Maturing Life Science Markets: Maryland
October 28, 2022
In our last post we discussed the emerging market of Philadelphia and its recent life sciences boom, thanks to significant federal and increasing private sector funding, leading to increased R&D activity and commercialization opportunities. This post will discuss the Maryland market, which in contrast to Philadelphia, has seen more steady growth in the past two decades, due to its geographic position, proximity to well-established companies and institutions, and consistent public investment at all levels of industry.
Maryland is Facility Logix’s home state, and we have been involved with the emerging life sciences market since our inception. For example, Facility Logix consulted for the Frederick Innovative Technology Center (FITCI) regarding its expansion in the early 2010s. Today, FITCI graduates, such as RoosterBio and Akonni Biosystems, attract new venture capital funding to the area. Facility Logix has also worked with TEDCO which also supports early-stage life science companies with funding and programming. Additionally, Facility Logix has continued to see Maryland’s steady growth through partnerships with fast-growing companies like United Therapeutics and research innovators like Johns Hopkins University (JHU), the University of Maryland (UMD) system, and the University of Baltimore.
Outside the Boston or California markets, Maryland is one of the most recognized U.S. life sciences ecosystems. In Montgomery County alone, there are more than 300 biosciences companies that attracted nearly $8 billion in investments in 2020 (Washington Business Journal, October 2022). And as part of the BioHealth Capital Region (which consists of Maryland, Virginia and Washington, DC), there are more than 1,800 life sciences companies, with over 70 federal labs and world class academic and research institutions in the area. And CBRE ranked the Baltimore/Washington D.C. area as the country’s second-best life sciences market for talent—just above the San Francisco market—due to the region’s world-leading universities and established industry presence (“Life Sciences Research Talent,” June 2022).
Most recently, the Greater DC & Baltimore area ranked fourth in JLL’s 2022 Life Sciences Clusters outpacing other emerging bioscience hubs such as Philadelphia, New Jersey, New York and Raleigh. The rankings are based on talent, funding, and commercial real estate. JLL credited the Greater DC & Baltimore cluster’s successful ranking to the strong NIH funding and sharp acceleration of venture capital in recent years (“2022 Life Sciences Research Outlook & Cluster Rankings,” 2022).
Located just north of Washington, D.C., Maryland is known as a government-related biotechnology hub. It is home to the headquarters of the National Institutes of Health, the U.S. Food and Drug Administration, and the National Institute of Standards and Technology in addition to Fort Detrick’s National Cancer Laboratory for Research and the National Biodefence and Counter Measures Center. This translates to an innovative life sciences sector with government-funded research and contracts. According to JLL, in 2018, the state of Maryland captured almost two-thirds of all contract awards by the NIH and FDA, totaling $4.2 billion (“Life Sciences Outlook: Suburban Maryland”). The influx of R&D federal funding along with private industry investment has led to advancements that now drive demand for biomanufacturing space.
With the steady growth of Maryland’s life sciences ecosystem, the state has adapted to the biotechnology sector’s needs and implemented accelerated approval processes. In Frederick County, companies can qualify for fast track permitting, and most recently, the county created a Turbo Fast Track program for Kite Pharma’s project. According to a recent article by NAIOP, the typical process takes 46 weeks from site plan to improvement plan and building permit processes, but it only took 13 weeks under the Turbo Fast Track program (“Boom Towns: Logistics and Life Sciences Spark Growth in Western Maryland,” September 2022). Recently, Montgomery County approved the BioHealth Priority Campus zoning amendment, establishing a streamlined zoning process in designated areas throughout the county for significant projects. Additionally, the Maryland Tech Council supports the advancement of the state’s life science sector through programs like the Biotechnology Investment Incentive Tax credit.
The Maryland Tech Council also hosts an annual Maryland Life Sciences Bio Innovation Conference to connect top life sciences professionals in the region with leading global brands, venture capitalists and promising startups. Earlier this month several Facility Logix representatives attended the conference and learned more about the region’s growth. Check out our LinkedIn post to learn more and connect about the conference.
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:
University of Maryland BioPark 250,000 SF
- BD Innovation Center
Unversity of Maryland BioPark
- CityGarage Renovation
- 7495 New Horizon Way
- Jefferson Tech Park
- Evolution Labs
- Progress Labs
- Monument Innovation Center
- Precision Labs
- Sirnaomics and RNAImmune
- 935 Prose
- 1450 Research Boulevard
- Boston Properties
- District Labs/King Farm
- Capital Digestive Care
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 email@example.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.