The Rich Get Richer

According to JLL’s newest Life Sciences Outlook, the favorites are still winning the race despite rising costs.

by ADAM BRUNS

The average annual salary for R&D professionals has reached $135,000 in the past five years, while the average salary in the sector overall has increased 19.2 percent. But even as real estate and personnel costs keep rising, so do the fortunes of the top life sciences clusters.

For those who still have a hard time finding an affordable place to live despite their rising pay, the workplace is growing more attractive as a place to spend even more time: Companies are creating campuses as focused on how good employees feel as on creating products to make the rest of us feel better.

Those are among the conclusions you can draw from JLL’s annual Life Sciences Outlook report, released this summer.

“In the face of a changing workforce, companies are prioritizing locations and spaces that can improve the well-being of their employees,” says Roger Humphrey, executive managing director and leader of JLL’s Life Sciences group. “With millennial interests demanding attention in a growing war for talent, companies are increasingly seeking out more amenity-rich spaces. In response, developers are redefining life sciences real estate as projects such as the Cove at Oyster Point in San Francisco aim to create a vibrant, collaborative environment that provides a communal atmosphere beyond your standard 9-to-5 campus.”

Greater Boston and the San Francisco Bay Area continue their reign as the top US life sciences clusters. They share common characteristics such as world-class academic institutions, top-notch research facilities and a tight-knit medical community.

But status as a leading cluster doesn’t always mean you’re far enough out in front of demand.

“Even highly competitive clusters such as Seattle-Bellevue have a dearth of ongoing development,” says Humphrey. “Alexandria Real Estate Equities is currently building a 289,000-square-foot project in the cluster’s Lake Union submarket, but it will come online already fully leased to Juno Therapeutics later this year. The city’s mayor has praised the project and stated that it underscores Seattle’s standing as a global hub for biotech.”

That same REIT is behind The Alexandria at Torrey Pines in San Diego (the No. 3 cluster), as well as the newly launched Alexandria Center for AgTech — RTP, a planned multi-tenant “mega campus” in No. 4-ranked Raleigh-Durham.

Acquisition and Attraction

When it comes to biotech in particular, Humphrey observes that Big Bio, fueled by growing cash reserves and pressure to keep growing, is now following the lead of Big Pharma and seeking innovation through acquisition and strategic partnerships rather than cultivating it in-house. EY data shows the biotech sector as a whole increased R&D spending by 28 percent in 2016, a far larger increase than Big Pharma.

Humphrey also shares these observations about specific biotech clusters:

San Diego: “Global biotech and pharma companies continue to depend on early-stage biotechs to drive innovation, and San Diego has proved it can do just that. The region has secured over $56 billion in M&A activity since 2011.”

Chicago: “Lake County continues to drive Chicago’s life sciences cluster with more than 100 biotechnology/pharmaceutical companies, including 10 corporate headquarters.”

Montréal: “Laval’s Biotech City is the second largest cluster for occupied lab and manufacturing space in Greater Montréal, and has the most dense grouping of life sciences companies in the region. Laval is located in a different administrative region than Montréal, meaning companies here benefit from a different structure of tax incentives and credits for the operation of their activities.”

New York City: “New York City is emerging as a leading destination for biotech startups and the larger life sciences industry.”

Iowa’s 16 Industrial Sites “Development Ready”

Fairfield, Iowa-based Agri-Industrial Plastics Company produces large-scale industrial parts for the construction, highway safety and medical industries.

Photo courtesy of Agri-Industrial Plastics, Inc.

With 16 “development ready” sites, Iowa jumps to the top of the list for companies looking for Midwest expansion, a low cost of doing business and a talented labor pool.

The Iowa Certified Sites Program combines national site location standards with Iowa’s natural assets and business/targeted industry needs. So far, more than $490 million worth of activity has occurred on sites or business parks within the program.

“Creating jobs and increasing family incomes for Iowans is my administration’s top priority,” said Gov. Branstad in a December 2016 statement. “The state now has several sites of all sizes that have all gone through a rigorous certification process to be considered ‘development ready’.”

Zoned for Business Growth

With access to rail and major interstate and connection highways, several sites are ideally situated for large-scale industrial ag operations or high-tech data centers. The Cedar Rapids Land and Air Super Park boasts 582 acres, has rail access and is a mile from I-380. Fort Dodge’s 447-acre site is primed for large industrial users and sits near major Cargill, Valero and CJ BioAmerica global operations. Two miles from I-80 in Van Meter, a nearly 288- acre site is ideally zoned for a data center. Sitting off of I-80, Dexter’s

255-acre site is perfect for a modern distribution center or warehouse. And Burlington’s site was once an army ammunitions plant, which features services such as ambulance, EMT, fire rescue and security right on the 152.9 acres.

“Competition to attract job creation projects is steep and the Iowa Certified Site Program gives us that edge,” said Debi Durham, director of the Iowa Economic Development Authority, in a June 2016 statement.

The 16 communities that now feature a certified site include: Cedar Rapids, Clinton, Dexter, Forest City, Fort Dodge, Grinnell, Iowa Falls, Marion, Mason City, Middletown, Norwalk, Osage, Perry, Quad Cities and Van Meter, and Waterloo.

Iowa’s Economy is Full Steam Ahead

Iowa’s focused economic development strategy is paying off as the state had a record-breaking year in manufacturing exports in 2014 and has attracted more than $11 billion of private capital investment projects over the last four years. Every corner of the state has benefited from business expansions from top-tier companies — many already with significant Iowa locations — proving that Iowa is on the right track when companies in its own backyard continue to invest.

Iowa’s economy is able to quickly react to global market and industry needs, because its fiscal house is in order. It’s the third best-managed state in the United States, with a perfect credit rating and a balanced budget. Iowa’s fair regulatory environment allows for companies to confidently invest in R&D, hire additional employees and expand into new international markets.

The state’s efforts to build and strengthen international trade relationships over the years is coming to fruition. In 2014, Iowa reached a new export record of more than $15.1 billion in manufactured and value-added goods. The state’s exports have increased 39 percent since 2011.

Iowa Demonstrates Focused Economic Development Strategy

Today, as the nation deals with critical infrastructure issues, Iowa has recognized that a vital component of growing its economy and working with emerging international markets is transportation infrastructure.

To keep Iowa a major global player, the state will invest $3.2 billion over five years to improve the state’s highways, bridges and connections to U.S. interstates (I-29/I-80/I-35). These key improvements will elevate the state’s ability to attract major exporters who already benefit from a reliable statewide rail system, several regional airports and the Mississippi River along the state’s eastern border. Iowa also has invested in the first-ever statewide Freight Optimization Study to further assist Iowa businesses with international trade by identifying ways to cut freight costs.

By going through the rigorous site certification process, Iowa’s business-focused communities and local utility partners are bringing the whole package together for national and international companies looking to expand in the Midwest. With a top-notch education system, skilled and productive labor force, affordable housing and utilities, plus a 20-minute average commute, you’ve got a certifiable “risk-free” investment in Iowa.

To learn more about Iowa’s Certified Sites, visit iowaeconomicdevelopment.com to jumpstart your next project … the state will provide the shovels.

Adam Bruns
Editor in Chief of Site Selection magazine

Adam Bruns is editor in chief and head of publications for Site Selection, and before that has served as managing editor beginning in February 2002. In the course of reporting hundreds of stories for Site Selection, Adam has visited companies and communities around the globe. A St. Louis native who grew up in the Kansas City suburbs, Adam is a 1986 alumnus of Knox College, and resided in Chicago; Midcoast Maine; Savannah, Georgia; and Lexington, Kentucky, before settling in the Greater Atlanta community of Peachtree Corners, where he lives with his wife and daughter.