long island city life sciences feasibility study · new york state new york city nycedc rfei $650...
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Long Island City
Life Sciences Feasibility
Study
Findings & Recommendations
October 2018
Generously funded in part through Empire State
Development and the NYC Regional Economic
Development Council.
Long Island City Partnership (LICP) is the neighborhood
development organization for Long Island City. Our mission is
to advocate for economic development that benefits the area’s
industrial, commercial, tech, cultural, tourism, 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 York-focused experience in life
sciences, real estate, and economic development, was
engaged to undertake this study.
LIC Life Sciences Feasibility Study
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
Defining the Life Sciences
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
Long Island City Life Sciences Feasibility Study
NYS: $600M+
Initiative to
Fuel Growth of
LS in NYS
NYC: $500M
LifeSciNYC
Initiative
Private
Interest in
LIC
Why this Study: Public and Private Momentum
New York State
New York City
NYCEDC RFEI
$650 Million in tax credits, incentives, capital grants,
investment, and operating funds
$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
$100 Million in capital and other resources
State and City Initiatives
Sources: JLL U.S. Life Sciences Outlook 2017; East Egg market knowledge
New York’s Progression in the Life Sciences
310K 313K
483K
923K 923K 968K 1M
310K
3K
140K
440K
45K 15K
80K
K
200K
400K
600K
800K
1M
1M
2010 2013 2013 2014 2016 2017 2017 2018
Squ
are
Feet
Complete Year
Alexandria Center
Tower One
Harlem
Biospace
*New York
Genome
Center
LifeSciNYC,
ESC,
Life
Sciences
Initiatives
*New York
Stem Cell
FoundationLaunch
Labs
BioLabs,
JLabs
For Profit SF Non-Profit SF
Alexandria Center
Tower Two
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
Long Island City Life Sciences Feasibility Study
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
Study Goals and Methodology
Companies | VC | Incubators | Institutions | Real Estate | Government
Stakeholders interviewed
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
Long Island City Life Sciences Feasibility Study
0M
5M
10M
15M
20M
25M
30M
Boston/Cambridge San Francisco San Diego Philadelphia NYC, Long Island, &Westchester
BreakoutCluster
Threshold
Leading National
Clusters
Thriving
ClusterBreakout
Cluster Emerging
Cluster
GAP
Sources: JLL U.S. Life Sciences Outlook 2017; East Egg market knowledge
Benchmarking: US Life Sciences Regional Clusters by Size
Quality of
life sciences in
NYC now
rivals Boston
and
San Francisco
NYC’s Life Science Sector
Game changers: BioLabs, JLabs,
LaunchLabs, and IndieBio
Unprecedented demand for step-out space
by growing companies in NYC
Expressed desire by companies and VCs
for alternatives to expensive existing space
in Manhattan while still being close by
Institutions and small companies need shared
facilities that are too expensive to host on
campus/solo (e.g., data storage, imaging)
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 talent, 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
Stakeholder interview Takeaways: NYC
“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
Regional Cluster San Francisco
Bay Area
Boston/
Cambridge
San Diego
County
Philadelphia
Region
New York City
Region
Regional Cluster
Size(sf) 25 million 25 million 18 million 12 million 7 million
Primary Sub-clustersMission Bay,
South San
Francisco
Kendall Square La Jolla University CityManhattan East
Side, Westchester
Secondary Sub-clusters Palo Alto,
East BayBoston Seaport North County
Philadelphia
Navy Yard Brooklyn/LIC
Lease Rates in primary
Sub-clusters (psf)$60 - $70 $75 - $90 $50 $38
$90 - $120(Manhattan)
Vacancy Rates in
Primary Sub-clusters1.2% 3.6% 5.9% 1.9%
0%(Manhattan)
Incentives NoneTax Credits
for JobsNone
Tax Abatements
and CreditsTax Credits
Significant Clusters Supported by Non-AMI Anchored Secondary Sub-clusters
New Trend:
Sources: JLL U.S. Life Sciences Outlook 2017; East Egg market knowledge
3.3M
2M
1.5M
2M
1M
0.8M
0.5M 1.5M
1.5M
0M
0.5M
1M
1.5M
2M
2.5M
3M
3.5M
N. San Diego Philadelphia Boston Seaport Westchester(NYS)
Manhattan(NYC)
NYC Gap
Squ
are
Feet
Existing sf in 2018 sf planned or under construction as of 2018 Anticipated NYC Growth
NYC Potential Growth in Life Sciences
West Harlem/
Manhattanville
Long Island City
East Side
CorridorWest
Side
Hudson
Square
LICEast
Side
West
Harlem
West
Side
Hudson
Square
Access to
Medical Corridor + + – – –
Public Transit
Access + + – – + +
Development
Sites + – + – –
Zoning + – + + –
Amenities + – – + +
Affordability + – + – –
Perception – + + – + +
AMI Presence – + + – –
LIC Aligns Best with Sector Needs
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
Stakeholder interview Takeaways: LIC
Excellent Access
NYC region’s educated workforce
Suburban transit connections
Commuter and regional rail lines to other cities and suburbs
Quick access to JFK and LaGuardia airports
Live/Work/Play/Innovate Community
Fastest growing neighborhood
Highly amenitized: 39 arts and cultural destinations; 150+ dining & drinking
Good schools with more planned
More Affordable Space
Lower land costs and additional incentives
Appropriate building stock and zoning
LIC Meets the Needs of NYC’s Life Sciences Sector
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
Three Challenges
To grow this
sector the right
way, the only
place to do it in
NYC
is LIC
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 established and expensive hubs, despite their distance from AMIs
Targeted incentives can catalyze growth and fill the cost/credit gap, which will be much lower in LIC than in Manhattan
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
Long Island City Life Sciences Feasibility Study
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
Recommendations to Address Challenges
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 security deposits
LICP
– Undertake a Residual Land Value Analysis and a
basic pro forma based on actual development
opportunities at specific sites
1: Address Financing Hurdles
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
2: Address Competitive Real Estate Market Challenge
Public Sector
Fund LICP LS Industry/Resource Desk
LICP
Establish LS Industry Desk that can
become “one-stop shop” for companies,
developers
–Track 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
3: Establish a Life Sciences Resource/Industry Desk at LICP
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
4: Accelerate and Expand Placemaking Initiatives
Public Sector
Partner with LICP in Marketing LIC
Improve connectivity further
between LIC and AMIs with focus
on ferries
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
5: Change Perceptions: Marketing
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
Recommendations to Address Challenges
Public Sector
Incentivize shared facilities (e.g.m research
support facilities, imaging centers, and
conference & event spaces) through
public/private partnerships and zoning
LICP
Work with public and private sectors to locate
suitable sites for shared facilities
Centre for Comparative Medicine,
Vancouver, BC
District Hall at
Boston Seaport
6: Support Development of Shared Facilities
Public Sector
Expand top-quality primary and secondary
schools within LIC to attract C-level talent
Create additional open space for active uses
7: Foster live-Work Aspects of LIC with Great Schools and Active Open Spaces
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
8: Encourage AMI & Industry Collaboration for Workforce Development
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
Recommendations to Address Challenges
Public Sector
Implement Sunnyside multi-modal
transit station
Engineer and implement new ferry
landing at East 68th Street
Build upon earlier success
9, 10, 11: New Construction, Regional Transportation, and Critical Mass
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
Long Island City Life Sciences Feasibility Study
Case One
375,000 sf of life science-related space
developed through 2021
Assume all from renovation of existing
buildings for speed-to-market
95% office + lab (356,250 sf)
5% meeting/event space (18,750 sf)
40:60 lab-to-office ratio
Assume standardized built-out lab space
geared to step-out companies
Case Two
1.5 million sf of life sciences space by 2028:
1M sf new construction, 500K sf renovations
New Construction
50% stand-alone: pharma (500,000 sf)
33% step-out/growth space (330,000 sf)
17% established LS companies (170,000 sf)
Renovated Space
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: Cases One & Two
Case One
(375K sf, all renovation)
Construction Impact (2019 $)
854 jobs (Direct & Indirect)
$74.8M annual earnings
$170.8M citywide economic output
Annual Ongoing Impact (2021 $)
2,815 jobs (Direct & Indirect)
$276.5M annual earnings
$696.9M in citywide econ output
$408.9M in citywide GDP
Case Two
(1M sf new, 500K renovation)
Construction Impact (2023 $)
5,564 jobs (Direct & Indirect)
$529.4M annual earnings
$1.23B citywide economic output
Annual Ongoing Impact (2028 $)
14,927 jobs (Direct & Indirect)
$2.2B annual earnings
$7.2B in citywide econ output
$3.8B in citywide GDP
Economic Impact Analysis: Impacts
If there were ever a time 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.
LIC is Key to NY’s Life Science Growth