A Life Science Juggernaut
A LIFE SCIENCE JUGGERNAUT – This phrase is an increasingly apt description of the life sciences industry in Greater Baltimore. Fueled by a decades-long focus on research and development at nationally and internationally recognized institutions including Johns Hopkins, University of Maryland Baltimore (UMB) and the University of Maryland Baltimore County (UMBC), the Region is now front and center with the spotlight shining brightly on the work underway to understand, control, remediate and ultimately eradicate COVID-19.
Pre-pandemic, the life science industry has been a strong economic asset with great potential for growth in the Region. The academic research institutions noted above have long been catalysts for the growth of life science expertise. STEM curriculum at these renowned institutions, as well as others in the region including Towson University and Morgan State University, has significantly added to the home-grown talent supporting economic growth within all industry sectors including the life sciences. Additionally, the region’s healthcare providers have embraced R&D and commercialization to varying degrees as part of their mission, including LifeBridge, MedStar, Kaiser and Carefirst.
The data highlights the Region’s value proposition for the potential of the life science industry to continue to grow. Here are just a few facts:
- #1 State for Federal R&D funding
- #1 Employed Bio & Health PhDs
- Johns Hopkins #1 Recipient of NIH Research Dollars
Greater Baltimore’s three university research parks have provided a home for many life science companies and facilities for start-ups created from the research underway.
- The UMB Bio Park’s 350,000sf houses emerging and established biotech companies, including Catalent/Paragon BioServices with 130,000sf. The BioInnovation Center provides pre-built lab space for early stage start-ups. Wexford Science and Technology, the Park’s developer, has a third building designed and working through the City’s approval process with pre-leasing for anchor tenants actively underway. This building will add 330,000sf of which about 30% will be flexible space available for start-up and emerging companies.
- The Science and Technology Park at Johns Hopkins has 334,000sf also housing start-ups and established companies. Fast Forward, with locations in the Park as well as in Baltimore City’s Hamden neighborhood, has over 40,000sf for incubating and growing new companies generated from research conducted at Johns Hopkins. Thirty companies are currently in residence.
- UMBC’s Technology Park is the oldest in the Region with two locations – bwtech@ UMBC North Park with incubator/accelerator space for IT and cyber start-ups, and bwtech@ UMBC South Park housing 27 life science companies, including eight faculty-created start-ups.
The synergy between the life science/biotech industry and the academic/medical research institutions in the Region cannot be overemphasized. This synergy is vital to the growth of the industry as demonstrated by the success of the Region’s technology parks. In just the past five years, for example, there have been 116 licenses and 147 patents issued from Johns Hopkins’ research. Research at UMB has resulted in the creation of 40 start-ups, and 432 patents.
Now, with the U.S. in the throes of the COVID-19 pandemic, Baltimore’s preeminence in vaccine research and development is shining a national spotlight on the Region’s life science industry. Daily updates from the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU) tracking the spread of the virus throughout the US and the world pepper the national broadcast and print media. Emergent Biosolutions is expanding capacity at its Bayview manufacturing facility and has solidified a $480M deal to produce COVID-19 vaccines developed by Janssen Pharmaceuticals, one of the leading vaccine development companies in the country. The vaccine trials underway at UMB’s Center for Vaccine Development and Global Health are testing the efficacy of a vaccine under development by Pfizer in partnership with BioNTech, a German biotech. Pfizer/wBioNTech was just awarded $1.95B to mass produce the vaccine once it has been approved.
A CHALLENGE - The case for attracting capital and talent to grow the Region’s many emerging life science companies and for growing and attracting more start-ups, emerging and established companies to Greater Baltimore could not be stronger. However, in spite of all of the assets in Greater Baltimore for growth, a significant challenge remains: the facilities required by these companies to perform their work are not immediately available.
The three University-affiliated bio parks are essentially at 100% occupancy and availability of lab space outside of the parks is limited to two buildings in Baltimore’s Holabird Industrial Park that would likely need to re-adapt and upgrade heavily chemical-based systems in order to accommodate most biotech companies. The need to create additional facilities with the specialized systems required to support life science companies is undisputed, but building new facilities, or even adapting existing facilities, has proven to be a significant hurdle to overcome.
There are multiple reasons why. New construction of ‘true’ lab space comes with a price tag of $600/sf and up. The Region’s relatively low rent levels do not support the economics of building a new life science facility for most developers. While tax breaks and vehicles such as Tax Increment Financing (TIF) can decrease the cost somewhat, the delta remains large between the cost of a facility and the rent rates that even a mature company can reasonably be expected to pay in this market. Additionally, high-rise construction on constrained footprints in urban centers where structured parking is a necessity further constrains any value engineering. Without readily available space and developers challenged with securing enough anchor tenants to reduce the financial risk of building a new facility, companies that are ready to expand and exit the Region’s excellent incubators and accelerators may be forced to consider locations outside of Greater Baltimore.
Life science growth companies present additional challenges that make traditional real estate development unrealistic. First, their space needs are often the result of successful investment rounds that enable them to quickly expand their product development and staff. This requires them to move into larger spaces within a short time frame of months, not years, necessitating the availability of space that can be prepared within a much shorter time period than traditional office tenants who usually plan office moves over a two- to three-year period. Second, the nature of these emerging companies requires flexibility in lease terms. The traditional 10-year lease that is fairly standard for office tenants is not realistic for growth companies that can quickly expand or contract based on variables such as funding, licensing and patent processes, and FDA approval. These factors require flexibility with both terms and rental rates.
It goes without saying that the pandemic has deeply impacted the economy and the unpredictability of its continued grip on the country – if not the world – renders planning for even the immediate future very difficult. However, the longer-term horizon requires that the Region continue to leverage its assets in order to build a vibrant economy and maximize its assets across all growth industry sectors. This must include life sciences, not only so as to not squander the richness of the Region’s assets, but also because of the promise of this industry to improve health outcomes through effective treatment, control and eradication of disease.
To build the life science industry, it may be necessary for local and state governments, research institutions, and the private sector to work together to enable the private sector to develop the facilities needed to help keep our home-grown life science companies here, especially as they expand and mature, and attract additional companies to the Region. This may require a mechanism to help underwrite the hard cost of construction combined with ‘backstops’ for developers in the event that space is not leased after an agreed-upon period of time.
EAGB is eager to partner with the public and private sectors to market Greater Baltimore’s life science assets and further attract funding, talent and companies to the Region. To be effective, however, the inventory of facilities for the industry will need to be expanded.
Access the full EAGB July 2020 Region On Point newsletter here.
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