CBRE Report 2023: A Snapshot of the Philadelphia Life Sciences Sector
By Mark Terry
May 10, 2023
Philadelphia is a major life sciences cluster in the United States, with more than 56,000 life science jobs, numerous academic and research institutions, and a growing presence in both biotech R&D and biomanufacturing.
CBRE, a global leader in commercial real estate services and investment, recently issued its 2023 U.S. Life Sciences Outlook report. CBRE also issued a Philadelphia Life Sciences report in the first quarter of 2023 that predominantly focused on real estate.
Here’s a snapshot of the Philadelphia Life Sciences Sector and how it fits into the country’s broader life sciences ecosystems.
Life Sciences Employment
The report says that U.S. life sciences employment hit a record 2.1 million jobs at the beginning of 2023. Perhaps not surprisingly, the San Francisco Bay Area ranked #1 with Boston/Cambridge ranking #2. Philadelphia ranked #8, with approximately 56,009 life science jobs as of the second quarter of 2022.
The CBRE report stated that overall, “Life sciences companies have announced many more layoffs in the first two months of 2023 than in 2022. Nevertheless, the unemployment rate for essential scientific occupations in life sciences research & development remains well below the total U.S. unemployment rate, suggesting underlying strength in hiring despite the layoff announcements.”
Industry Funding
The CBRE report states that at least in the first quarter of 2023, there “has been a notable pullback in life sciences venture capital investment and initial public stock offerings.” However, NIH funding remained consistent. The report didn’t have a broad breakdown of VC investments, although it did note that the top three markets for it were Boston/Cambridge, the San Francisco Bay Area and San Diego. Despite that, funding for the three markets dropped by 33.5% year-over-year in 2022 compared to a drop of 31% for the rest of the top 10 markets tracked by CBRE Research. In 2022, VC funding in Philadelphia was around $1.3 billion.
However, for the top 10 U.S. metropolitan areas for NIH funding, Philadelphia ranked #8. The top spot was New York/New Jersey with $3,257,868,219 in 2022, followed by Boston/Cambridge with $3,036,176,516. Philadelphia ranked between Seattle and San Diego, with $1,340,374,498 in NIH funding, an increase of 11% from 2019 to 2022.
Laboratory/R&D Trends
Over the past five years, the report indicates, U.S. life sciences laboratory/R&D inventory has grown by 47% to 181.7 million square feet. Across the country, there is a record 40.2 million square feet of new construction underway. Again, Philadelphia ranks #8 with 9,665,840 square feet of inventory. Its vacancy rate is 10.1% (compared to Boston/Cambridge’s 3.0% and Chicago’s whopping 29.6%).
In Philadelphia, the average asking rent is $46.32 (triple net lease, NNN). The most expensive rents are in New York City at $108.47 per square foot, with the least expensive in New Jersey at $32 per square foot. Boston/Cambridge comes in at $99.02 per square foot and San Francisco Bay Area is $71.64 per square foot.
Philadelphia’s square feet under construction is 2,767,460. Boston/Cambridge is again the top figure, with 15,297,894 square feet under construction, followed by San Francisco Bay Area, with 9,255,050 square feet under construction. In terms of square feet under construction, Philadelphia ranks #4.
It was just announced that construction began on a new life science research building at Philadelphia’s Center City District. The $130 million, 223,000-square-foot research site at S. 23rd Street has been dubbed 2300 Market by Breakthrough and is being developed by Breakthrough Properties. The building is expected to be completed by the summer of 2024.
In late April, Integral Molecular cut the ribbon on its new headquarters, the first tenant in Philadelphia’s One uCity.
The report noted that 2022 set records in Philadelphia for life sciences leasing activity and that beating that this year would be tough. “However, it was encouraging for the market to have two major construction projects move full-steam ahead and break ground, and for over 125,000 sq. ft. of deals to sign between the city and suburbs.”
The report specifically cites Spark Therapeutics continuing its expansion at Discovery Labs in Kingi of Prussia, and bioMerieux subsidiary Invisible Sentinel signing on to take a significant portion of 1201 Normandy Place in Navy Yard. Also, One uCity Square, the newest phase of Wexford’s master development in University City, completed construction.
New Biomanufacturing/GMP Space
Again, Philadelphia ranks #8 in the top 10 metropolitan areas by biomanufacturing capacity. It cites 20 facilities with 4,860 biomanufacturing employees.
In early April, Philadelphia-based VintaBio, a contract development and manufacturing organization (CDMO) focused on cell and gene therapies, came out of stealth mode. The company had just completed a new 22,500-square-foot manufacturing facility at the Navy Yard. King of Prussia, Pa.-based Center for Breakthrough Medicines (CBM), a CDMO, has been busy expanding its services and inking contracts with partners around the world.
One unusual example is the Jefferson Institute for BioProcessing (JIB), part of the Kanbar College of Design Engineering & Commerce at Thomas Jefferson University. In addition to its academic programs, the JIB acts as a contract development and manufacturing organization (CDMO) for companies to partner with for process and product development, and customized training and workforce development. Its facilities include a flexible, single-use facility with BSL1 and BSL2 bioprocessing capabilities.
All the data pulled into these two reports confirm that the Philadelphia region is a strong and growing center of the life sciences, with plenty of new space for companies being built and leasing at reasonable rates compared to the rest of the country. It is also a center for biomanufacturing innovation, which can support the growth of its influential R&D capabilities.
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Mark Terry is a freelance writer, editor, novelist and ghostwriter. He holds a degree in microbiology & public health and spent 18 years in infectious disease research and clinical and research genetics prior to his transition to a writing career. His areas of expertise include biotechnology, pharma, clinical diagnostics, and medical practice management. He has written literally thousands of articles, as well as market research reports, white papers, more than 20 books, and many other written materials. He currently lives in Michigan with his family.
