Cushman & Wakefield has formed its own practice representing life sciences companies in an attempt to compete with global and regional brokerage powerhouses.
C&W’s Global Life Science Practice will consist of four veteran brokers experienced in representing biotechs, pharmaceuticals and other life sciences businesses in searches for office and laboratory space.
The four, all of them managing principals of the life science group with at least two decades of experience, are: Christopher Kinum, managing director of the life science practice and a C&W executive director based in the firm’s East Rutherford, NJ, office; Mark Winters, an executive director based in Boston; Thomas Giannone, a senior director also based in East Rutherford; John Minervini, a senior director based in Los Angeles,
but also knowledgeable about San Diego’s life science market.
Kinum told BioRegion News the brokers will be joined by additional professionals as C&W combines individuals it plans to recruit from outside the company with growth from within.
“We are currently identifying additional people with life sciences experience, and we’re also talking to people within the firm who may have an educational background but don’t have extensive real estate experience,” Kinum told BioRegion News.
C&W wouldn’t say how many professionals it plans to add, or over what period of time.
Cushman & Wakefield, which has 201 offices in 55 countries and more than 12,000 brokers worldwide, currently has a foot in the life-science door. It counts as existing biopharma clients Novartis, Teva Pharmaceuticals, Bristol-Myers Squibb, Johnson & Johnson, and Merck.
In recent years, C&W helped Alpharma find its headquarters in Bridgewater, NJ, and it represented Actavis Group in its search for a US headquarters. Four months ago, Kinum said, Novartis assigned to C&W a global site search for a manufacturing plant that is “75 percent done.” He declined to elaborate.
But the company has a long way to go before it catches up in size or stature to a host of rival brokerages in the life sciences. C&W’s staff pales next to the 50 US and 25 overseas brokers of the industry leader CB Richard Ellis.
“In San Francisco we have probably four brokers who work different sections of the Bay Area alone. Another three or four do San Diego. In New Jersey we have four brokers who work the life sciences. In any of the tier one regions you have three or four brokers. You can’t have one person focus on an entire state,” said Patricia Ardigo, a first vice president with CBRE based in Stamford, Conn., and director of its life sciences group.
Another rival, Colliers International, said its life science practice numbers about 100 brokers worldwide, 35 of them based in the US.
“The requirements for a life science company are completely different than for office, or retail, or industrial use,” said Tom Mercer, a senior vice president with Colliers International based at its San Diego office. “What the shell of a building needs to have to be able to [support] a life-sciences tenant is different from an office or industrial building. … There are things that go into the planning of a building that [a life science practice] can help landlords with. And if we’re working for a tenant, we know what the buildings need to have before they go in there.”
Another rival brokerage, Jones Lang LaSalle, includes its life-sciences specialty within a larger healthcare group that includes hospitals and university medical centers.
“I think we are starting to think about whether or not [forming a distinct life-sciences practice is] something that we should invest the time and effort in,” said Daniel Cordeau, senior vice president of life sciences with Jones Lang LaSalle.
Cordeau could not say how many of JLL’s 11,800 brokers worldwide are assigned to the healthcare practice.
According to Kinum, “in many cases, hands-on service is more important than size. We think we’re big enough with the coverage we have. Yet we also view it as a one-on-one relationship. While we have local information, we also have very experienced professionals who have dedicated themselves to this practice.”
The life science group has one liaison each in Europe and the Asia-Pacific region. This global focus may reflect the firm’s new ownership. On March 30, the investment group of Italy’s Agnelli family completed its acquisition of a 71.5-percent majority stake in C&W for $563 million from Rockefeller Group International; the remaining share is held by a C&W employee group.
While life science real estate may be gaining depth globally, it is also consolidating into the hands of a few large REITS specializing in lab-R&D space for biotechs and pharmaceuticals.
For instance, in at least one market, San Diego, Alexandria Real Estate Equities markets its properties through CBRE.
Kinum said that consolidation is less a factor in highlighting the need for a specialized life sciences group than the fact such companies are joining other businesses in thinking about real estate more strategically and planning for future growth rather than reacting to a need for more or less space in certain markets.
The life-science practice has “been a major boost in our ability to deal with our targeted clients in terms of being able to sit with them and talk with them intellectually about what their business goals are and how we can help them plan to achieve those goals,” Kinum said. “We’re pretty comfortable that what we have in place now is certainly somewhat unique and clearly a differentiator within our competition.”
‘A Little Late’
Another challenge for C&W’s life-science practice is being able to compete with deep-rooted regional shops.
Greg Bisconti, a vice president/principal with the life sciences group Burnham Real Estate in San Diego, noted that the leading life science brokers in each of the nation’s top biotech hubs work for regional powerhouses: In Boston there’s Richards Barry Joyce & Partners; in San Francisco Cresa Partners; Burnham in San Diego; and GVA/Kidder Mathews in Seattle.
“Frankly, I don't see C&W making much of a penetration in the life sciences sector, at least not on the West Coast,” Bisconti told BioRegion News via e-mail. “I know they have some very good brokers on the East Coast in this specialty, but they will have a big job ahead of them to command market share.
“The laboratory arena isn't like the office or industrial sector where you can just staff up and start making headway,” he added. “The barrier to entry is very high, the community is very tight, and the relationships run deep.”
“The laboratory arena isn't like the office or industrial sector where you can just staff up and start making headway. The barrier to entry is very high, the community is very tight, and the relationships run deep.”
Bisconti said Burnham closed 13 life science deals in the first half of this year, up from 11 in the first half of 2006. Burnham is working on more than 600,000 square feet of sale and lease transactions in a market where the firm is tracking between 700,000 to more than 1 million available square feet, with the larger number including longer-range and tentative space requirements.
“Everyone seems to be trying to get into our space now that the market is picking up, so C&W's intent, albeit a little late, doesn't surprise me in the least,” he said.
For its part, C&W offered an upbeat forecast about the future of the life sciences real estate market. In a 22-page white paper released the day it announced the formation of its life-science practice, the company identified four factors or “main drivers” in that anticipated growth: The effect of clusters; limited supply of space; stable income for property owners via long-term leases; and the improving credit of companies. The report, Life Sciences Sector Drives Real Estate Growth, is available here.
The report includes mostly optimistic projections for 10 regional life sciences markets — four primary markets, Boston/Cambridge, Philadelphia/Delaware/Southern New Jersey, San Francisco Bay Area and San Diego; plus the Los Angeles, Seattle, and New York metro areas; suburban Maryland, Raleigh-Durham, and Puerto Rico.
The report also echoed existing findings that the nation’s life sciences sector will benefit from the aging baby-boomer population, advances in research and development, and increases in prescription drug spending.
Also, over the past three years, many pharmaceuticals have focused on fighting class-action lawsuits while smaller biotechs had struggled to raise venture capital, said Jerry Fennelly, president of NAI Fennelly Associates in Princeton, NJ. But that’s changing.
“The large pharmas are coming out of some of the litigation, and they’re actually getting positive responses,” Fennelly said. “And the bio companies are starting to get money, so a lot of [real-estate] deals are getting funded all of a sudden — $80 million, $70 million, $50 million, a decent amount of money to keep a company running for a year or two. Up till now, it’s been brutal. What we’re saying is it’s going to get better.”
NAI Fennelly recorded five biotech deals in the first half of 2007 for a total of 43,830 square feet. The largest deal was a 13,000-square-foot lease signed by Genmed at 457 North Harrison St., followed by the contract research organization Covance, which took 9,242 square feet at 210 Carnegie Center, then Indian-based generic drug maker Zydus taking 9,000 square feet at the same building. All three sites are in Princeton.
Other reasons for Fennelly’s optimism on the life sciences market: Some new businesses are likely to be created as spinoffs from the $100 million neuroscience institute established two years ago by Princeton University. And some companies may be drawn to New Jersey if voters approve a $450 million stem-cell referendum on the ballot for the Nov. 6 election [BioRegion News, July 2].
But New Jersey won’t likely generate as many companies as top-tier biotech clusters owing to the Garden State’s high taxes, Fennelly added.
Wherever the new companies get created, he said, they will seek real estate brokerages that can cater to their needs.
“It’s good to have that specialty because you understand the technicalities of the business. You’re able to track certain industry types within that group that are growing and contracting more readily, because you’re an expert at it. You want to get involved in [industry] conventions,” Fennelly said.