Post on 25-Feb-2018
NEW JERSEY
PHARMA /
LIFE SCIENCES
MARKET
REPORT
The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals.
© 2015 Cushman & Wakefield, Inc. All rights reserved.
Cushman & Wakefield of New Jersey, Inc.
Licensed Real Estate Broker
One Meadowlands Plaza
East Rutherford, NJ 07073
201-935-4000
cushmanwakefield.com
NEW JERSEY
PHARMA/LIFE SCIENCES
MARKET REPORT----------------------------------------------
CUSHMAN & WAKEFIELD RESEARCH SERVICES
The near future should feel like the last few years for the New
Jersey commercial real estate market and pharmaceutical and
life sciences sector. Bristol-Myers Squibb will soon vacate
650,000 sf of class A office space in Plainsboro once they move
into their new headquarters in nearby Lawrenceville come
2016. The move will allow them to consolidate their office
needs into the Princeton/Route 1 submarket. Shire’s recent
purchase of NPS Pharma poses the question of the company
maintaining its Bedminster presence or backfilling other out-of-
state facilities. Meanwhile, Celgene’s expansion of its office
space at their Summit campus is underway. Once completed,
Celgene is anticipated to dispose of more than 100,000 sf of
their space at 110 Allen Road in Bernards Township.
NJ PHARMA/LIFE SCIENCES OUTLOOK
Furthermore, Celgene is in the process of purchasing Merck’s
1.1 msf Summit R&D campus, which the firm will then fully
occupy. In Princeton, Church & Dwight is renovating their
former headquarters and building a new lab/pilot plant in
excess of 125,000 sf.
With some of the aforementioned additional vacancies hitting
the market, the availability rate could rise once again by 2016,
unless demand persists. With research and development now
less of a driving factor in the state’s real estate market,
pharmaceutical companies’ office needs should continue to
boost both the local economy and office space demand.
NEW JERSEY RESEARCH TEAM
CHRISTA DILALO SENIOR ANALYST
Research Services
201.508.5286
christa.petti@cushwake.com
JASON PRICEDIRECTOR
Research Services
201.508.5208
jason.price@cushwake.com
NEW JERSEY PHARMA ADVISORY TEAM
WILLIAM BROWNSENIOR DIRECTOR
Brokerage
973.292.4613
bill.brown@cushwake.com
PAUL E. GIANNONEEXECUTIVE VICE PRESIDENT
Brokerage
732.452.6184
paul.giannone@cushwake.com
Sources: C&W Research, Bionj.com, NJ Department of Labor, Choose NJ
CHRISTINE DELTUFO
JUNIOR ANALYST
Research Services
201.508.5225
christine.deltufo@cushwake.com
CHRISTOPHER KINUM EXECUTIVE DIRECTOR
Global Life Science Practice
201.508.5255
christopher.kinum@cushwake.com
2015 | CUSHMAN & WAKEFIELD
NEW JERSEY
PHARMA/
LIFE SCIENCES
MARKET
REPORT
INTRODUCTION
The pharmaceutical and life sciences industry has played a key
role in New Jersey’s economy for many years. Many of the
world’s largest pharmaceutical firms either own or lease
substantial amounts of space in the Garden State, which has
helped New Jersey gain the moniker “Medicine Chest of the
Nation.”
The Garden State is home to some of the largest
pharmaceutical companies in the world, including Johnson &
Johnson, Merck & Co., Novartis, Bristol-Meyers Squibb, Sanofi,
and Bayer. Residents also include biotech companies Celgene
and Amicus Therapeutics. New Jersey’s skilled and highly
educated workforce, its highway system, and its proximity to
NYC and the Port of NY/NJ have made the state a desirable
location for global pharmaceutical firms. These high-profile
companies are also drawn to New Jersey’s 63 colleges, which
produce 22,000 life sciences graduates annually, and the state is
home to six higher education universities offering graduate and
post graduate degrees in the field.
However, since the last recession, there have been many cost-
cutting moves by the industry, including corporate
consolidations and mergers and acquisitions. In turn, New
Jersey has seen its fair share of pharmaceutical companies exit
the local marketplace; most recently, Roche. However, small
and mid-sized pharmaceutical companies have increased demand
for space over the last few years while the number of
pharma/life sciences establishments in the state has increased
9.4% since 2008. Firms such as Roche, which recently vacated
its Nutley campus in a move across the river to NYC’s
Alexandria Center, have left a glut of space available in both the
office and lab/R&D markets.
Meanwhile, Merck’s Whitehouse Station headquarters facility
and Summit and Union sites are currently for sale. Novartis
vacated over 365,000 square feet (sf) of its office space in
Florham Park, putting it on the market for lease as it
consolidated into owned campuses.
In addition, mergers and acquisitions by companies such as
Watson Pharmaceuticals purchasing Actavis (whose name was
then adopted), Warner Chilcott, Allergan, and Forest
Laboratories, have ended with blocks of space added to the
supply over the last few years. As many large pharma and life
science companies re-evaluate their real estate needs and costs
of owning and/or leasing in the New Jersey market, this trend of
large consolidations and departures could very well continue in
the coming years.
ECONOMY
As of early 2014, there were over 3,000 operations within the
bio-pharmaceutical life sciences cluster in New Jersey, consisting
of the pharmaceutical, medical device, and biotech/R&D
industries, with an economic impact of $26 billion annually.
From 2008 through 2013, the number of companies operating
in New Jersey has inched lower by 0.1%, due in large part to
consolidations and relocations. According to the State of New
Jersey, the life sciences cluster boasted more than 115,000
workers during 2013, or 3.6% of the state’s total. In
comparison, the cluster accounts for just 2.0% nationwide.
The pharmaceutical sector employs 50,016 people in the
Garden State, 43.5% of the life sciences cluster’s total. Although
the pharma sector boasts the highest concentration of
employees in the cluster, it has also seen a notable decline in
payrolls from 2008 to 2010 (-11.1%), mainly due to the
aforementioned mergers, acquisitions, and major consolidations.
Over the next two years, the workforce declined at a slower
rate (-4.2%), and edged slightly higher in 2013. Much of the
industry’s workforce is located in Northern New Jersey, where
48.3% of the jobs lie. Meanwhile, Central New Jersey boasts
42.1% of the state total.
New Jersey has historically filled the industry’s need for a highly
educated and skilled workforce. There are 20 four-year
universities in the state, including Princeton and Rutgers, along
with top engineering schools. Furthermore, more than 35.5% of
the population age 25+ holds at least a bachelor’s degree.
Within the life sciences/pharma industry itself, over 65% have
obtained a bachelor’s degree or higher.
50,016
24,251
40,779
NUMBER OF NJ EMPLOYEES BY INDUSTRY
PHARMACEUTICALS
MEDICAL DEVICE
BIOTECH/R&D
C&W OVERVIEW
Cushman & Wakefield, Inc. (“C&W”) is one of the largest commercial real estate firms in the world. Founded in 1917, C&W
now operates from 259 offices in 60 countries with 16,000+ employees. Our professionals offer expertise in every business
sector and real estate class and deliver integrated solutions by actively advising, implementing and managing on behalf of
tenants, landlords and investors throughout every stage of the real estate process.
C&W’s core services — Leasing, Capital Markets, Valuation & Advisory, Consulting, and Corporate Occupier & Investor
Services — span the full continuum of real estate services. We employ the leading professionals in these fields, thereby
ensuring best-of-class services in each area.
With a culture that puts our clients' needs and objectives first in everything we do, C&W has the expertise to provide the best
possible commercial real estate services in the world.
2015 | CUSHMAN & WAKEFIELD
NEW JERSEY
PHARMA/
LIFE SCIENCES
MARKET
REPORT
INTRODUCTION
The pharmaceutical and life sciences industry has played a key
role in New Jersey’s economy for many years. Many of the
world’s largest pharmaceutical firms either own or lease
substantial amounts of space in the Garden State, which has
helped New Jersey gain the moniker “Medicine Chest of the
Nation.”
The Garden State is home to some of the largest
pharmaceutical companies in the world, including Johnson &
Johnson, Merck & Co., Novartis, Bristol-Meyers Squibb, Sanofi,
and Bayer. Residents also include biotech companies Celgene
and Amicus Therapeutics. New Jersey’s skilled and highly
educated workforce, its highway system, and its proximity to
NYC and the Port of NY/NJ have made the state a desirable
location for global pharmaceutical firms. These high-profile
companies are also drawn to New Jersey’s 63 colleges, which
produce 22,000 life sciences graduates annually, and the state is
home to six higher education universities offering graduate and
post graduate degrees in the field.
However, since the last recession, there have been many cost-
cutting moves by the industry, including corporate
consolidations and mergers and acquisitions. In turn, New
Jersey has seen its fair share of pharmaceutical companies exit
the local marketplace; most recently, Roche. However, small
and mid-sized pharmaceutical companies have increased demand
for space over the last few years while the number of
pharma/life sciences establishments in the state has increased
9.4% since 2008. Firms such as Roche, which recently vacated
its Nutley campus in a move across the river to NYC’s
Alexandria Center, have left a glut of space available in both the
office and lab/R&D markets.
Meanwhile, Merck’s Whitehouse Station headquarters facility
and Summit and Union sites are currently for sale. Novartis
vacated over 365,000 square feet (sf) of its office space in
Florham Park, putting it on the market for lease as it
consolidated into owned campuses.
In addition, mergers and acquisitions by companies such as
Watson Pharmaceuticals purchasing Actavis (whose name was
then adopted), Warner Chilcott, Allergan, and Forest
Laboratories, have ended with blocks of space added to the
supply over the last few years. As many large pharma and life
science companies re-evaluate their real estate needs and costs
of owning and/or leasing in the New Jersey market, this trend of
large consolidations and departures could very well continue in
the coming years.
ECONOMY
As of early 2014, there were over 3,000 operations within the
bio-pharmaceutical life sciences cluster in New Jersey, consisting
of the pharmaceutical, medical device, and biotech/R&D
industries, with an economic impact of $26 billion annually.
From 2008 through 2013, the number of companies operating
in New Jersey has inched lower by 0.1%, due in large part to
consolidations and relocations. According to the State of New
Jersey, the life sciences cluster boasted more than 115,000
workers during 2013, or 3.6% of the state’s total. In
comparison, the cluster accounts for just 2.0% nationwide.
The pharmaceutical sector employs 50,016 people in the
Garden State, 43.5% of the life sciences cluster’s total. Although
the pharma sector boasts the highest concentration of
employees in the cluster, it has also seen a notable decline in
payrolls from 2008 to 2010 (-11.1%), mainly due to the
aforementioned mergers, acquisitions, and major consolidations.
Over the next two years, the workforce declined at a slower
rate (-4.2%), and edged slightly higher in 2013. Much of the
industry’s workforce is located in Northern New Jersey, where
48.3% of the jobs lie. Meanwhile, Central New Jersey boasts
42.1% of the state total.
New Jersey has historically filled the industry’s need for a highly
educated and skilled workforce. There are 20 four-year
universities in the state, including Princeton and Rutgers, along
with top engineering schools. Furthermore, more than 35.5% of
the population age 25+ holds at least a bachelor’s degree.
Within the life sciences/pharma industry itself, over 65% have
obtained a bachelor’s degree or higher.
50,016
24,251
40,779
NUMBER OF NJ EMPLOYEES BY INDUSTRY
PHARMACEUTICALS
MEDICAL DEVICE
BIOTECH/R&D
C&W OVERVIEW
Cushman & Wakefield, Inc. (“C&W”) is one of the largest commercial real estate firms in the world. Founded in 1917, C&W
now operates from 259 offices in 60 countries with 16,000+ employees. Our professionals offer expertise in every business
sector and real estate class and deliver integrated solutions by actively advising, implementing and managing on behalf of
tenants, landlords and investors throughout every stage of the real estate process.
C&W’s core services — Leasing, Capital Markets, Valuation & Advisory, Consulting, and Corporate Occupier & Investor
Services — span the full continuum of real estate services. We employ the leading professionals in these fields, thereby
ensuring best-of-class services in each area.
With a culture that puts our clients' needs and objectives first in everything we do, C&W has the expertise to provide the best
possible commercial real estate services in the world.
2015 | CUSHMAN & WAKEFIELD
NEW JERSEY
PHARMA/
LIFE SCIENCES
MARKET
REPORT
PHARMA/LIFE SCIENCES EMPLOYMENT & DEMOGRAPHIC TRENDS PHARMA/LIFE SCIENCES ACTIVITY
NJ EMPLOYMENT BY INDUSTRY TREND (2010–2013) New Jersey’s class A inventory, where the majority of
pharmaceutical and life sciences companies opt to lease space,
consists of 100.2 million square feet (msf) and boasts an
average asking rent of $29.54 per square foot (psf). Since the
start of 2010, pharmaceutical and life sciences corporations
have accounted for more than 22.0% of all new class A office
leasing within the state. Since then, there have been 45
50,000+ sf transactions executed by this sector. Renewal
activity has also been robust, as last year alone saw over
465,000 sf of office space renewed within the industry.
Life sciences demand has been heavily concentrated within a
few specific geographic areas in New Jersey. The I-78
Corridor, Princeton/Route 1 Corridor, and Morris County
together comprise 81.3% of life sciences leasing since 2010.
Over the past five years, the I-78 and Princeton/Route 1
Corridors have each seen over 1.3 msf of new leasing activity;
while Princeton’s activity was dominated by transactions in
excess of 10,000 sf.
In one of the most noteworthy leases in recent history,
Novo Nordisk leased 770,000 sf of specially-renovated space
in Princeton in 2011. Otsuka Pharma expanded during 2013,
and now occupies over 130,000 sf in Princeton. Meanwhile, a
handful of significant deals occurred in the I-78 Corridor:
Valeant Pharmaceuticals relocated its headquarters and leased
310,000 sf of class A space in 2013; LifeCell Corporation took
117,937 sf in 2011; and Celgene expanded by 79,323 sf and
renewed for a total of 104,323 sf in one of its multiple
locations in the area. Most recently, GlaxoSmithKline
(Novartis) took over 144,000 sf of class A space in Warren
for their headquarters.
In addition to these office-based transactions, the I-78
Corridor saw a unique abundance of activity within high
technology/R&D facilities in 2013 when Ashland Chemical and
Amneal Pharmaceuticals leased 198,000 sf and 141,930 sf,
respectively, at the former Sanofi-Aventis site in Bridgewater,
now known as the Center of Excellence.
0%
5%
10%
15%
20%
25%
30%
Less HS HS Associate Bachelor MasteR Doctoral
4.7%
Less Than High
School
High School
Diploma
Some College/
Associate Degree
Bachelor’s
Degree
Master’s/
Professional DegreeDoctoral
Degree
14.5%15.4%
31.7%
25.1%
8.6%
CLASS A OFFICE MARKET SNAPSHOT
Northern NJ Central NJ NJ Total
Inventory (SF) 60,587,993 39,595,094 100,183,087
Total Vacancy Rate 23.6% 17.0% 22.30%
Avg. Direct Asking
Rental Rate (PSF)$29.92 $29.17 $29.54
YTD Leasing (SF) 2,005,333 2,601,598 4,606,931
YTD Direct
Absorption (SF)1,196,486 (121,497) 1,074,989
81% of pharma/life sciences leases have
occurred in I-78 Corridor, Princeton/Route 1
or Morris County since 2010
65.4% of this workforce holds
at least a Bachelor’s Degree
-7.0%
-8.2%
-4.2%
PHARMACEUTICALS
MEDICAL DEVICE
BIOTECH/R&D
NJ LIFE SCIENCES EDUCATIONAL BREAKDOWN
CLASS A VACANCY VS RENTS
$29.4
1
$29.0
4
$28.8
2
$28.5
6
$30.4
3
$29.6
9
$29.9
2
$24.6
5
$24.6
1
$25.2
0
$25.8
9
$29.5
3
$29.2
1
$29.1
7
12.0%
16.0%
20.0%
24.0%
28.0%
$14.00
$19.00
$24.00
$29.00
$34.00
2009 2010 2011 2012 2013 2014 2Q15
NNJ Class A Rental CNJ Class A Rental
NNJ Class A Vacancy CNJ Class A Vacancy
2015 | CUSHMAN & WAKEFIELD
NEW JERSEY
PHARMA/
LIFE SCIENCES
MARKET
REPORT
PHARMA/LIFE SCIENCES EMPLOYMENT & DEMOGRAPHIC TRENDS PHARMA/LIFE SCIENCES ACTIVITY
NJ EMPLOYMENT BY INDUSTRY TREND (2010–2013) New Jersey’s class A inventory, where the majority of
pharmaceutical and life sciences companies opt to lease space,
consists of 100.2 million square feet (msf) and boasts an
average asking rent of $29.54 per square foot (psf). Since the
start of 2010, pharmaceutical and life sciences corporations
have accounted for more than 22.0% of all new class A office
leasing within the state. Since then, there have been 45
50,000+ sf transactions executed by this sector. Renewal
activity has also been robust, as last year alone saw over
465,000 sf of office space renewed within the industry.
Life sciences demand has been heavily concentrated within a
few specific geographic areas in New Jersey. The I-78
Corridor, Princeton/Route 1 Corridor, and Morris County
together comprise 81.3% of life sciences leasing since 2010.
Over the past five years, the I-78 and Princeton/Route 1
Corridors have each seen over 1.3 msf of new leasing activity;
while Princeton’s activity was dominated by transactions in
excess of 10,000 sf.
In one of the most noteworthy leases in recent history,
Novo Nordisk leased 770,000 sf of specially-renovated space
in Princeton in 2011. Otsuka Pharma expanded during 2013,
and now occupies over 130,000 sf in Princeton. Meanwhile, a
handful of significant deals occurred in the I-78 Corridor:
Valeant Pharmaceuticals relocated its headquarters and leased
310,000 sf of class A space in 2013; LifeCell Corporation took
117,937 sf in 2011; and Celgene expanded by 79,323 sf and
renewed for a total of 104,323 sf in one of its multiple
locations in the area. Most recently, GlaxoSmithKline
(Novartis) took over 144,000 sf of class A space in Warren
for their headquarters.
In addition to these office-based transactions, the I-78
Corridor saw a unique abundance of activity within high
technology/R&D facilities in 2013 when Ashland Chemical and
Amneal Pharmaceuticals leased 198,000 sf and 141,930 sf,
respectively, at the former Sanofi-Aventis site in Bridgewater,
now known as the Center of Excellence.
0%
5%
10%
15%
20%
25%
30%
Less HS HS Associate Bachelor MasteR Doctoral
4.7%
Less Than High
School
High School
Diploma
Some College/
Associate Degree
Bachelor’s
Degree
Master’s/
Professional DegreeDoctoral
Degree
14.5%15.4%
31.7%
25.1%
8.6%
CLASS A OFFICE MARKET SNAPSHOT
Northern NJ Central NJ NJ Total
Inventory (SF) 60,587,993 39,595,094 100,183,087
Total Vacancy Rate 23.6% 17.0% 22.30%
Avg. Direct Asking
Rental Rate (PSF)$29.92 $29.17 $29.54
YTD Leasing (SF) 2,005,333 2,601,598 4,606,931
YTD Direct
Absorption (SF)1,196,486 (121,497) 1,074,989
81% of pharma/life sciences leases have
occurred in I-78 Corridor, Princeton/Route 1
or Morris County since 2010
65.4% of this workforce holds
at least a Bachelor’s Degree
-7.0%
-8.2%
-4.2%
PHARMACEUTICALS
MEDICAL DEVICE
BIOTECH/R&D
NJ LIFE SCIENCES EDUCATIONAL BREAKDOWN
CLASS A VACANCY VS RENTS
$29.4
1
$29.0
4
$28.8
2
$28.5
6
$30.4
3
$29.6
9
$29.9
2
$24.6
5
$24.6
1
$25.2
0
$25.8
9
$29.5
3
$29.2
1
$29.1
712.0%
16.0%
20.0%
24.0%
28.0%
$14.00
$19.00
$24.00
$29.00
$34.00
2009 2010 2011 2012 2013 2014 2Q15
NNJ Class A Rental CNJ Class A Rental
NNJ Class A Vacancy CNJ Class A Vacancy
2015 | CUSHMAN & WAKEFIELD
NEW JERSEY
PHARMA/
LIFE SCIENCES
MARKET
REPORT
PHARMA/LIFE SCIENCES ACTIVITY NEW JERSEY LAB/R&D MARKET
Many drug companies now want to be near university
centers of excellence that conduct life science related
research (i.e. California and Massachusetts), something the
Garden State does not have in terms of scope and size. In
turn, New Jersey is no longer a strongly desirable location
for companies to set up research and lab facilities, which
makes large leases like that of Ashland Chemical and
Amneal Pharmaceuticals now unique. However, life sciences
firms continue to view the state as a viable option for office
space and headquarters locations. Located centrally along
the Boston-DC life sciences corridor, New Jersey offers
both an educated workforce and competitive rental rates.
Several relocations have occurred within the past several
years, creating hundreds of new jobs within the sector. In
2013, the aforementioned Valeant Pharmaceuticals acquired
Bausch & Lomb and relocated its headquarters within the
state, more than doubling its footprint in New Jersey. This
transaction added 500 new jobs to the 274 already existing
in the state.
Swiss company Ferring Pharmaceuticals recently purchased
a 135,000-sf facility in Parsippany for future expansion.
Generic drug manufacturer Actavis (formerly known as
Watson) chose New Jersey as its global headquarters
location and opened an R&D center, bringing 350 new jobs
to the state. The company also recently acquired Forest
Laboratories, Warner Chilcott, and Allergan and has been
relocating most of its operations to New Jersey.
PHARMA/LIFE SCIENCES LEASING ACTIVITY
2010-2Q15
5.94%
12.63%
18.63%
20.00%
42.81%
PHARMA/LIFE SCIENCES LEASING BY SIZE –
% OF TOTAL (BY SF)
<10,000 sf
10,000 - 24,999 sf
25,000 - 49,999 sf
50,000 - 99,999 sf
100,000 sf+
The lab/R&D market consists of over 6.7 msf of non-owner
occupied space within both office and flex properties. The bulk
of this market is concentrated in Morris, Somerset, and
Middlesex counties. The majority of the inventory which
houses lab/R&D space is less than 100,000 sf in size as only
17 buildings exceed that number within the inventory tracked.
The largest facility—the former Sanofi campus in Bridgewater–
exceeds 1.0 msf. The “Center of Excellence” has seen two
transactions (Amneal Pharmaceuticals and Ashland Chemical)
signed during 2013, bringing the campus to almost 50.0%
occupancy. However, a handful of the buildings in the campus
are slated to be demolished later this year.
Vacancy within the lab and R&D market has hovered above
25.0% in recent years, although it has seen a modest decline
since reaching its peak of 29.3% in 2013. Since this year began,
the vacancy rate fell by 2.0 percentage points due to some
healthy demand. As of Q2, there were 11 blocks of space
available throughout the market in excess of 50,000 sf, five of
which exceeded 100,000 sf. Activity within these properties
has seen some major fluctuations annually since 2011, with
more than 800,000 sf of space leased in that time. Notable
deals were inked by Amneal Pharmaceuticals, Ashland
Chemical, Bristol-Myers Squibb, Celgene and Bracco
Diagnostics. Much of the deal volume was concentrated around
Princeton/Route 1 and the I-78 Corridor.
Meanwhile, asking rents are down 4.5% since the close of 2013,
as competition to attract companies in need of lab space has
been strong due to the plethora of space being marketed for
lease in the state. Since the start of 2015, however, asking
rents have remained stable throughout many of these buildings.
With some large pharmaceutical companies moving their
research needs to other markets such as Cambridge, Boston,
and San Francisco due to their proximity to a higher
concentration of universities and centers of excellence, New
Jersey has seen a significant amount of R&D facilities placed on
the market for sale or lease.
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
$12.00
$13.00
$14.00
$15.00
$16.00
2011 2012 2013 2014 2Q15
Direct Rental Rate Overall Vacancy Rate
NJ LAB / R&D SNAPSHOT*
Inventory (SF) 6,765,645
Available Space (SF) 1,748,876
Overall Vacancy Rate 25.8%
Avg Direct Asking Rental Rate (PSF) $14.77
YTD Leasing Activity (SF) 202,469
YTD Overall Absorption (SF) 47,221
DIRECT RENTAL VS. VACANCY RATE
*Non owner-occupied buildings 20,000 sf + only included in this data set
0.00%
4.00%
8.00%
12.00%
16.00%
20.00%
24.00%
28.00%
0.0
0.5
1.0
1.5
2.0
2.5
2010 2011 2012 2013 2014 YTD
2015
Mill
ions
SF
New Leases Renewals % of NJ Total New Leasing Activity
500 new jobs created with
Valeant Pharma’s 310,000 sf
lease in 2013
COMPANY TRANSACTION TYPE ADDRESS SUBMARKET SQUARE FEET
GlaxoSmithKline New Lease 184 Liberty Corner Rd I-78 Corridor 144,536
Ferring Pharmaceuticals User Purchase 260 Cherry Hill Road Parsippany 135,000
Solvay Pharmaceuticals New Lease 504 Carnegie Center Princeton/Rt 1 107,000
Taiho Pharmaceuticals New Lease 101 Carnegie Center Princeton/Rt 1 60,000
Opthotech Sublease 1 University Square Drive Princeton/Rt 1 35,206
40% of the state’s lab/R&D inventory lies
within Morris & Somerset Counties
YTD 2015 MAJOR PHARMA/LIFE SCIENCES TRANSACTIONS
2015 | CUSHMAN & WAKEFIELD
NEW JERSEY
PHARMA/
LIFE SCIENCES
MARKET
REPORT
PHARMA/LIFE SCIENCES ACTIVITY NEW JERSEY LAB/R&D MARKET
Many drug companies now want to be near university
centers of excellence that conduct life science related
research (i.e. California and Massachusetts), something the
Garden State does not have in terms of scope and size. In
turn, New Jersey is no longer a strongly desirable location
for companies to set up research and lab facilities, which
makes large leases like that of Ashland Chemical and
Amneal Pharmaceuticals now unique. However, life sciences
firms continue to view the state as a viable option for office
space and headquarters locations. Located centrally along
the Boston-DC life sciences corridor, New Jersey offers
both an educated workforce and competitive rental rates.
Several relocations have occurred within the past several
years, creating hundreds of new jobs within the sector. In
2013, the aforementioned Valeant Pharmaceuticals acquired
Bausch & Lomb and relocated its headquarters within the
state, more than doubling its footprint in New Jersey. This
transaction added 500 new jobs to the 274 already existing
in the state.
Swiss company Ferring Pharmaceuticals recently purchased
a 135,000-sf facility in Parsippany for future expansion.
Generic drug manufacturer Actavis (formerly known as
Watson) chose New Jersey as its global headquarters
location and opened an R&D center, bringing 350 new jobs
to the state. The company also recently acquired Forest
Laboratories, Warner Chilcott, and Allergan and has been
relocating most of its operations to New Jersey.
PHARMA/LIFE SCIENCES LEASING ACTIVITY
2010-2Q15
5.94%
12.63%
18.63%
20.00%
42.81%
PHARMA/LIFE SCIENCES LEASING BY SIZE –
% OF TOTAL (BY SF)
<10,000 sf
10,000 - 24,999 sf
25,000 - 49,999 sf
50,000 - 99,999 sf
100,000 sf+
The lab/R&D market consists of over 6.7 msf of non-owner
occupied space within both office and flex properties. The bulk
of this market is concentrated in Morris, Somerset, and
Middlesex counties. The majority of the inventory which
houses lab/R&D space is less than 100,000 sf in size as only
17 buildings exceed that number within the inventory tracked.
The largest facility—the former Sanofi campus in Bridgewater–
exceeds 1.0 msf. The “Center of Excellence” has seen two
transactions (Amneal Pharmaceuticals and Ashland Chemical)
signed during 2013, bringing the campus to almost 50.0%
occupancy. However, a handful of the buildings in the campus
are slated to be demolished later this year.
Vacancy within the lab and R&D market has hovered above
25.0% in recent years, although it has seen a modest decline
since reaching its peak of 29.3% in 2013. Since this year began,
the vacancy rate fell by 2.0 percentage points due to some
healthy demand. As of Q2, there were 11 blocks of space
available throughout the market in excess of 50,000 sf, five of
which exceeded 100,000 sf. Activity within these properties
has seen some major fluctuations annually since 2011, with
more than 800,000 sf of space leased in that time. Notable
deals were inked by Amneal Pharmaceuticals, Ashland
Chemical, Bristol-Myers Squibb, Celgene and Bracco
Diagnostics. Much of the deal volume was concentrated around
Princeton/Route 1 and the I-78 Corridor.
Meanwhile, asking rents are down 4.5% since the close of 2013,
as competition to attract companies in need of lab space has
been strong due to the plethora of space being marketed for
lease in the state. Since the start of 2015, however, asking
rents have remained stable throughout many of these buildings.
With some large pharmaceutical companies moving their
research needs to other markets such as Cambridge, Boston,
and San Francisco due to their proximity to a higher
concentration of universities and centers of excellence, New
Jersey has seen a significant amount of R&D facilities placed on
the market for sale or lease.
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
$12.00
$13.00
$14.00
$15.00
$16.00
2011 2012 2013 2014 2Q15
Direct Rental Rate Overall Vacancy Rate
NJ LAB / R&D SNAPSHOT*
Inventory (SF) 6,765,645
Available Space (SF) 1,748,876
Overall Vacancy Rate 25.8%
Avg Direct Asking Rental Rate (PSF) $14.77
YTD Leasing Activity (SF) 202,469
YTD Overall Absorption (SF) 47,221
DIRECT RENTAL VS. VACANCY RATE
*Non owner-occupied buildings 20,000 sf + only included in this data set
0.00%
4.00%
8.00%
12.00%
16.00%
20.00%
24.00%
28.00%
0.0
0.5
1.0
1.5
2.0
2.5
2010 2011 2012 2013 2014 YTD
2015
Mill
ions
SF
New Leases Renewals % of NJ Total New Leasing Activity
500 new jobs created with
Valeant Pharma’s 310,000 sf
lease in 2013
COMPANY TRANSACTION TYPE ADDRESS SUBMARKET SQUARE FEET
GlaxoSmithKline New Lease 184 Liberty Corner Rd I-78 Corridor 144,536
Ferring Pharmaceuticals User Purchase 260 Cherry Hill Road Parsippany 135,000
Solvay Pharmaceuticals New Lease 504 Carnegie Center Princeton/Rt 1 107,000
Taiho Pharmaceuticals New Lease 101 Carnegie Center Princeton/Rt 1 60,000
Opthotech Sublease 1 University Square Drive Princeton/Rt 1 35,206
40% of the state’s lab/R&D inventory lies
within Morris & Somerset Counties
YTD 2015 MAJOR PHARMA/LIFE SCIENCES TRANSACTIONS
NEW JERSEY
PHARMA /
LIFE SCIENCES
MARKET
REPORT
The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals.
© 2015 Cushman & Wakefield, Inc. All rights reserved.
Cushman & Wakefield of New Jersey, Inc.
Licensed Real Estate Broker
One Meadowlands Plaza
East Rutherford, NJ 07073
201-935-4000
cushmanwakefield.com
NEW JERSEY
PHARMA/LIFE SCIENCES
MARKET REPORT----------------------------------------------
CUSHMAN & WAKEFIELD RESEARCH SERVICES
The near future should feel like the last few years for the New
Jersey commercial real estate market and pharmaceutical and
life sciences sector. Bristol-Myers Squibb will soon vacate
650,000 sf of class A office space in Plainsboro once they move
into their new headquarters in nearby Lawrenceville come
2016. The move will allow them to consolidate their office
needs into the Princeton/Route 1 submarket. Shire’s recent
purchase of NPS Pharma poses the question of the company
maintaining its Bedminster presence or backfilling other out-of-
state facilities. Meanwhile, Celgene’s expansion of its office
space at their Summit campus is underway. Once completed,
Celgene is anticipated to dispose of more than 100,000 sf of
their space at 110 Allen Road in Bernards Township.
NJ PHARMA/LIFE SCIENCES OUTLOOK
Furthermore, Celgene is in the process of purchasing Merck’s
1.1 msf Summit R&D campus, which the firm will then fully
occupy. In Princeton, Church & Dwight is renovating their
former headquarters and building a new lab/pilot plant in
excess of 125,000 sf.
With some of the aforementioned additional vacancies hitting
the market, the availability rate could rise once again by 2016,
unless demand persists. With research and development now
less of a driving factor in the state’s real estate market,
pharmaceutical companies’ office needs should continue to
boost both the local economy and office space demand.
NEW JERSEY RESEARCH TEAM
CHRISTA DILALO SENIOR ANALYST
Research Services
201.508.5286
christa.petti@cushwake.com
JASON PRICEDIRECTOR
Research Services
201.508.5208
jason.price@cushwake.com
NEW JERSEY PHARMA ADVISORY TEAM
WILLIAM BROWNSENIOR DIRECTOR
Brokerage
973.292.4613
bill.brown@cushwake.com
PAUL E. GIANNONEEXECUTIVE VICE PRESIDENT
Brokerage
732.452.6184
paul.giannone@cushwake.com
Sources: C&W Research, Bionj.com, NJ Department of Labor, Choose NJ
CHRISTINE DELTUFO
JUNIOR ANALYST
Research Services
201.508.5225
christine.deltufo@cushwake.com
CHRISTOPHER KINUM EXECUTIVE DIRECTOR
Global Life Science Practice
201.508.5255
christopher.kinum@cushwake.com