Maturing Life Science Markets: New York Region
January 3, 2023
In our last post, we discussed the emerging market of Maryland and its steady evolution into a well-known life sciences hub with established anchor institutions and a community committed to advancing biotechnology. This post will discuss the New York City regional market, which in contrast to Maryland’s steady growth, has blossomed rapidly in the last decade thanks to a large talent pool, supporting infrastructure, and significant public investments. In the past several years, Facility Logix has expanded into the New York market and has established a presence there with strong consultant and company relationships.
In its earliest years, the New York life sciences market grew in fits and starts, with small new spaces, like the Audubon and the Downstate Biotech incubators, being established only every few years. It was clear that the city’s biggest obstacle to building a successful biotech ecosystem in the early 2000’s was the lack of modern commercial lab space. To address this hurdle, the New York City Economic Development Corporation (NYCEDC) worked with Alexandria Real Estate Equities to build two lab towers (750,000 sf total) on Manhattan’s East Side in 2010 and 2013. These buildings truly put NYC on the country’s life sciences map and made it clear that the city was serious about this sector.
In 2015, NYCEDC commissioned the Life Sciences Infrastructure Initiative (LSI2) study, which recommended a set of incentives and soon evolved into LifeSciNYC, Mayor de Blasio’s $500M program to stimulate life sciences job creation, investment, and space development. This program, together with the state’s $620M life sciences push (both announced in December of 2016), served to create stronger and steadier growth in New York’s biotech sector, both in and around the city. The following five years saw the openings of new incubator facilities and larger lab spaces, a new internship program, and a surge in venture capital funding. In 2021, NYC doubled its commitment to life sciences to $1B, resulting in more development and job creation.
Because of the existing size and breadth of New York’s bioscience ecosystem, the city is a national leader in key metrics including academic R&D, National Institutes of Health (NIH) funding, venture capital investments, and patents awarded. Today, it is home to global companies like Bristol-Myers Squibb and Pfizer, in addition to well-established research institutions and medical centers, including Columbia University Medical College, New York University (NYU) Langone School of Medicine, Icahn School of Medicine at Mount Sinai, Memorial Sloan Kettering, the Rockefeller University, Weill Cornell Medicine, Albert Einstein College of Medicine, New York Presbyterian Hospital, and the Hospital for Special Surgery.
With these large, world-renowned institutions drawing significant federal grants, NYC has ranked second (just behind Boston) in NIH funding in the previous five years, and NIH funding awards reached $3.2 billion in FY 2021.[1] In terms of research and development, academic research institutions in New York state spent $4.7 billion in bioscience-related fields in 2020, which amounts to $235 per capita—well above the national average and sixth in the country.[2] Additionally, New York hosts the most clinical trials (approximately 7,000) and ranks third in biosciences-related patents.[3]
With steady, public investment, the private sector has responded by rapidly accelerating venture capital investments in New York, from $2.19 billion in 2018 to $9.46 billion in 2021 (see Figure 1). According to the Partnership Fund for NYC, “New York [State] received 73 cents of VC funding for every dollar of NIH funding received in FY 2020, up substantially from 13 cents in 2016 and 6 cents in 2013. While New York still trails Massachusetts and California, which received about twice as much VC investment as NIH dollars in 2020, New York’s 73 cents is on par with the national average, and this figure is growing as private investors identify the state as an increasingly attractive life sciences hub for startups, and as the supply of state-of-the-art lab space grows to meet their needs.” In fact, New York City is home to eight incubator spaces for life sciences start-ups including Biolabs@NYULangone, located in Hudson Square, and Alexandria LaunchLabs, located in Kips Bay and Upper Manhattan.
Figure 1. Source: TEConomy/BIO, New York State Profile, 2022
Due to the size and population of the New York City metropolitan area, there are 31,650 people employed in life science occupations, behind only the Boston/Cambridge area.[1] The NYC metro area is home to several large, bioscience-degree-awarding institutions including Columbia, NYU, Fordham, City College of New York, and New York Institute of Technology. Institutions like these reported a 49% increase in life sciences degrees awarded since 2010, which has facilitated growth in the region’s already large bioscience industry employment base.[2] Since 2018, New York state’s life science employment base has grown by seven percent, reaching 110,000 jobs spanning 5,314 establishments in 2021.[3]
In 2022, Cushman & Wakefield released its “Life Sciences Update,” which examines the relationship between this large talent pool and top market’s inventory of lab space; New York’s standing is currently below the curve (see Figure 2). New York City has a large employment base due to its overall large population, multiple world-renowned research institutions, and established pharma companies in neighboring Westchester and New Jersey. Cushman & Wakefield found that the “growth in demand for life sciences employees has mirrored lab space inventory growth as employers race to meet the needs of this growing sector.”[4] Thus, New York has rapidly increased its lab space supply in recent years to fulfill the growing sector’s demand, with new buildings like Innolabs and Alexandria LIC in Queens and the Hudson Research Center and Cure in Manhattan.
- [1] CBRE, June 2022
- [2] Cushman & Wakefield, October 2022
- [3] TEConomy/BIO 2022
- [4] Cushman & Wakefield, October 2022
Figure 2. Source: Lightcast, Cushman & Wakefield Research, October 2022
The current inventory of commercial lab space is nearly three million square feet, and 2.6 MSF of additional development is planned to come on line in the next five years, with new developers like Longfellow entering the market (see Figure 3). Despite continued development, New York, like many other markets, may still struggle to meet demand, especially in cGMP space.
Figure 3. Life Sciences Development in New York City
In JLL’s 2022 Life Sciences Research Outlook and Cluster Rankings, New York ranked 13th in the country due to inventory, supply growth, asking rent, and rent growth. The current market offers 2.9MSF with average asking rents of $97.97 per SF and a 32% vacancy rate; much of this vacancy is due to large blocks, i.e., entire buildings coming on-line at once.[1] NYC’s rent prices are, not surprisingly, higher than other emerging markets but are on par with San Francisco and Boston/Cambridge and offer access to talent and connectivity to large research institutions.
When the Alexandria Center for Life Science was built on Manhattan’s far East Side of Manhattan (see map item #1 below), it was considered an ideal location because of its proximity to the city’s premier research institutions and hospitals. Since that time, however, factors like neighborhood amenities and subway access have proven to be as (if not more) important to growing companies than institutional adjacency, thus enabling the development of a few mini hubs in other parts of the city.
Hudson Square – now home to the New York Genome Center, JLabs, and Biolabs@NYULangone – has become an attractive location for life sciences companies because of its rich retail offerings and subway accessibility.
In West Harlem, CUNY’s Advanced Science Research Center and the Harlem Biospace co-working lab will soon be joined by City College’s planned incubator. Long Island City, with recently opened projects by Alexandria Real Estate Equities and King Street Properties, is proving to be a third budding subcluster. Manhattan’s West Side is currently home to the Hudson Research Center and will soon boast 125 West End Avenue and a new clinical and research center for Mount Sinai. Several institutions and companies are also located in various neighborhoods of Brooklyn, creating its own subcluster.
- [1] Ibid.
In addition to our recent blogs highlighting Greater Philadelphia and Maryland as emerging life sciences markets,
the New York City region is contributing to the strength of the sector in the Mid-Atlantic region. It should come as no surprise that New York has myriad assets and offerings to foster a successful life science ecosystem, including one of the most educated and diverse talent pools in the nation, large public investment, first-class academic and medical institutions, and premier venture capital firms. And while the city has been strengthening its focus on its own life science efforts, it is also coordinating efforts with its counterparts in Westchester, New Jersey, Connecticut, and Long Island. These broader steps combined with the rapid pace of research, discovery, and development will certainly boost the region’s standing as one of the country’s premier life sciences hubs.
Next in our series we will explore the role the Virginia 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.