JLL Reports Life Sciences Still Strong in NJ Amid New Office Needs
Life sciences companies remain a leading driver of commercial real estate in New Jersey, accounting for more than a third of all office leases during the first half of 2023 and fueling a pipeline of deals for lab and manufacturing space.
Those are among the findings of a report by JLL, which noted that tenants in the sector accounted for the market’s largest office leases in each of the past two quarters. They include Sanofi, which took 260,000 square feet at SJP Properties’ M Station West project in Morristown, as well as the second-quarter commitment by Kenvue, the Johnson & Johnson consumer health spinoff, which will lease 191,450 square feet of newly renovated office space at Onyx Equities’ Summit East campus in Summit.
Aside from what will be its global headquarters, Kenvue will also occupy a 100,000-square-foot research and development building that will be constructed on the campus, the report said. The activity comes as owners look to capture demand at newer offerings, including Onyx’s Northeast Science and Technology Center at the former Merck & Co. campus in Kenilworth and New Brunswick Development Corp.’s Health + Life Science Exchange project in New Brunswick.
“Despite macroeconomic headwinds, life sciences companies were active in their pursuit of Class A office, R&D/lab and manufacturing facilities in New Jersey through mid-2023,” JLL wrote in the report. “With NEST in Kenilworth and HELIX in New Brunswick seeing tenant interest from startup biotechs expanding from incubators, as well as established companies, looking for existing quality space opportunities, demand is expected to persist during the second half of the year as well.
“Furthermore, economic development organizations like Choose NJ and the (New Jersey Economic Development Authority) are helping to grow the state’s life sciences sector, while collaborative efforts between universities, community colleges and the private sector are providing opportunities for research, innovation and talent development.”
The moves are tempered by several large availabilities in the sector, as life sciences companies consolidate and relocate, JLL said. To that end, LEO Pharma in Q2 listed 78,480 square feet of sublease space at 7 Giralda Farms in Madison, as another 154,440 square feet remains on the market at 5 Giralda Farms after AbbVie moved to 92,440 square feet in Florham Park.
Still, property owners remain bullish on the life sciences spaces. While JLL noted that certain submarkets have unusually high vacancy rates due to a limited inventory of existing lab buildings, top-end destinations such as Princeton have average direct asking rents of more than $34 per square foot.
New Jersey is also drawing interest from manufacturers such as Enzene Biosciences Ltd., which leased 55,920 square feet at the Princeton West Innovation Campus @ Hopewell for what will be a new plant and its first location outside its home country of India. And, just last week, cell therapy company Cellares announced that it would open a 118,000-square-foot manufacturing facility in Bridgewater thanks to $255 million in Series C funding.
“We’ve developed integrated technologies for the entire drug development and manufacturing life cycle,” Cellares CEO Fabian Gerlinghaus said. “Now we’re leveraging these technologies to offer global manufacturing services for the living drugs of the 21st century. Our partners are some of the best academics, biotechs, and large pharma companies in the world. We’re enabling them to meet total patient demand, improve consistency and quality, lower manufacturing costs and accelerate expansion to new markets.”