Life Sciences Projects Revive in Central New Jersey
Published on January 31, 2012
This building in East Windsor, N.J., is the first of four planned for SciPark. It has been leased by Elementis, a chemical company.
EAST WINDSOR, N.J. — With its concentration of pharmaceutical giants like Merck, Johnson & Johnson, Bristol-Myers Squibb and ImClone Systems, and academic powerhouses like Princeton and Rutgers, central New Jersey has long had the foundation to be a major center for life sciences businesses.
Yet an effort to brand the area as such never caught on widely, and the global economic crisis of the last five years halted development of new laboratory space for life sciences companies. Now, signs of a small revival are apparent. Statewide, the number of biotechnology companies has grown to 335 from 80 in 1998, with about 10 of them either moving into the state or developing from in-state research in 2011, said Debbie Hart, the president of BioNJ, a nonprofit group that promotes the growth of biotechnology in New Jersey.
In the life sciences, research institutes, medical centers and government agencies are collaborating to develop biological science and technology into spinoff companies that turn science into commercial applications.
These efforts tend to be concentrated in a handful of research clusters nationwide — including the Boston area and Research Triangle Park in Durham, N.C. — typically near major universities or hospitals. They provide stable, high-paying jobs, and when their research succeeds, the companies often expand rapidly.
For that reason, before the recession, many states and municipalities, including New York City, were passing initiatives to try to capture biotechnology businesses with new, specialized office and laboratory space.
In the five counties that are part of the central New Jersey cluster — Hunterdon, Mercer, Middlesex, Monmouth and Somerset — 5 percent of the office space, about 6.5 million square feet, is laboratory space and other specialized space for biotechnology companies, according to CoStar Group, a real estate information company in Washington. Including research and development space, that figure rises to nine million square feet.
Here in East Windsor, a 64,000-square-foot specialized office building is being built on spec, the first of four planned in a new development called SciPark.
The building has been fully leased to the global chemical company Elementis P.L.C., which designed the interiors and will take occupancy in March. The developer of SciPark is Woodmont Properties of Chatham, N.J., which says it hopes to lease and build the three other planned structures in the next three year.
The other three at SciPark, each about 60,000 square feet, will not be built speculatively, but for specific tenants, said Stephen A. Santola, an executive vice president and general counsel of Woodmont Properties.
“We’ve definitely seen an uptick in the last three to four months in interested tenants of all sizes, from start-up businesses to much larger users,” he said. “Tenants are willing to look at new space, at taking on more space, particularly in this region.”
Also benefiting the area is a world-class transportation and distribution system in one of the three major trade zones globally, said Katherine Kish, the executive director of Einstein’s Alley, a nonprofit group promoting central New Jersey’s life sciences corridor, along Route 1, the New Jersey Turnpike and Route 130.
Yet when the global real estate market declined in 2007, development of the specialized office space for biotechnology stopped in central New Jersey, as it did in many areas nationwide.
As a result of the economic crisis, the pharmaceutical industry has consolidated in recent years, which has led to many layoffs — but that trend may benefit central New Jersey’s biotechnology cluster, said James J. Medenbach, a senior vice president and member of the life science practice group at the commercial brokerage Jones Lang LaSalle.
“The mergers and acquisition activity to some extent has disadvantaged the work force, but it’s been an advantage to companies that come into this marketplace and are looking to establish or grow themselves,” Mr. Medenbach said. “They can take advantage of the intellectual capital.”
Elementis, which was based in London, acquired a small company in central New Jersey in 1998, then moved its headquarters to the region, largely to exploit its highly skilled and specialized work force, said Greg McClatchy, the president of two Elementis divisions. “We also wanted to take advantage of the natural synergies of having all these businesses located in one place,” he said.
The life sciences space in central New Jersey has been privately developed except for the Technology Centre of New Jersey, a six-building, 311,000-square-foot complex designed for the lab and office needs of biotech companies in New Brunswick, N.J., Mr. Medenbach said.
The New Jersey Economic Development Authority developed the Technology Centre, keeping rents low for start-up life sciences companies, and the complex is 75 percent leased, he said. An additional 560,000 square feet of space could be built to suit biotechnology companies, but no development is imminent, he said.
Typically, lab space in New Jersey is about $25 a square foot, Mr. Medenbach said. In Manhattan, life science space can be more than $55 a square foot.
Even if development at the Technology Centre has stopped since 2002, a resurgence in biotechnology in central New Jersey may be heralded by a recent deal in Princeton. The global health care company Novo Nordisk is expanding, with the $215 million redevelopment of a 770,000-square-foot office building in the Princeton Forrestal Center. The center is a collection of 40 buildings with 6.5 million square feet of office and research space on land owned by Princeton University. The Novo building was an outdated structure that was originally home to Merrill Lynch.
Novo Nordisk has leased 500,000 square feet in the office building with an option to lease the rest. On completion of the project in 2013, it will have almost 700,000 square feet in two buildings at Princeton Forrestal.
“Novo is very exciting, and they’re growing about 10 percent a year,” said David Knights, the director of marketing for Princeton Forrestal. Princeton trustees are also in talks with a developer who is proposing to build an 800,000-square-foot Science Park at Princeton Forrestal, he said.
“I think there are enough things going on that science companies will return,” Mr. Knights said. “I don’t think New Jersey’s lost them completely.”