PRINCETON, NJ—The life sciences industry is a driving force in New Jersey's economy, fueling the state through revenue and job growth. According to a report by Cushman & Wakefield, the life sciences industry contributes $47.5 billion to the state economy annually, 86% higher than the national average for this sector. Many of the world's largest life sciences companies are headquartered or have a major presence in the Garden State. Currently, there are 3,280 life science facilities in the state that employ more than 117,000 people in fields like pharmaceuticals, biotech and medical devices.
“New Jersey has a large, unique concentration of life sciences companies, as it contains the headquarters of 13 of the top 20 global biopharma companies in the Unites States,” says Jason Price, tri-state suburbs research director of Cushman & Wakefield. Half of FDA approvals “came from New Jersey-based life science firms in 2017, and the biotech employment rate has increased 12.6% in the past two years, which will continue to have a significant impact moving forward.”
Along with its overall economic impact, life sciences have a major influence across all office markets in the state. “Life sciences companies are attracted to the New Jersey's innovation ecosystem and workforce; 37% of the state's workforce holds at least a Bachelor's Degree, whereas the national average is only 30%,” says Robert Rudin, vice chairman of Cushman & Wakefield, who works in the firm's life sciences specialty practice group “The state also offers appealing incentives for qualified life sciences companies, including specific incentives created to support start-up and early stage ventures. In 2017 alone, $114.37 million in incentives were awarded to life sciences companies.”
Looking at the Research & Development (R&D)/laboratory market, New Jersey houses 8.3 million square feet of R&D of space, much of which is concentrated in Somerset, Middlesex, and Morris counties. Since 2014, the vacancy rate in this micro-market dropped from 28% to 11.1%, and declined 940 basis points in 2017 alone. The vacancy decline is a result of healthy demand and a slow influx of supply with only 928,000 square feet available in this submarket. The largest R&D/laboratory lease in 2017 was a new 55,084 square foot lease at 4 Sperry Road in Fairfield, NJ, for Parker Labs.
The life sciences industry had 57 class A and B office leasing deals in 2017 totaling 1.028 million square feet, and accounted for more than 10% of the total office space leased in New Jersey. Historically, the life sciences sector has significantly impacted the New Jersey class A office market with both large lease transactions and space dispositions. This was proven true in 2017 with life sciences having the second largest amount of square feet leased in New Jersey's office market, following the retail/wholesale sector by just under 100,000 square feet. Six of the life science industry leases signed in 2017 exceeded 50,000 square feet with the largest coming in at 108,870 square feet for Bristol Meyers Squibb at 100 Nassau Park Boulevard in Princeton.
“Life sciences transactions will likely continue to help drive leasing velocity in key Northern and Central New Jersey submarkets in the foreseeable future,” says Price. “While some large pharmaceutical companies may look to consolidate operations and downsize with new space configurations, expect the number of small and mid-tier pharmaceutical and bio-tech firms expand further in the coming year.”
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Steve Lubetkin
Steve Lubetkin is the New Jersey and Philadelphia editor for GlobeSt.com. He is currently filling in covering Chicago and Midwest markets until a new permanent editor is named. He previously filled in covering Atlanta. Steve’s journalism background includes print and broadcast reporting for NJ news organizations. His audio and video work for GlobeSt.com has been honored by the Garden State Journalists Association, and he has also been recognized for video by the New Jersey Chapter of the Society of Professional Journalists. He has produced audio podcasts on CRE topics for the NAR Commercial Division and the CCIM Institute. Steve has also served (from August 2017 to March 2018) as national broadcast news correspondent for CEOReport.com, a news website focused on practical advice for senior executives in small- and medium-sized companies. Steve also reports on-camera and covers conferences for NJSpotlight.com, a public policy news coverage website focused on New Jersey government and industry; and for clients of StateBroadcastNews.com, a division of The Lubetkin Media Companies LLC. Steve has been the computer columnist for the Jewish Community Voice of Southern New Jersey, since 1996. Steve is co-author, with Toronto-based podcasting pioneer Donna Papacosta, of the book, The Business of Podcasting: How to Take Your Podcasting Passion from the Personal to the Professional. You can email Steve at [email protected].
