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JLL Life Sciences Report ranks Minneapolis as a strategic location
Minneapolis, March 4, 2013—With a series of key brand-name drug patents set to expire in 2013, deadlines collectively referred to as the “patent cliff,” life sciences companies are bracing themselves for a revenue drop some estimate could reach $30 billion. One industry response to the cliff is the geographic reshuffling and right-sizing of the North American life sciences industry occurring in comparatively smaller metropolitan areas as these cities rise in industry influence. Jones Lang LaSalle’s (JLL) annual 2012 Life Sciences Cluster Report chronicles this shift in a ranking of industry clusters—areas in which life sciences intellectual capital, funding and facilities are concentrated. Cities that are rising in influence offer a workforce, academic community and public sector focused on R&D productivity and areas of opportunity within the sector, such as biologic biosimilar drug research and production.
Minneapolis is ranked ninth in the 2012 Jones Lang LaSalle Life Sciences Cluster Report out of a total of 21 U.S. cities, according to weighted scores for total employment in high-tech research and hospital/medical fields; life science establishments; National Institutes of Health (NIH) funding; and venture capital funding.
The 2012 report compares the top 10 U.S. markets for life sciences with the top 2011 trends, along with detailing the following emerging trends:
2012 Cluster Report (current)
2011 Cluster Report (first annual)
Greater Boston (no change)
San Diego (+5)
New Jersey / New York City
San Francisco Bay (no change)
San Francisco Bay Area
Los Angeles / Orange County
Washington D.C. Metro Area
Washington D.C. Metro Area (-1)
New Jersey / New York City (-5)
Los Angeles / Orange County (-4)
Minneapolis-St. Paul (-1)
Seattle (no change)
Boston remains the clear worldwide leader.
San Diego surpasses Los Angeles and San Francisco in overall ranking.
Raleigh-Durham and Philadelphia also rise.
With HQ consolidation, New York/New Jersey and Los Angeles areas decrease in importance, but remain industry leaders.
Regions anchored by smaller cities are rising in influence, demonstrated by strong showing by Minneapolis-St. Paul and Philadelphia overshadowing larger cities in their regions, such as Chicago and New York.
No new additions or drop-offs to the Top 10
Listed among emerging clusters are Chicago, Denver, Atlanta, central / southern Florida, and Indianapolis (also covered in the 2011 report). New emerging clusters added to the 21-city ranking in 2012 include: Westchester / New Haven, Ohio, Salt Lake City, Dallas/Fort Worth, Wisconsin and Michigan.
“Access to world-class research institutions, facilities and intellectual capital are priorities for R&D-focused organizations,” said Chris Hickok, Executive Vice President of Jones Lang LaSalle’s Minneapolis office. “Proximity to these resources continues to command a premium in terms of rents and facilities investments.”
Hickok pointed to other notable influencers including start-up firms that begin after entrepreneurial individuals Have “cut their teeth” at larger firms.
“The experience and opportunities that come from working at large and strong companies like Medtronics, Boston Scientific, St. Jude and Guidant, among others, along with the availability of venture capital have made the Twin Cities a fertile ground for life science start-ups,” Hickok said.
National Life Sciences Corporate Real Estate Trends
Three key factors have helped both the established and emerging clusters to achieve success during rapidly changing times in the life sciences industry: middle-market growth, the need for access to innovation and the offering of economic incentive packages to fuel life sciences sector expansion.
Trend No. 1: Middle-market growth and M&As are benefitting smaller metropolitan areas.
Right-sizing and consolidation by multi-national pharmaceutical companies in the United States have led to opportunity for middle-market corporations, as many former single-institution research campuses are now thriving, multi-tenant life sciences centers. This transformation is benefitting clusters located outside the nation’s largest metropolitan areas, because they offer lower overall costs of occupancy, yet retain premium access to academic resources and an educated workforce. In the Midwest for example, the largest metropolitan area, Chicago, remains an emerging cluster while its smaller Midwestern counterpart, Minneapolis, is a top 10 cluster for the second year in a row.
Trend No. 2: Proximity to innovation is more important than ever.
The importance of access to a thriving and diverse community focused on innovation has never been greater. According to Deloitte’s 2012 The Future of the Life Sciences study, “Significant revenue growth is unlikely to be achieved organically, mergers and acquisitions will continue, and partnerships/alliances will emerge as an important means of revenue generation. Companies will need to leverage the fact that partnerships will be ubiquitous and may include cross-sector partnerships and collaborations with payers as well as academia.”
Trend No. 3: Build it (the lab) and they will come.
While not offering the critical mass of the established clusters, emerging U.S. life sciences concentrations are stepping up their economic development and public-private partnership activities to attract life sciences organizations.
Certain emerging clusters -- Indianapolis, Oakland-East Bay, Ann Arbor and Atlanta -- have adopted the ‘if you build it, they will come’ mentality, combining targeted incentive packages, new facilities, economic development groups and public-private partnerships in concerted efforts to attract life sciences companies. These incentives are important as life sciences companies balance their need to be near world-class scientific institutions versus their need to manage facilities costs.
Hickok noted that speculative development of life science facilities has not been prevalent in the Twin Cities, but there has been increasing interest in discussion in those types of opportunities.
The complete findings of Jones Lang LaSalle’s 2012 Jones Lang LaSalle Life Sciences Cluster Report are available in a dedicated microsite available here: http://www.joneslanglasalle.com/Pages/Life-Sciences-Cluster-Report.aspx
A PDF of the report can be downloaded here: http://www.us.am.joneslanglasalle.com/UnitedStates/EN-US/Pages/ResearchDetails.aspx?ItemID=10401
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 LaSalleJones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47 billion of assets under management. For further information, please visit www.joneslanglasalle.com
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