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Jones Lang LaSalle’s 2012 Local Life Sciences Cluster Study Reports Greater Boston Benefits from Global Realignment

Market clear world leader for second consecutive year

BOSTON, Jan. 31, 2013 – The after effects of the recession, combined with the European debt crisis, continue to plague businesses in the mature market clusters of North America and Europe. The product development formula of the past has changed. Companies are increasingly diversifying their portfolios to mitigate risk and help fund the cost of innovation through mergers and acquisitions. Jones Lang LaSalle’s (JLL) annual 2012 Life Sciences Cluster Report chronicles the Northeast United States’ continued dominance with its extensive university networks and deep labor pools.

The Boston market continues to benefit from global realignment. The discovery process demands efficiency, collaboration and intellectual prowess. According to the Report, Boston is again the elite provider creating the connectivity that is required to flourish, fuelled by a strong labor force, leading universities, innovation centers, research hospitals, and venture capital firms.

Boston’s Metropolitan Statistical Area includes more than 74,000 employees in the pharmaceutical, biotechnology, and medical device industry sub-sectors. Within the US it trails only San Diego on a percent of total workforce basis. The area is also the leading recipient of National Institute of Health (NIH) funding.

Massachusetts is home to five of the top eight NIH-funded hospitals in the country. The leading five NIH-funded universities are: Harvard, University of Massachusetts, Boston University, MIT, and Tufts. These institutions anchor this cluster, fuel employment in the industry and region, and add depth to the development of new products.

“The Greater Boston life science market remains strong,” said Jones Lang LaSalle Vice President Don Domoretsky. “Trends in rightsizing are allowing global organizations to remain in high cost clusters. Intellectual capital in East Cambridge is certainly driving expansion, as 2012 saw over two million square feet of committed real estate development. Partnerships through merger and acquisition activity and outsourcing models are fuelling the start-up to mid-tier sector. The combination of top-down and bottom-up continue to feed Boston’s scientific ecosystem.”

According to Peter Abair, Director of Economic Development and Global Affairs at the Massachusetts Biotechnology Council (MassBio): “The biopharma industry has grown by 42% in employment over the past 10 years and we are pleased that Massachusetts has retained its preeminent position in this report. Not only does this report provide perspective on where the Massachusetts cluster is in relation to others around the world, it also conveys an valuable understanding of how changing industry realities play out in different geographies.” MassBio was a source for Jones Lang LaSalle on this report.

Cambridge, according to the report, is the state’s core life sciences cluster. Large biopharma companies intermingle with start-ups who begin and grow here until they are acquired or relocate to accommodate expansion.

There are multiple emerging markets outside of Cambridge that attract attention. These emerging clusters include: the Greater Boston suburbs, Seaport District with its Innovation District of established and start-up companies, and the Longwood Medical and Academic Area. The ripple effect emanating from East Cambridge has become dense. Over seven million square feet of lab space exits in less than a 1.5 mile radius from Kendall Square’s MBTA Station As a result this market is very competitive. There are few growth options and asking rents reach $65-per-square-foot NNN for trophy space.

Asking rents are lower as tenants look outside East Cambridge. West Cambridge, Watertown, Charlestown and the Boston Seaport are far less dense and serve as emerging clusters. Here asking rents vary from $32 to $46-per-square-foot NNN.

The next step outwards are the suburban towns of Bedford, Lexington, Waltham, Medford and Somerville. Here the landscape is considerably less clustered, with lower rents in the $25 to $32-per-square-foot range. The Longwood Medical Area is a unique outlier submarket in the rent ring. Here rents of $58 to $70 psf are often higher than those of East Cambridge. This is due to its downtown location and proximity to leading healthcare institutions.

“The same rightsizing seen on a global scale,” Domoretsky said, “is replicated within Greater Boston’s sub-clusters. “Mid-tier users in East Cambridge are evaluating relocation opportunities. Suburban markets are able to offer cost effective alternatives, lower rates, and increased efficiency resulting in 20% to 40% savings.

“Tenant restructuring isn’t solely based on rate,” Domoretsky continued. “It’s a combination of savings realized through streamlined processes. As a result, West Cambridge, Lexington and Bedford are building critical mass, while Medford, Charlestown, Woburn and Beverly offer pockets of cost effective alternatives. You can’t walk across the street to MIT from these locations. At the end of the day, however, you’re within a 15 mile radius of Kendall Square and reallocating millions of research dollars in the process. These industry co-dependencies and operational business decisions are pushing submarket growth and extending the Boston R&D footprint.”

The Jones Lang LaSalle Report presents a deep dive into each of these clusters and how they compare in the life sciences rent ring.

Jones Lang LaSalle has a team of real estate and facility management experts dedicated to helping life sciences companies optimize and manage their real estate portfolios. The firm provides a comprehensive range of facilities management services to the life sciences community covering 70 million square feet of research, manufacturing and commercial space. Jones Lang LaSalle’s industry leading full-service platform includes: integrated facilities management, engineering and operations, energy and sustainability, transaction advisory services, lease administration, project management and a new platform for integrating laboratory services, Labwell.

A leader in the real estate outsourcing field, Jones Lang LaSalle’s Corporate Solutions business helps corporations improve productivity in the cost, efficiency and performance of their national, regional or global real estate portfolios by creating outsourcing partnerships to manage and execute a range of corporate real estate services. This service delivery capability helps corporations improve business performance, particularly as companies turn to the outsourcing of their real estate activity as a way to manage expenses and enhance profitability.
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About Jones Lang LaSalle
Jones Lang LaSalle (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. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 2.6 billion square feet. Its investment management business, LaSalle Investment Management, has $47.0 billion of real estate assets under management. For further information, visit