New York City developer launches life science firm

Taconic Partners, one of the largest private owners and managers of laboratory space serving New York’s pharmaceutical and biotech companies, is consolidating its life science portfolio into a new subsidiary called Elevate Research Properties. Elevate will control three life science labs currently under development by Taconic.

According to Matthew Weir, Taconic’s executive vice president, Elevate also plans to spend more than $ 250 million to redevelop an office property he owns with Nuveen Real Estate near several academic medical institutions, including Mount Sinai Hospital. The building will include 200,000-square-foot office space, construction of which is expected to begin next year.

“We saw that New York had all the key elements to really see this industry grow, but obviously what was really missing was the space for the labs,” he said.

Additionally, the new firm is looking for opportunities outside of New York, particularly in other East Coast markets, said Weir, who will serve as president of Elevate.

Life science research has boomed in many cities since the start of the Covid-19 pandemic, fueling demand for buildings designed for pharmaceutical, biotech and other laboratory uses. According to real estate firm CBRE Group, just over 29 million square feet of labs were under construction in the United States in the first quarter of 2022, a record 55% year-on-year increase. Inc.

But after more than a year of unbridled growth, biotech stocks entered a bear market this year as the cost of borrowing and scientific setbacks dampened investor enthusiasm. SPDR S&P Biotech ETF,

an equally weighted index of biotech stocks, is down 43.44% year to date compared to a 21.33% decline in the S&P 500.

Life science companies, especially startups, get much of their funding from venture capital firms. These companies, in turn, eventually seek high stock market valuations to go out and profit from their startup investments.

“There’s a lot of uncertainty out there,” said Austin Barrett, executive vice president and head of the life sciences practice group at Savills Real Estate Brokerage. He said the financing pipeline of venture capital firms and government agencies remains robust.

But he added, “If companies can’t go out and raise large public funds, then they can’t hire that fast.”

The New York City market, totaling 4.9 million square feet of existing life science space, is still in its infancy, according to real estate firm Colliers..

The nation’s major markets, Boston and the San Francisco Bay Area, each have more than 30 million square feet of dedicated life science real estate, Colliers said.

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Historically, suburbs were better suited for laboratory real estate, with lots of space and cheaper rental prices for sprawling research and development campuses, said Aaron Jodka, research director for US capital markets at Colliers. But technological and architectural advances have made it possible to build laboratories on the higher floors of office buildings, opening up more development opportunities in New York.

The city has other ingredients for a growing life sciences industry, including $ 5.6 billion in venture capital and $ 3 billion in federal research funding that moved into the industry last year. “You are starting to see a really strong recipe for the future growth of life sciences,” said Jodka.

Founded in 1997, Taconic owns commercial and residential properties. The company is best known for the redevelopment of a huge building on Eighth Avenue which it sold in 2010 to the current Alphabet. Inc

Google division.

Mr. Weir said he is not worried that turmoil in biotech stocks harms demand for lab space, in part because he believes demand for new therapies and other technologies, such as climate and agricultural technology, will survive current losses in the lab. stock market.

“The disruptions in the public market right now are a fundamental reset,” Weir said. “Population aging, the emergence of personalized medicine, technologies like mRNA – there is such momentum in the market that those issues, at the macro level, will continue.”

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Write to Kate King to [email protected]

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