long island city life sciences feasibility study · new york state new york city nycedc rfei $650...

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

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




IV. LIC: NY’s Life Sciences Significant Sub-cluster




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




IV. LIC: Key to NY’s Life Sciences Growth




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


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

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:


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

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


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


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




IV. LIC: NY’s Life Sciences Significant Subcluster




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)


$696.9M in citywide econ output

$408.9M in citywide GDP

Case Two

(1M sf new, 500K renovation)

Construction Impact (2023 $)



$1.23B citywide economic output

Annual Ongoing Impact (2028 $)


$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

long island city life sciences feasibility study · new york state new york city nycedc rfei $650...

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