Biotech Startups Flock to the Suburbs Over Rising Rent Prices
August 21, 2017
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – Large metropolitan areas like Boston, New York, San Francisco, San Diego and more have become some of the key hubs of the biotech industry in the United States. But, a key concern may come to challenge those cities as the home of biotech – rent.
In the past, BioSpace has reported on the increasing real estate costs in these biotech hubs, and in the case of some cities, the shortage of space, which causes rent prices to increase. This week Reuters reported that many companies are now looking for suburban settings for office and laboratory space. Dan Baughman, marketing director for Exosome Diagnostics, told Reuters the company moved its operations to Waltham, Mass. in an effort to cut its rent by about half.
Not only can biotechs find more affordable rent, Reuters noted that many suburban spaces are move-in ready, which is critical for startup companies short on excess funds.
In June, Alexandria Real Estate Equities, Inc. opened a new space for New York-based startups to call home. Alexandria LaunchLabs at the Alexandria Center for Life Science is a full-service startup platform designed to satisfy key unmet needs for plug-and-play space and strategic risk capital for seed- and early-stage life science companies in New York City. The new innovation center includes 15,000 square feet of lab and office space that is currently the home to 13 startup companies. At capacity, the facility is expected to house about 25 companies. Blake Stevens, general manager of the LaunchLabs, told BioSpace that early-stage companies in New York have a dilemma when it comes to using capital for R&D, as well as trying to find crucial lab space.
Alexandria isn’t the only real estate company looking to help companies find more affordable property. In the Boston area, King Street Properties developed a 91,000 square-foot structure in nearby Lexington, Mass. as an alternative for high-rent space in the Kendall Square area of Cambridge, Mass. At the time, King Street planned its facility rent in Kendall Square for about $70 per square foot. The Lexington site had rent of about $45 per square foot. The square foot price in Kendall Square has now jumped to nearly $80 per square foot, Reuters said.
San Francisco has long been known for its high real estate costs. One innovative group based in nearby San Jose saw the need for biotech space and opened the San Jose BioCube. Saam Farahmand, marketing director for San Jose BioCube, told BioSpace that there is now a waiting list for the 37,000 square-foot facility located about an hour from San Francisco. The BioCube offers multiple amenities, such as a reception center, conference center and three research centers – a cell culture room, virus room and a bacteria room. Office space ranges between 100 to 2,000 square feet. Lab space can 500 to 1,300 square feet in size.