Bisnow features Hudson Valley iCampus in a special report on biotech and life sciences in the region. The reporter notes, “In Pearl River, New York … the Hudson Valley iCampus seeks to draw tenants looking for lab space and lower costs. The 2M SF mixed-use site … is being run and marketed by the Industrial Realty Group. According to campus President Jamie Schwartz, the site is a ‘hot ticket,’ with 200K SF of leases in the pipeline.”


BISNOW.COM / March 4, 2022

Ask a New Yorker, and they’ll tell you the suburbs, New Jersey, Connecticut owe their success, in considerable measure, to the financial and economic heft of the five boroughs. But in the case of life sciences and labs in the Tri-State region, there’s a good argument to be made that the city isn’t yet pulling its weight.

The vision of a stronger, more united region — with early stage innovation centers in New York City and biomanufacturing sites and larger campuses for mature firms in the suburbs, all working in synergy — remains mostly a vision, albeit one that is starting to come into clearer focus.

“I don’t think the collaboration is organized, but it’s happening organically,” said Taconic Partners Executive Vice President Matt Weir, whose firm has developed a handful of life sciences projects in the city, such as the Hudson Research Center.

This potential is still years off, experts in the region’s life sciences markets say, because the urban center is still a minor player on the national scene. Even after a year of record leasing, the total inventory in New York City is 1.9M SF per CBRE’s recent Q4 report, a fraction of less expensive markets like Houston, Denver and Raleigh-Durham. CBRE projects the city’s inventory will more than double in the next three years, hitting 4.6M SF by 2025.

“I don’t know if there’s enough data points,” said East Egg Project Management principal Yasmeen Pattie, who offers consulting and strategic planning services for firms seeking lab space in New York City. “The move to the suburbs isn’t happening in a meaningful way. Companies looking in the burbs are already there. And someone like Modern Meadow, who moved to New Jersey, just needed more space and the city couldn’t accommodate them.”

Weir said the clustering effect and draw of New York overpowers any recent Covid-era shift toward the suburbs. Recent spikes in city rental rents, and an uptick in the office market, show the dynamism that has long defined the urban versus suburban debate.

“Maybe there’s certain early stage companies with their funding structure looking for a longer runway with certain funding options,” he said. “But if you want the talent, you want New York City.”

CBRE Senior Vice President David Stockel said the city just hasn’t hit critical mass yet. The surge in demand for lab space in New York City in recent years — leasing activity leaped from 72K SF in 2019 to 156K SF in 2020 to 433K SF in 2021, according to CBRE — hasn’t created a massive suburban build-out, since most potential tenants are “looking for facilities to attract the right talent.”

Stockel has seen more out-of-market tenants from San Francisco and Boston look for space in the city, he said, in large part due to a search for a more untapped labor market.

New Jersey’s unique position, and its mix of facilities, support the theory that different Tri-State areas can be more complementary than competitive.

Dominated by large-scale, second-generation lab space, namely large campuses once occupied by Big Pharma, New Jersey hasn’t seen a lot of new lab construction in recent years, CBRE Senior Vice President Thomas Sullivan said. Just two projects are in the pipeline. But it hasn’t needed it, with 20.4M SF of inventory and large deals, such as BeiGene’s deal for part of the 42-acre Princeton Innovation Campus last November, underscoring the state’s continued emergence as a major market for biomanufacturing.

That may change in a few years as the market and vacancy rates tighten; already, there are more urban-style lab projects such as 95 Greene St., a Jersey City development by Thor Equities. But Sullivan believes those kinds of projects are few and far between, and mostly far off.

“This will not become a dominant trend in my opinion,” he said. “If you’re going to go multi-story, you’ll want a New York address. As far as the cost of construction goes, there’s really no cost advantage to Jersey City or Hoboken versus New York City.”

There likely won’t be until deliveries and development in New York City ramp up. CBRE’s Stockel said there will continue to be more demand than supply, which should keep the availability of lab space low. But he thinks it’s more likely that softness in the office market, which could lead to more conversions, covers the need for incubation and startup space in the near term, as opposed to suburban flight.

“We’re still in the very early innings of the life science ecosystem, and many of the tenants I work with are early or mid-stage” he said. “For companies to outgrow New York City, they’d need to grow in a pretty meaningful way. But over a longer period of time, you could see people grow into the need for manufacturing and may consider suburban locations to be more viable.”

He’s also seeing more firms operate across geographies, instead of needing to be close by or under one roof. With more California and Boston firms looking for satellite space in New York City, it goes to follow the same bifurcation may eventually allow downtown firms to lease up space in New Jersey or Connecticut, or even upstate.

In Pearl River, New York, an hour’s drive northwest of the city, the Hudson Valley iCampus seeks to draw tenants looking for lab space and lower costs. The 2M SF mixed-use site, formerly a Pfizer campus (the pharma giant downsized, and still has a small presence at the site), is being run and marketed by the Industrial Realty Group. According to campus President Jamie Schwartz, the site is a “hot ticket,” with 200K SF of leases in the pipeline.

Schwartz doesn’t see competition within the region for sought-after lab tenants, rather a “rising tide lifts all boats” situation. He sees a benefit to being in a suburban location in such a dynamic region, beyond the cost savings, and time will prove that significant growth will eventually cross over city boundaries.

“We have more options than we’ve ever had before, and that’s only a good thing for tenants,” Pattie said of the regional real estate picture. “It’s a lovely place to be. I think we’re setting ourselves up for success in that way because we have those options.”

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