Life Sciences Outlook - JLL · Table of contents JLL |United States Life Sciences Outlook 2016 2...

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.


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.


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


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.


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.


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


Largest clusters by rentable lab space (m.s.f.)



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


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


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%





R&D


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


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)


$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:


Leasing

Sales

Under construction



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


9.9%

1.6 ppts

12.2%

1.0 ppts


Under construction (s.f.) 1.6M s.f. 1.6M s.f.

DEMAND

# of requirements


36

2.1M s.f.

51

3.4M s.f.

PRICING



$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



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


3.0% 9.1%


Under construction (s.f.) 0 s.f. 620,000 s.f.

DEMAND

# of requirements


1

50,000 s.f.

0

0 s.f.

PRICING



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.




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


employment

Year-over-

year growth

Employment 53,054 1.7% 0.0%



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).



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.



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%



Medical Equipment & Supplies MFG


R&D

Medical & Diagnostic Laboratories

4.6%

16.1%

26.3%

12.7%

19.8%

20.4%

Pharma & Medicine MFG




R&D


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:


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


5.05%

-0.55 ppts

4.6%

-0.4 ppts


Under construction (s.f.) 0 0

DEMAND

# of requirements


1

25,000 s.f.

5

350,000 s.f.

PRICING



$10.54 p.s.f.

-5.2%

$10.64 p.s.f.

-0.03%

Leasing

Sales

Under construction


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.




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


employment

Year-over-

year growth

Employment 27,666 2.1% 1.7%




NIH funding $325.37M 2.83%


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.


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


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.


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:


SUPPLY Boulder Northwest

Rentable lab stock

(% of total stock)

1.8M s.f.

42.5%

1.2M s.f.

29.2%

Direct vacancy


7.9%

(-1.1) ppts

17.4%

(-3.5) ppts


Under construction (s.f.) 0 s.f. 0 s.f.

DEMAND

# of requirements


21

400,000 s.f.

22

375,000 s.f.

PRICING



$18.31 p.s.f.

10.9%

$19.08 p.s.f.

0.6%

Leasing

Sales

Under construction


23JLL | Denver | Life Sciences Outlook | 2016



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


Activity key:


SUPPLY SESoutheast

Suburban

Rentable lab stock

(% of cluster stock)

0.2M s.f.

5.0%

0.2M s.f.

5.4%

Direct vacancy


8.6%

(+4.0) ppts

20.8%

(+3.0) ppts



DEMAND

# of requirements


3

70,000 s.f.

14

1,360,750 s.f.

PRICING



$18.00 p.s.f.

0.0%

$9.25 p.s.f.

0.0%

Leasing

Sales

Under construction



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


Activity key:


SUPPLY West SuburbsSouthwest

Suburban

Rentable lab stock


0.6M s.f.

13.2%

0.2M s.f.

4.7%

Direct vacancy


16.3%

(+14.4) ppts

8.5%

(-21.7) ppts


Under construction (s.f.) 110,520 s.f. 0 s.f.

DEMAND

# of requirements


10

140,000 s.f.

3

80,000 s.f.

PRICING



$10.00 p.s.f.

-1.1%

$11.47 p.s.f.

6.9%

Leasing

Sales

Under construction



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.




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


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.


32%

16%18%

17%

17%Pharma & medicine manufacturing






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


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


25,500 s.f.

Class A

$21.50 Net

Activity key:


SUPPLY Toronto Mississauga

Rentable lab stock

(% of total stock)

2.1 m.s.f.

74.9%

720,000 s.f.

93.4%

Direct vacancy


0.0%

-1890 bps

1.2%

N/A



DEMAND

# of requirements


2

80,000 s.f.

0

0 s.f.

PRICING

Average asking rent (Net)


$30.00 p.s.f.

0.0%

$24.00 p.s.f.

N/A

Leasing

Sales

Under construction


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.




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


employment

Year-over-

year growth

Employment 28,274 2.6% -2.3%

Establishments 540 0.5% 0.9%


VC funding $167.4M 2.44%



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.



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


percent since 2004.



540

Life sciences patents for

drug, bio-affecting and body

treating compositions


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




R&D


18.7%

3.8%

19.2%

7.1%0.5%

50.6%





R&D


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


Activity key:


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


14.8%

(0.4) ppts

13.2%

(0.1) ppts


Under construction (s.f.) 0 270,000.f.

DEMAND

# of requirements


0

0 s.f.

2

180,000 s.f.

PRICING



$25.50 p.s.f.

0.7%

$16.95 p.s.f.

0.0%

Leasing

Sales

Under construction


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.




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%


Funding Total life sciences % to total U.S.


NIH funding $1,002.2M 8.71%


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



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.



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




R&D


5.2%

13.6%

21.3%

10.6%

24.5%

24.7%





R&D


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


SupplyLos Angeles

Major Lab

Rentable lab stock


1,163,972 s.f.

26.6%

Direct vacancy


2.9%

(-140) ppts

# of large blocks over 50,000 s.f. 0

Under construction (s.f.) 0 s.f.

Demand

# of requirements


3

257,000 s.f.

Pricing



$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


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


SupplyOrange County

Emerging Lab

Rentable lab stock


403,262

10.5%

Direct vacancy


5.9%

(-150) ppts



Demand

# of requirements


2

450,000 s.f.

Pricing



$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


Sales

Under construction


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.




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


employment

Year-over-

year growth

Employment 39,145 2.2% 4.2%






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.



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.



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%





R&D


8.63%

6.93%

1.71%2.04%

67.68%

13.02%





R&D


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:


SUPPLYMajor lab market

(I-270)

Rentable lab stock

(% of cluster supply)

9.5M s.f.

81.2%

Direct vacancy


4.3%

680 bps


Under construction (s.f.) 0

PRICING



$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


Class B

$7.9 million

Leasing

Sales

Under construction


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.




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


42%

14%

31%

13%Pharma & medicine manufacturing





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


SupplyMontréal

major lab

Rentable lab stock

(% of total stock)

0.9 m.s.f.

7.0%

Direct vacancy


13.0%

+0.3%


Under construction (s.f.) 0

Demand

# of requirements


15

319,000 s.f.

Pricing

Average asking rent (NET)


$14.10 p.s.f.

(1.5%)

JLL | Montréal | Life Sciences Outlook | 2016


Sales

On the market


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.




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

287

95

78

95

95

495

80

Bronx

Brooklyn

Staten

Island

Queens

43

Economic scorecard


employment

Year-over-

year growth

Employment 77,326 3.2% -1.8%

Establishments 1,712 1.0% -0.4$





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.



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.



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%





R&D


11.7%

11.0%

16.6%

9.9%

25.5%

25.2%





R&D


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:


SUPPLYNorthern NJ

Major lab

Central NJ

Major lab

Rentable lab stock


2.3M s.f.

60.8%

4.4M s.f.

35.5%

Direct vacancy


31.3%

(0.7) ppts

13.5%

(1.8) ppts


Under construction (s.f.) 0 0.7M s.f.

DEMAND

# of requirements


3

0.5M s.f.

4

0.3M s.f.

PRICING



$10.38 p.s.f.

-8.9%

$17.55 p.s.f.

-4.1%

Leasing

Sales

Under construction


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.




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.

287

95

78

95

95

495

80

Bronx

Brooklyn

Staten

Island

Queens

Manhattan

46

Economic scorecard


employment

Year-over-

year growth

Employment 13,947 0.4% 0.4%




NIH funding $1,506.9M 13.10%


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 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.



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%





R&D


1.46%4.59%

9.99%

0.98%

46.62%

36.36%





R&D


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:


SUPPLY NYC

Rentable lab stock

(% of total stock)

2.8M s.f.

99.4%

Direct vacancy


32.6%

(8.8) ppts


Under construction/

redevelopment (s.f.)3.6M s.f.

PRICING

Average asking rent (gross)


$27.30 p.s.f.

(19.7)%

Leasing

Sales

Under construction


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.




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


employment

Year-over-

year growth

Employment 53,614 2.3% -0.4%

Establishments 1,573 0.9% -0.3%





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.



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.



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%





R&D


25.3%

13.7%

8.7%6.7%

35.6%





R&D


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:


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


1.5%

-450 bps

6.4%

110 bps


Under construction (s.f.) 1,199,000 s.f. 0 s.f.

DEMAND

# of requirements


5

710,000 s.f.

0

0 s.f.

PRICING



$28.00 p.s.f.

16.0%

$12.35 p.s.f.

23.1%

Leasing / In the market

Sales

Under construction


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.




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


employment

Year-over-

year growth

Employment 35,073 5.4% 6.6%






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.



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.



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%





R&D


4.20%6.78%

7.43%

9.80%

49.52%

22.28%





R&D


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:


SUPPLYDowntown

Durham lab

West Raleigh

lab

Rentable lab stock


230,294 s.f.

2.2%

296,639 s.f.

2.8%

Direct vacancy


0.0%

(5.1) ppts

0.0%

0.0 ppts


Under construction (s.f.) 284,000 s.f. 104,988 s.f.

DEMAND

# of requirements


1

100,000 s.f.

1

10,000 s.f.

PRICING



$27.50 p.s.f.

2.3%

$29.50 p.s.f.

0.0%

Leasing

Sales

Under construction


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:


Leasing

Sales

Under construction


JLL | Raleigh-Durham | Life Sciences Outlook | 2016

SUPPLYRTP / RDU

lab

Rentable lab stock


8.6 M s.f.

81.0%

Direct vacancy


19.1%

6.4 ppts



DEMAND

# of requirements


7

250,000 s.f.

PRICING



$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



56

Economic scorecard


employment

Year-over-

year growth

Employment 64,690 5.6% -3.1%

Establishments 1.414 1.4% 3.0%





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.



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.



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%





R&D


10.39%

17.83%

9.68%

2.96%

51.26%





R&D


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:


Leasing

Sales

Under construction



SUPPLY Torrey Pines

Rentable lab stock

(% of total stock)

6.0M s.f.

36.0%

Direct vacancy


3.3%

-4.0 ppts


Under construction (s.f.) 0.1M s.f.

DEMAND

# of requirements


6

0.2M s.f.

PRICING



$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:


Leasing

Sales

Under construction



SUPPLY UTC

Rentable lab stock

(% of total stock)

3.5M s.f.

20.9%

Direct vacancy


18.7%

-3.4 ppts



DEMAND

# of requirements


6

0.6M s.f.

PRICING



$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


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


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


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:


Leasing

Sales

Under construction



SUPPLY Sorrento Mesa

Rentable lab stock

(% of total stock)

3.9M s.f.

23.6%

Direct vacancy


7.0%

+1.5 ppts


Under construction (s.f.) 0M s.f.

DEMAND

# of requirements


9

0.4M s.f.

PRICING



$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:


Leasing

Sales

Under construction



SUPPLY Sorrento Valley

Rentable lab stock

(% of total stock)

1.1M s.f.

6.9%

Direct vacancy


8.7%

-3.2 ppts


Under construction (s.f.) 0M s.f.

DEMAND

# of requirements


3

0.03M s.f.

PRICING



$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:


Leasing

Sales

Under construction



SUPPLY North County

Rentable lab stock

(% of total stock)

2.1M s.f.

12.6%

Direct vacancy


5.1%

(-0.4) ppts



DEMAND

# of requirements


2

0.3M s.f.

PRICING



$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




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


employment

Year-over-

year growth

Employment 24,320 1.8% 1.0%






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.


9%

25%

8%

3%

51%

4% Pharma & medicine manufacturing



Testing 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%





R&D


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:


Leasing

Sales

Under construction



SUPPLYLake Union

Major Lab

Capitol Hill

Emerging lab

Rentable lab stock


2.1M s.f.

56.2%

0.5M s.f.

64.0%

Direct vacancy


2.6%

2.6 ppts

0.0%

(10.0) ppts


Under construction (s.f.) 0.3M s.f. 0

DEMAND

# of requirements


2

20,000

0

0

PRICING

Average asking rent (FS)


$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:


Leasing

Sales

Under construction



SUPPLYBothell

Manufacturing

Redmond

Manufacturing

Rentable lab stock


1.5M s.f.

74.6%

0.5M s.f.

100%

Direct vacancy


10.5%

(0.8) ppts

8.1%

(1.7) ppts


Under construction (s.f.) 0 0

DEMAND

# of requirements


4

194,000

4

194,000

PRICING



$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




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%


Funding Total life sciences % to total U.S.

VC funding $1,518.8M 22.13%



19,303,587 s.f. 2.9%

Cluster score:

75.2

JLL | Northern California Bay Area | Life Sciences Outlook | 2016



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.



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%





R&D


4.7%

11.4%

12.6%

7.6%

48.9%





R&D


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


Sales

Under construction



Supply South County North County

Rentable lab stock


2.6M s.f.

16.4%

5.9M s.f.

60.8%

Direct vacancy


1.1%

(-0.7) ppts

0.5%

(0.4) ppts


Under construction (s.f.) 217,000 1,414,100

Demand

# of requirements


5

185,000 s.f.

1

20,000 s.f.

Pricing



$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


40 percent interest sale

455,069 s.f.

Buyer: TIAA-CREF Seller: ARE

Class A

$1,042 psf

1500 Owens


49 percent ineterst sale

158,267 s.f.

Buyer: TIAA-CREF Seller: ARE

Class A

$928 psf

499 Illinois Street

UCSF


97,000 s.f.

Class A

$65 NNN (sublease from Illumina)

Activity key:


SupplyMission Bay / China

Basin

Rentable lab stock


1.49M s.f.

60.0%

Direct vacancy


0.0%

(0) ppts


Under construction (s.f.) 680,000

DEMAND

# of requirements


4

500,000 s.f.

PRICING



$65.00 p.s.f.

8.3%

Leasing

Sales

Under construction


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


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%


Under construction/renovation (s.f.) 250,000 s.f. 0

Demand

# of requirements


26

900,000 s.f.

2

30,000 s.f.

Pricing



$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.


Sales

Under construction


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.




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



7,761

non-labusing

labusing



214


employment

Year-over-

year growth

Employment 7,761 2.2% 3.9%





SUPPLY Total lab supply (s.f.) % direct vacancy

2,660,000 12.0%

0.8%

7.1%

5.9%

32.9%

53.3%





R&D


2.8%

11.1%

9.3%

7.2%

18.7%

21.6%





R&D


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


The Landmark at Eastview – B

157,500 square feet

BioMed Realty

Expected delivery: 12-18 months

Activity key:


Leasing

Sales

Under construction


73


The Landmark at Eastview – C

139,500 square feet

BioMed Realty

SUPPLYI-287 West

major lab

Westchester

South major lab

Rentable lab stock


2.0M s.f.

39.6%

0.66M s.f.

17.5%

Direct vacancy


11.0%

(0.0%)

15.2%

(0.0%)


Under construction (s.f.) 300,000 s.f. 0 s.f.

DEMAND

# of requirements


0

0 s.f.

0

0 s.f.

PRICING



$52.00 p.s.f.

(0.0%)

$45.00 p.s.f.

(0.0%)

JLL | Westchester County | Life Sciences Outlook | 2016

Life Sciences contacts


5CONTACTS

Contacts


For more information, please contact:

Roger Humphrey

Executive Managing Director

Life Sciences

+1 (908) 698-2867

[email protected]

Dan Loughlin

Managing Director

Brokerage, New Jersey

+1 (973) 939-3869

[email protected]

Richard McBlaine

International Director

Corporate Client Development

+1 (312) 228-2793

[email protected]

Lisa Strope

Director, New England Research

Americas Research

+1 (617) 531-4243

[email protected]

Wes Simon

Analyst, Boston Research

Americas Research

+1 (617) 531-4216

[email protected]

About JLL

JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased

value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $5.2 billion and gross revenue of $6.0

billion, JLL has more than 280 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its

clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square

meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. Its investment management business, LaSalle Investment

Management, has $58.3 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle

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

property trends and forecast future conditions in over 60 countries, producing unrivalled local and global perspectives. Our research and expertise,

fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful

strategies and optimal real estate decisions.

This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means,

either in whole or in part, without prior written consent of Jones Lang LaSalle IP, Inc.

COPYRIGHT © JONES LANG LASALLE IP, INC. 2016

http://www.jll.com/

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