Maturing Life Science Markets: Maryland

Such biotechnology infrastructure along with Maryland’s talent pool attracts new companies to the region. CBRE reported that in Q1 2022 along the I-270 Corridor, there was 900,000 SF of activity from outside the market and 67% of CBRE’s active tenant requirements are companies looking to establish a Maryland presence (“I-270 Biotech Corridor Report,” Q1 2022).

Similarly, Facility Logix has seen an increased frequency of foreign companies looking at Maryland, and Montgomery County in particular, as a place to set up their first US operation. In March, the German company, Miltenyi Biotech, announced the relocation of its North American headquarters to Gaithersburg and plans to expand operations. Most recently, UNDBio Labs, a Korean company, announced the establishment of its new U.S. headquarters at TwinLabs in Rockville. And in November, the Korean American Professional Association in Life Sciences (KAPAL) will hold its annual conference in Gaithersburg. Frederick County’s Ellume, an Australian diagnostic test maker, opened its doors in late spring, another first in the US operation.

The influx of new companies to the region is increasing the demand for highly skilled life sciences professionals. At the end of July 2022, Indeed’s job search site listed nearly 750 biotechnology job openings in Montgomery County (Washington Business Journal, October 2022). Montgomery College is stepping up to meet the demand with programs that offer workshops on specific skills like CRISPR and bootcamps sponsored by WorkSource Montgomery, where workers displaced by COVID-19 learned basic laboratory skills and cell culture. Additionally, the University of Maryland, Baltimore County (UMBC) at the Universities at Shady Grove designed its interdisciplinary curriculum using industry input and requires students to complete an internship at companies like AstraZeneca, Kite Pharma or Charles River Laboratories to earn their bachelor’s degree (Washington Business Journal, October 2022).

Like the rest of the country, Maryland has faced a demand that outpaces its supply of lab space although the supply and demand equation may evolve in the coming months based on the national economy. CBRE’s most recent report of the I-270 Corridor stated there is 10.9 MSF of space with 3% vacancy and $43-46 NNN (Top of Market Rates). There is 3.3 SF of active tenants in the market—which is far greater than the near-term supply (CBRE, “I-270 Biotech Corridor Report,” Q1 2022). With the supply constraints and increased demand, lab space rent is similarly increasing. According to Scheer Partner’s BioHealth Lab Market Report from 2021Q3, by 2026 Class A lab space will be in the mid-$50s.

Maryland developers are attempting to meet high demand by delivering 1.8M SF in the next 24-months through the conversion of office buildings in well-established life sciences hubs and the expansion outside these long-established areas (CBRE, “I-270 Biotech Corridor Report, Q1 2022). Along the I-270 corridor, leasing activity has spread north to Frederick County and south to North Bethesda due to supply constraints in the traditional hubs of Shady Grove and Gaithersburg. Frederick area market interest has been driven in part by the need for large blocks of manufacturing requirements, and there is increasing interest in R&D lab space, as well.

CBRE found that “while Shady Grove and Gaithersburg continue to drive 84% of the R&D activity by volume, supply constraints have contributed to the rise of Germantown and Frederick as viable alternatives” (“I-270 Biotech Corridor Report,” Q1 2022). In North Bethesda, space previously occupied by NIH (named TwinLabs), was leased in a matter of months to four tenants, each with 25,000 SF.

 

As in many other markets, the Baltimore area has lacked sufficient “ready-to-go” graduate lab space in recent years. Most existing early-stage lab space in the area is linked to JHU or UMD and is at capacity. However, there are plans to develop in Port Covington and at UMD’s campus on MLK Blvd, which is expected to lease quickly.

Additional developments in the Maryland market include:

Building on our recent blog highlighting the Greater Philadelphia region’s emergence as a life science hub, Maryland’s steady evolution provides another example contributing to the strength of life sciences in the mid-Atlantic region. These two markets further demonstrate the increasing occurrence of life science hubs outside of the historically dominant Boston and California markets.

Maryland offers access to a large talent pool, a community committed to advancing biotechnology, and established anchor institutions. Next in our series we will explore the role the New York life science ecosystem plays in contributing to the Mid-Atlantic region’s emerging markets.

If you have questions about this analysis or are interested in hearing more about Facility Logix, please contact Ariel Gruswitz at arielg@flgx.com.

About Facility Logix – One of only a few facility-related consulting services firms in the United States specializing in the life sciences industry, Facility Logix provides owners’ representation; facilities planning; move and transition, project, and operational management implementation; marketing and business development; and feasibility studies.