New York City's life sciences sector primed for growth
As the urbanization trend continues, the growing demand for life sciences space in top live-work-play cities is being driven by the need to attract the best and brightest talent, including New York City.
Life sciences industries are thriving throughout the world as global health spending continues to rise. The real estate demands of these companies and institutions are extremely specific and continually evolving in lockstep with the dynamic research being furthered daily. End users of research laboratory spaces seek to co-locate not only with academic institutions at the forefront of the life sciences but also tend to cluster in areas where all forms of technology research are being pursued. As real estate costs increase across product types and the availability of laboratory space sits at all-time lows, landlords and tenants are innovating new ways to achieve collaboration, flexibility and affordability in the nation’s top life sciences markets.
As industry leaders continue to compete for top-level graduate and post-graduate thought leaders, the locations and amenities of these laboratory facilities and each surrounding neighborhood become recruitment differentiators. This approach to talent acquisition has led to the expansion of the life sciences clusters outside of the traditional hubs in Cambridge/Boston, San Francisco and San Diego. As the urbanization trend continues, the growing demand for life sciences space in top live-work-play cities is being driven by the need to attract the best and brightest talent. New York City, as a leading 24-hour global culture leader, is positioned to benefit from this demand as it can offer the next generation of research personnel an urban experience second-to-none in the United States.
What are Life Sciences?
Life sciences are comprised of any science that focuses specifically on living organisms and life processes including anatomy, biochemistry, biology, botany, genetics, immunology, pharmacology, toxicology and zoology, among many others. The life sciences industry therefore includes many types of companies but particularly refers to biotechnology, medical technology, and pharmaceutical organizations. As these companies’ business models depend on the advancement of their proprietary technologies and intellectual property, their needs are typically strongly focused on research and development. The many types of laboratories needed to accommodate such a varied group of companies has led to the emergence of specialty real estate that includes both office and dynamic laboratory space so that users can seamlessly transition out of an academic research setting and into private industry.
Life Sciences Growth Forecast
According to Deloitte in their 2019 Global Life Sciences Outlook, the compound annual growth rate (CAGR) for health care spending across 60 countries is predicted to increase 5.4 percent between 2018-2022, compared to just 2.9 percent from 2013-2017. Global pharmaceutical spending is predicted to outpace overall health care spending in that same period, with worldwide prescription drug sales expected to rise from $900 billion in 2019 to $1.2 trillion in 2024, also per Deloitte. Venture capital investment activity into the life sciences sector has increased an average of 18.5 percent year-over-year since 2013, with $30.7 billion of total investment in 2018. National Institute of Health grant funding also provides significant seed investments to further life sciences research, with $26.9 billion of funding granted in 2018, according to the National Institute of Health (NIH).
Crossroads of Technology and BioPharma
According to Savills recent report Tech Cities in Motion, New York City was recently ranked the No. 1 global city for technology based on business environment, technology environment, cost of living, existing and future talent pool, real estate costs and accessibility. New York’s ability to attract world-class talent locally and globally is a key differentiator to its success. The steady rise in venture capital funding to New York over the past three years proves the growing presence of technology as a key factor of the New York economy.
Life sciences firms and leading technology companies have begun to co-locate across the country as the lines are blurring between industries. Due to the high costs of biopharma research & development, companies in the space are aggressively pursuing big data and artificial intelligence platforms to reduce costs and increase efficiencies in their research. Six of the ten largest technology companies in the world have recently made inroads into health care and are investing in life sciences startups focused on a wide range of specialties including genetics, telemedicine, big data and pharmaceuticals, per Deloitte’s above-referenced perspective. This trend, along with the similarities between their talent pools, have led to traditional technology and biotechnology tenants clustering in the same markets around the country as their employment bases seek similar environments in which to live and work.
The Needs of a Life Sciences Cluster
Successful life sciences clusters include a broad mix of academic research institutions, medical centers, and companies at various stages of maturation. The most successful examples of thriving life sciences communities also feature a specific mix of talent, real estate solutions, amenities and government support.
New York City offers an appealing environment for the life sciences sector, as it is already home to many of the necessary features of a mature cluster. The presence of leading technology firms, world renowned medical research centers, top-ranked academic institutions and large successful pharmaceutical and biotechnology companies position New York City as the most sought after emerging life sciences cluster.