Philadelphia, long a secondary market for biotech investment, is seeing an uptick in development as investors seek to meet demand from an expanding roster of life sciences tenants on the hunt for a shrinking amount of available space.
Greater Philadelphia is considered the strongest cell and gene therapy hub in the nation, attracting nearly $4 billion in venture capital and funding in 2021. The city has also become popular among startups or firms preparing to graduate from incubator space. Nearly 2.25 million square feet of lab and research space is under construction in the region, according to Colliers, and developers are pitching another 9.7 million square feet in order to capitalize on the swelling demand.
“Philadelphia has quickly established itself as a leader in the cell, gene, and mRNA therapy space, which is driving increasing demand for high quality lab space,” Aaron Kazam, Los Angeles-based Breakthrough Properties’ senior vice president of acquisitions, said in the statement. He added that the city’s biotech market has been fueled by its highly educated workforce and the influx in funding, all of which has propelled demand to record levels.
Breakthrough Properties, a joint venture of global developer Tishman Speyer and investment firm BellCo Capital, is moving ahead with plans to overhaul an aging office building in Center City into more than 200,000 square feet of high-end life science space. The plan was announced about a month after the venture raised $3 billion to fund research and development projects in a handful of markets, including Philadelphia, in which it does not have a presence.
The proposed project at 2300 Market St. marks Breakthrough Properties’ entry into the city. It will also join a group of projects New York-based Tishman has in the construction pipeline across several Philadelphia suburbs. Including its Philadelphia plans, Breakthrough Properties has more than 4.6 million square feet of biotech and life science construction underway around the world.
Breakthrough Properties said in a statement that Center City, in particular, is “well positioned to capture the intense and growing demand for modern lab space throughout Philadelphia that cannot currently be met by the existing supply-constrained life science market.”
Breakthrough Properties purchased the 33,900-square-foot Market Street office building for about $16.6 million in December 2021, according to CoStar data. It is unclear how much the venture will invest in converting the property, and Breakthrough did not respond to CoStar News’ requests for more details about the proposed project.
Philadelphia is among the 10 largest life sciences markets in the country, but has historically been passed over for other hubs such as Boston, San Diego, the San Francisco Bay Area and Seattle. However, the shortage of space in those markets has become increasingly burdensome for tenants, and some are beginning to shift their attention to alternatives such as Philadelphia in a move that has helped catapult the city to the forefront of the life science sector’s accelerating growth.
CoStar.com, Katie Burke