properties, which will start work on turning office properties into lab space. Taconic projects it will lease and manage more than $2 billion of life sciences assets spread across 1.4 million square feet, The Wall Street Journal first reported. Taconic executive vice president Matt Weir, who will head up Elevate, described this move as a hedge against a sluggish return to offices, since workers in the life science sector have little choice but to perform in-person work.
“You can’t work from home when you’re a lab researcher,” Weir said Tuesday during a Commercial Observer panel discussion. “So I think the big picture point is that diversity in economies is so important to cities. New York learned that after the Great Recession, after 9/11, it grew the tech business in a big way under Mayor Bloomberg. That proved to have a major positive impact on the city, and I think life science is a great example of this.”
Elevate Research Properties plans to come out the gate and spend more than $250 million to reposition office property owned in a joint venture between Taconic and Nuveen Real Estate near medical research centers such as Mount Sinai Hospital into lab space, according to the Journal.
With the life science industry intersecting with academia, National Institutes of Health funding and workforce trends, Weir said during CO’s Tuesday panel that there is almost a “machine” behind the momentum in lab space.
Taconic already has two life science centers: a 400,000-square-foot, $600 million lab development at 125 West End Avenue set for completion in the second quarter of 2023, and Hudson Research Center, a 320,000-square-foot building at 619 West 54th Street already leased to the New York Stem Cell Foundation, HiberCell, C16 Biosciences and Rensselaer Polytechnic Institute.
Elevate is also hashing out the details for 309 East 94th Street, a 200,000-square-foot Class A research lab development Taconic and Nuveen bought for $70 million in December.
Meanwhile, occupancy rates in major office markets nationwide have stagnated at 43 percent for the last two months, according to research from Kastle Systems, while space for life sciences has seen record demand.
Taconic isn’t the only real estate organization hoping to ride this wave. Nationally, construction for life science space was up 55 percent year-over-year in the first quarter of 2022 with 9 million square feet of lab space under construction, according to research from CBRE. The firm also found that the workforce in life sciences grew 79 percent between 2001 and 2021 compared with 8 percent growth for all occupations in the U.S.
Graduates in biological and biomedical sciences doubled in the last 15 years, totaling more than 163,000 in 2020, according to CBRE.
Mark Hallum can be reached at mhallum@commercialobserver.com.
