New Jersey remains the world’s “medicine chest” in many ways, according to the new Life Sciences 2020 report from real estate firm Cushman & Wakefield, which found continued growth in the industry throughout the Garden State bodes well for the real estate sector.
With mergers and consolidations continuing throughout the industry, both regionally and nationally, New Jersey has seen an increase in the number of small and midsized pharmaceutical and biotech companies in recent years, Cushman & Wakefield said, including spinoffs from major firms as well as organic growth as smaller firms snap up talent that may have been downsized at larger ones.
The real estate firm did note that the lab and research and development market is anticipated to tighten in the near future, as small and midsized companies expand and relocate, particularly in key submarkets such as the Princeton area, Interstate 78 corridor and Morris County. The growth also means facility opportunities should be available within the sector, C&W added.
“The majority of available lab space in New Jersey is second-generation space,” Shawn Straka, a managing director with Cushman & Wakefield, told ROI-NJ in an emailed statement. “Recently renovated lab space will lease at a higher rate, and we see rents trending higher as more space is updated and renovated to meet the demands of today’s life sciences companies.”
C&W reported 17.7 million square feet of lab/R&D space in the market, with average rents of $22.86 per square foot and a vacancy rate of 14.3%. The total 15,000 employees in the industry represent 63% growth since 2010.
The Greater Princeton submarket led the way, with more than 5.3 million square feet of inventory and a vacancy rate of 24.8%, with an average asking rent of $20.43 per square foot. The Route 78 submarket and Morris County submarket also have large inventories, at 2.5 million and 1.5 million square feet, respectively.
“We see demand across all segments of the life science industry,” Straka said.
The well-educated workforce in the state continues to be an asset, C&W noted, with New Jersey’s medical schools, research universities and other institutions producing more than 27,000 life sciences graduates each year.
“New Jersey maintains a strong, educated life science workforce,” Straka said. “Companies such as PTC Therapeutics and CMIC expanded their footprint significantly in New Jersey in 2019.”