<<

Long Island Life Sciences Feasibility Study Findings & Recommendations

October 2018 LIC Life Sciences Feasibility Study

Generously funded in part through State Development and the NYC Regional Economic Development Council.

Long Island City Partnership (LICP) is the neighborhood development organization for . Our mission is to advocate for economic development that benefits the ’s industrial, commercial, tech, cultural, , and residential sectors. The goal is to attract new businesses to LIC, retain those already here, welcome new residents and visitors, and promote a vibrant and authentic mixed-use community.

East Egg Project Management, a strategic consultant team with 15+ years of New -focused experience in life sciences, real estate, and economic development, was engaged to undertake this study. Defining the Life Sciences

Biogenerics | Bioinformatics | Biomedical Engineering

Biopharmaceuticals | Biotechnology | Chemical Synthesis

Chemistry | Medical Diagnostics

Genomics | Medical Image Analysis | Medical Devices

Medical Nanotechnology | RNA Interference

Stem Cell Research | Medical & Neurological Clinical Trials

Health Robotics | Veterinary Science Long Island City Life Sciences Feasibility Study

I. Why the Study: NYC’s Life Sciences Sector is on the Cusp II. Study Goals and Methodology III. What’s Needed to Reach NYC’s Potential IV. LIC: NY’s Life Sciences Significant Subcluster V. How to Make it Happen VI. Economic Impacts Why this Study: Public and Private Momentum

NYS: $600M+ Private Initiative to Interest in Fuel Growth of LIC LS in NYS NYC: $500M LifeSciNYC Initiative State and City Initiatives

New York State $650 Million in tax credits, incentives, grants, investment, and operating funds

New York City $500 Million (total) ten-point plan: capital funding for incubators and non-profit facilities, start-up working capital, internship program, management matching and training, tax abatements

NYCEDC RFEI $100 Million in capital and other resources New York’s Progression in the Life Sciences

For Profit SF Non-Profit SF

1M BioLabs, LifeSciNYC, *New York JLabs ESC, Stem Cell Launch 80K Life Labs 1M Alexandria Center Sciences Tower Two Initiatives 45K 15K

800K

440K

600K *New York

Square Square Feet Genome Center 1M 923K 923K 968K 400K Alexandria Center Tower One Biospace 140K 3K 483K 200K 310K 310K 313K

K 2010 2013 2013 2014 2016 2017 2017 2018

Complete Year

Sources: JLL U.S. Life Sciences Outlook 2017; East Egg market knowledge Long Island City Life Sciences Feasibility Study

I. Why the Study: NYC’s Life Sciences Sector is on the Cusp II. Study Goals and Methodology III. What’s Needed to Reach NYC’s Potential IV. LIC: NY’s Life Sciences Significant Sub-cluster V. How to Make it Happen VI. Economic Impacts Study Goals and Methodology

Goals 1. Identify and assess the key obstacles that have thus far prevented a life sciences cluster from developing in LIC; 2. Estimate the potential magnitude and economic impacts of an LIC Life Sciences cluster; and 3. Identify and recommend what is needed to overcome the barriers and catalyze a self-sustaining cluster. Study Goals and Methodology

Methodology 1. Stakeholder Interviews 2. Leveraging Leading Industry Reports 3. Economic Impact: Two Scenarios for LIC 4. Benchmarking Study 5. SWOT: Strengths, Weaknesses, Opportunities, Threats 6. Recommendations for LICP/leadership, City/State to implement to catalyze a cluster in LIC Stakeholders interviewed

Companies | VC | Incubators | Institutions | Real Estate | Government Long Island City Life Sciences Feasibility Study

I. Why the Study: NYC’s Life Sciences Sector is on the Cusp II. Study Goals and Methodology III. What’s Needed to Reach NYC’s Potential IV. LIC: Key to NY’s Life Sciences Growth V. How to Make it Happen VI. Economic Impacts Benchmarking: US Life Sciences Regional Clusters by Size

Leading National 30M Clusters

25M Thriving Cluster Breakout 20M Cluster Emerging Cluster

15M Breakout Cluster Threshold 10M GAP

5M

0M /Cambridge San Diego NYC, Long Island, & Westchester

Sources: JLL U.S. Life Sciences Outlook 2017; East Egg market knowledge NYC’s Life Science Sector

. Game changers: BioLabs, JLabs, LaunchLabs, and IndieBio

. Unprecedented demand for step-out space by growing companies in NYC sciences in . Expressed desire by companies and VCs NYC now for alternatives to expensive existing space in while still being close by rivals Boston and . Institutions and small companies need shared San Francisco facilities that are too expensive to host on campus/solo (e.g., data storage, imaging) Stakeholder interview Takeaways: NYC

Academic Institutions . Proximity to campus is key when locating core research facilities . Lots of company spin-outs but they all go to Boston and SF; need space in NYC

Companies . Primary space and location factors: move-in ready, access to , cost, access to core research facilities, amenities . Strong demand for generic space for small companies; 5-10K sf to start . Proximity to AMIs less important as companies grow and mature . Access/proximity to smaller biotech companies a growing priority for larger pharma companies

VCs and Incubators . Growth in incubators has transformed NYC market for start-ups will feed demand . Some companies and VCs will always prefer Manhattan, but others not location-driven Stakeholder interview Takeaways: NYC

Developers and Landlords . Rents don’t cover construction costs . NYC developers, esp. REITs, less comfortable with risk of life sciences development . Boston developers comfortable with spec development because of history with robust pipeline; anchors less important . Seeing high demand for lab/office/event space, even outside Midtown core

Organizations . Building a life sciences cluster is a talent game . Small companies want space that is built-out . With a meaningful number of small companies and amenities, may not need institutional anchor . Wet-lab component is becoming less urgent/important, but for those who use it, it is vital to have it ready to go “We have the brains, the NIH funding, the capital. No more excuses, New York.” — NYC-based incubator director Long Island City Life Sciences Feasibility Study

I. Why the Study: NYC’s Life Sciences Sector is on the Cusp II. Study Goals and Methodology III. What’s Needed to Reach NYC’s Potential IV. LIC: NY’s Life Sciences Significant Sub-cluster V. How to Make it Happen VI. Economic Impacts New Trend:

Significant Clusters Supported by Non-AMI Anchored Secondary Sub-clusters

Regional Cluster San Francisco Boston/ San Diego Philadelphia Bay Area Cambridge Region Region

Regional Cluster 25 million 25 million 18 million 12 million 7 million Size(sf)

Mission Bay, Manhattan East Primary Sub-clusters South San Kendall Square La Jolla University City Side, Westchester Francisco

Palo Alto, Philadelphia Secondary Sub-clusters Boston Seaport North County East Bay Navy Yard /LIC

Lease Rates in primary $60 - $70 $75 - $90 $50 $38 $90 - $120 Sub-clusters (psf) (Manhattan)

Vacancy Rates in 1.2% 3.6% 5.9% 1.9% 0% Primary Sub-clusters (Manhattan)

Tax Credits Tax Abatements Incentives None None Tax Credits for Jobs and Credits NYC Potential Growth in Life Sciences

3.5M

3.3M 3M

0.8M 2.5M 0.5M 1.5M 2M 2M 2M 1.5M

1.5M 1.5M SquareFeet 1M 1M 0.5M

0M N. San Diego Philadelphia Boston Seaport Westchester Manhattan NYC Gap (NYS) (NYC) Existing sf in 2018 sf planned or under construction as of 2018 Anticipated NYC Growth

Sources: JLL U.S. Life Sciences Outlook 2017; East Egg market knowledge LIC Aligns Best with Sector Needs

East West West Hudson LIC Side Harlem Side Square

Access to Medical Corridor + + – – – West Harlem/ Public Transit Access + + – – + + Manhattanville

Development Sites + – + – –

Zoning + – + + –

Amenities + – – + + West Corridor Affordability + – + – – Side

Perception – + + – + + Long Island City Hudson AMI Presence – + + – – Square Stakeholder interview Takeaways: LIC

Academic Institutions . Faculty will not travel, so LIC is too far (for now) . Large, expensive, shared research facilities would make sense in LIC

Companies . Require: move-in-ready + affordable, access to talent, access to core research facilities, amenities . Need good connections to Grand Central and Penn Station . Location needs personality/cachet that matches company . Will senior talent commute to LIC? A major concern

VCs & Incubators . LIC — a good place to foster growth, but there is nothing here yet to attract a cluster . Growth in incubators has transformed NYC market for start-ups and will feed demand . VCs want access to their companies: subway is better than flying Stakeholder interview Takeaways: LIC

Developers and Landlords . Boston developers bullish on NYC and see opportunities in LIC . Best initial location in LIC core . Speculative capital is key though public incentives will be necessary to “break the ice”

Organizations . Demand for step-out space could catalyze a cluster in LIC even without an anchor . Perception issue of LIC must be addressed . South San Francisco as model for LIC . Live/work features are attractive . Activity and amenities needed for workers LIC Meets the Needs of NYC’s Life Sciences Sector

Excellent Access . NYC region’s educated workforce . connections . Commuter and regional rail lines to other and suburbs . Quick access to JFK and LaGuardia airports

Live/Work/Play/Innovate Community . Fastest growing neighborhood . Highly amenitized: 39 and cultural destinations; 150+ dining & drinking . Good schools with more planned

More Affordable Space . Lower land costs and additional incentives . Appropriate building stock and Three Challenges

1. Misperceptions of distance from Manhattan’s East Side medical corridor. Inconvenient; suburban; no amenities, no neighborhood character

2. Lack of existing cluster and academic research institutions (AMIs)

3. Cost/Credit “conundrum” is the financing risk due to high construction costs + low/no tenant credit among small companies LIC Challenges Can Be Addressed

. Misperceptions can be overcome via promotional marketing

. Some larger regional clusters and successful urban sub-clusters have developed as viable alternatives to more To grow this established and expensive hubs, despite sector the right their distance from AMIs way, the only place to do it in . Targeted incentives can catalyze growth NYC and fill the cost/credit gap, which will be is LIC much lower in LIC than in Manhattan Long Island City Life Sciences Feasibility Study

I. Why the Study: NYC’s Life Sciences Sector is on the Cusp II. Study Goals and Methodology III. What’s Needed to Reach NYC’s Potential IV. LIC: NY’s Life Sciences Significant Sub-cluster V. How to Make it Happen VI. Economic Impacts Recommendations to Challenges

Short Term

1. Address Financing Hurdles 2. Address Competitive Real Estate Market Challenge 3. Establish a Life Sciences Resource/Industry Desk at LICP 4. Accelerate and Expand Placemaking 5. Change Perceptions: Marketing 1: Address Financing Hurdles

Public Sector The Cost/Credit gap will need to be mitigated by public incentives and assistance if New York is to capture growth in life sciences and tech companies

Supply Side • Tax abatements • Reduce cost for city-owned property • Loan guarantees • Capital grants

Demand Side • Tenant improvement fund • Loans for deposits

LICP – Undertake a Residual Land Value Analysis and a basic pro forma based on actual development opportunities at specific sites 2: Address Competitive Real Estate Market Challenge

Public Sector Identify and incentivize development opportunities that include space for life sciences, especially as part of mixed-use and office development projects

Plans for mixed-use office, lab, and residential development at Seaport Square in Boston 3: Establish a Life Sciences Resource/Industry Desk at LICP

Public Sector . Fund LICP LS Industry/Resource Desk

LICP . Establish LS Industry Desk that can become “one-stop shop” for companies, developers – and cultivate pipeline of step-out companies that need ready space and cultivate their awareness of opportunities in LIC –Establish an inventory of properties appropriate for conversion & for development to life sciences –Guide private developers and companies through zoning, permitting issues, and incentives 4: Accelerate and Expand Placemaking Initiatives

Public Sector . Accelerate and expand public capital investments in transportation, infrastructure and streetscape improvements . Consider LIC for DRI Funding

LICP . Expand placemaking and community activities, continue wayfinding, streetscape, and arts initiatives . Continue programming events and activities 5: Change Perceptions: Marketing

Public Sector . Partner with LICP in Marketing LIC . Improve connectivity further between LIC and AMIs with focus on

LICP . Target marketing efforts to LS stakeholders and potential workforce around LIC’s convenient location and accessibility . Execute targeted marketing campaign that defines life sciences opportunities in LIC, and highlights LIC’s assets over competing neighborhoods . Develop interactive tool for LS companies and developers that frames vision for a potential cluster in LIC Recommendations to Address Challenges

Mid Term

6. Support Development of Shared Facilities 7. Foster Live-Work Aspects of LIC with Great Schools and Active Open Space 8. Encourage AMI and Industry Collaboration for Workforce Development 6: Support Development of Shared Facilities

Public Sector

. Incentivize shared facilities (e.g.m research Centre for Comparative , support facilities, imaging centers, and , BC conference & event spaces) through public/private partnerships and zoning

LICP . Work with public and private sectors to locate suitable sites for shared facilities District Hall at Boston Seaport 7: Foster live-Work Aspects of LIC with Great Schools and Active Open Spaces

Public Sector . Expand top-quality primary and secondary schools within LIC to attract C- talent

. Create additional open space for active uses 8: Encourage AMI & Industry Collaboration for Workforce Development

Public Sector . Invest in workforce development programs at all skill levels (lab techs, data analysts, etc.) . Expand the State’s START-UP NY incentive program to include locations in LIC

LICP . Use its network to connect LaGCC and other appropriate workforce training providers with life sciences stakeholders in NYC and beyond Recommendations to Address Challenges

Longer Term

9. Leverage Critical Mass of Step-out Space, Incentive Programs, and Shared Facilities to Attract Larger Life Sciences and Pharma Companies for Ground-up Development 10. Invest in Improving Regional Transit 11. Build upon Earlier Success 9, 10, 11: New Construction, Regional Transportation, and Critical Mass

Public Sector . Implement Sunnyside multi-modal transit station . Engineer and implement new landing at East 68th . Build upon earlier success Long Island City Life Sciences Feasibility Study

I. Why the Study: NYC’s Life Sciences Sector is on the Cusp II. Study Goals and Methodology III. What’s Needed to Reach NYC’s Potential IV. LIC: NY’s Life Sciences Significant Subcluster V. How to Make it Happen VI. Economic Impacts Economic Impact Analysis: Cases One & Two

Case One Case Two

. 375,000 sf of life science-related space . 1.5 million sf of life sciences space by 2028: developed through 2021 1M sf new construction, 500K sf renovations . Assume all from renovation of existing New Construction buildings for speed-to-market . 50% stand-alone: pharma (500,000 sf) . 95% office + lab (356,250 sf) . 33% step-out/growth space (330,000 sf) . 5% meeting/event space (18,750 sf) . 17% established LS companies (170,000 sf) . 40:60 lab-to-office ratio . Assume standardized built-out lab space Renovated Space geared to step-out companies . 44% lab/office for step-out & growing cos. (220,000 sf) . 20% industrial space for device manufacturing (100,000 sf) . 30% shared support facilities (150,000 sf) . 6% open space and shared collaboration space (30,000 sf) Economic Impact Analysis: Impacts

Case One Case Two

(375K sf, all renovation) (1M sf new, 500K renovation)

Construction Impact (2019 $) Construction Impact (2023 $) . 854 jobs (Direct & Indirect) . 5,564 jobs (Direct & Indirect) . $74.8M annual earnings . $529.4M annual earnings . $170.8M citywide economic output . $1.23B citywide economic output

Annual Ongoing Impact (2021 $) Annual Ongoing Impact (2028 $) . 2,815 jobs (Direct & Indirect) . 14,927 jobs (Direct & Indirect) . $276.5M annual earnings . $2.2B annual earnings . $696.9M in citywide econ output . $7.2B in citywide econ output . $408.9M in citywide GDP . $3.8B in citywide GDP LIC is Key to NY’s Life Science Growth

If there ever a for New York to take a major step forward in the development of this sector, it is now, and it should happen in LIC.

With appropriate supports from the State and City, and concerted action by the local community, LIC can be the key to delivering on NYC’s goal of being a significant, self-perpetuating life sciences hub.