EAST RUTHERFORD, NJ — The pharmaceutical and life sciences industry, a long-time driver of New Jersey’s commercial real estate, continues to boost the state’s economy and office market, according to Cushman & Wakefield’s New Jersey Pharma/Life Sciences Market Report. “Many of the world’s largest pharmaceutical firms either own or lease substantial amounts of space in the Garden State, which has led to its being known as the ‘Medicine Chest of the Nation,’” said Cushman & Wakefield’s Jason Price, New Jersey research director. “A skilled and highly educated workforce, excellent highway system, and proximity to NYC and the Port of NY/NJ have made our state a desirable location for global organizations.”The number of pharma/life sciences establishments in the state has increased 9.4% since 2008, according to the Cushman & Wakefield report.
As of early 2014, more than 3,000 operations comprised the bio-pharmaceutical life sciences cluster in New Jersey. Consisting of the pharmaceutical, medical device, and biotech/R&D industries, this group represents an economic impact of $26 billion annually. Pharma/Life Sciences ActivityCost-cutting moves in the pharma/life sciences industry following the last recession have resulted in a number of major players exiting or consolidating in the local marketplace. At the same time, small and mid-sized pharmaceutical companies have increased demand for space over the last few years, according to Cushman & Wakefield.“Since the start of 2010, pharmaceutical and life sciences corporations have accounted for more than 22% of all new class A office leasing within the state, with 45 transactions greater than 50,000 s/f executed by this sector,” Price said. “Renewal activity has also been robust. Last year alone saw over 465,000 s/f of office space renewed within the industry.”Life sciences demand has been heavily concentrated within specific geographic areas in New Jersey. The I-78 Corridor, Princeton/Route 1 Corridor and Morris County together account for 81.3% of life sciences leasing since 2010. Over the past five years, the I-78 and Princeton/Route 1 Corridors have each seen more than 1.3 million s/f of new leasing activity. New Jersey’s 6.8 million-s/f lab/R&D market, which includes both office and flex properties, is concentrated in Morris, Somerset, and Middlesex counties. Vacancy within the lab/R&D market has hovered above 25% in recent years, although it has seen some improvement since reaching its peak of 29.3% in 2013. To date in 2015, healthy demand has resulted in a drop of two percentage points to 25.8%. Cushman & Wakefield predicts that the near future will bring more of the same when it comes to the New Jersey Pharma/Life Sciences sector.“We will see contraction and growth as companies in this fluid industry merge, expand and consolidate,” Price said. “Availabilities that hit the market should be countered by persistent demand. And while lab/R&D may continue to be less of a driving factor in the state’s real estate market, office needs will continue to boost both the local economy and real estate demand for years to come.”