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News release

EAST RUTHERFORD, NJ

Midsize, Specialty Life Sciences Firms Grow Rapidly, Drive Leasing Volume

Sector Accounts for One-Quarter of Leases in Northern and Central New Jersey in 2013


EAST RUTHERFORD, NJ, May 27, 2014 — According to JLL’s recently released New Jersey/New York City/Westchester County Life Sciences Outlook report, smaller, more nimble life sciences companies have been experiencing rapid growth in the New York metropolitan region in response to promising products and treatments.

At the same time, overall transaction volume and demand for space within the region’s life sciences industry is being driven by the growth of mid-tier companies and specialty players rather than expansion of the “Big Pharma” companies that once defined market activity. Companies including Actavis, Celgene, Dr. Reddy’s Laboratories and Otsuka Pharmaceutical have been active in the Garden State’s life sciences arena.

“While markets with large suburban life sciences headquarter campuses are experiencing an uptick in vacant space as companies consolidate their global operations, opportunity exists in retrofitting and redeveloping such campuses to meet the growing needs of the mid-sized life sciences companies,” said Daniel Loughlin, managing director and broker lead in New Jersey for JLL.

For example, after acquiring Genentech and relocating its U.S. headquarters to San Francisco in 2009, Roche ceased operations at its Clifton/Nutley research campus in 2013. Five buildings totaling 2.0 million square feet on the 119-acre campus are being marketed for sale, while the remainder of the site is positioned for redevelopment. In addition, a joint venture between Advance Realty Group and CrossHarbor Capital Partners acquired the former Sanofi U.S. Research and Development Campus in Bridgewater. Ashland Specialty Ingredients and Amneal Pharmaceuticals recently leased 341,000 square feet of office and laboratory space within the 1.2 million-square-foot research and development complex now called the New Jersey Center of Excellence at Bridgewater. The new owners are looking to redevelop other portions of the site for alternate uses.

New Jersey has the largest inventory of research and development/laboratory space in the tri-state region. The Northern and Central New Jersey submarkets offer a combined total of more than 16.0 million square feet, nearly equally split between leased and owner-occupied facilities utilized for R&D/lab, manufacturing and support operations. The life sciences sector accounted for one-quarter of all leases signed in 2013. Major transactions included Novo Nordisk’s relocation of more than 1,100 employees to a new headquarters at 800 Scudders Mill Road in Plainsboro; Valeant Pharmaceuticals International Inc.’s lease of the 310,000-square-foot 400 Somerset Corporate Boulevard in Bridgewater for its new U.S. headquarters; and Zoetis Inc.’s relocation to 100 Campus Drive in Florham Park after receiving a $14.2 million incentive grant from the state.

The biotech industry is generating much of the sector’s innovative research in New Jersey. While the state’s life sciences cluster registered a 17.5 percent decline in employment from 2006 through 2011, biotech firms reported a nearly 5.0 percent increase during the same time period, according to the Quarterly Census of Employment and Wages. Consolidations among the larger life sciences players have led to workforce downsizings and excess space released to the market. Growing companies have been able to tap this highly skilled labor pool, while also locating suitable space for their operations in the state. Many of today’s entrepreneurial life sciences start-ups can trace their innovative roots back to the larger companies.

“Mergers and acquisitions will continue to reshape the state’s life sciences industry as companies look to diversify their business lines, increase revenue and gain market share,” said James Medenbach, managing director in New Jersey for JLL.

Generic drug company Actavis, which operates its U.S. Headquarters from Parsippany, has been among the most active players in this field. After acquiring Watson Pharmaceuticals in late 2012, Actavis acquired Warner Chilcott one year later and is in talks to purchase rival drug maker Forest Laboratories. Bridgewater-headquartered Valeant Pharmaceuticals recently made a $45.6 billion bid for Allergan, while Pfizer has offered to acquire AstraZeneca.

With more of today’s life sciences companies seeking collaborative partnerships with universities and renowned research hospitals, New Jersey is pursuing an education restructuring strategy designed to make the state more competitive in earning grants and attracting instructors and researchers. Following last year’s integration of the University of Medicine and Dentistry of New Jersey, Rutgers University vaulted into the list of top 25 research universities in the nation.

JLL is a leader in the northern/central New Jersey commercial real estate market, with more than 500 professionals and support staff providing agency leasing, tenant representation, industrial services, strategic consulting, project and development services, property management and investment sales/capital markets services to New Jersey's leading corporate tenants, investors and landlords. The firm, which assists clients from three full-service offices in Parsippany, Iselin (Metropark) and East Rutherford, also acts as local service provider for JLL global and national corporate clients in need of real estate assistance in New Jersey.

About JLL
JLL (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 fee revenue of $4 billion, JLL has more than 200 corporate offices and operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3 billion square feet and completed $99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $48.0 billion of real estate assets under management. For further information, visit www.jll.com.