Eli Lilly this week signed a lease to become the anchor tenant at the Science and Technology Center at East River Science Park in New York City — a deal that should prove an immediate shot in the arm to the campus' leasing effort, according to the chairman and CEO of the lab's developer, Alexandria Real Estate Equities.
However, Alexandria CEO Joel Marcus would not discuss whether the deal would hasten a decision to begin the project's second phase, which has been delayed due to the ongoing economic upheaval.
Lilly signed a 15-year lease for 91,000 square feet, plus 9,000 square feet of core services space, for a new oncology research headquarters for its wholly owned subsidiary ImClone Systems, which the pharma giant acquired last November for $6.5 billion. ImClone will relocate 125 researchers now in lower Manhattan at 180 Varick St., its headquarters of 25 years, to the new space, "with plans to add scientists in those areas that support expansion of the ImClone pipeline," according to a Lilly statement.
Lilly will occupy floors 10 through 14 of the 16-story, almost 320,000-square-foot East Tower at East River Science Park, which is technically a venture of Alexandria and New York City's Economic Development Corp. Lilly Chairman, President and CEO John Lechleiter joined ImClone CEO John Johnson, New York City Mayor Michael Bloomberg, and Alexandria's Marcus in signing lease papers at a July 22 ceremony at East River Science Park.
"It's huge," Marcus said in an interview after the signing event, which was also attended by City Council Speaker Christine Quinn and numerous other New York City officials. "It's a year before we start delivering space, which is next June. Anytime you have an anchor tenant that has a brand name, and has a lot of money to collaborate and to do deals with, that's a pretty big tenant."
"This doesn't happen every day in the middle of a quasi-depression," Marcus told BioRegion News.
Marcus said the crafting of the lease took only "a couple of months."
ImClone was represented in lease talks by John Isaacs and Timothy Dempsey, both executive vice presidents with CB Richard Ellis. Alexandria and East River Science Park were represented by three Cushman & Wakefield professionals: Chris Kinum, managing director of C&W's global life science practice and an executive director based in the firm's East Rutherford, NJ, office; Mark Winters, a Boston-based executive director with the global life science practice; and Bill Hartman, an executive vice president based in New York.
Marcus would not comment on whether the Lilly/ImClone signing would cause Alexandria to reconsider its indefinite suspension of plans to break ground on East River Science Park's second phase. The Pasadena, Calif.-based real estate investment trust disclosed during a Feb. 9 conference call with analysts that it was holding off on the second phase as one of several projects it will not pursue until the financial markets emerge from their current near-freeze.
The Alexandria chairman and CEO did say, however, that ImClone was a better fit for East River Science Park than two life sciences tenants that, according to brokers and economic development officials, had considered but passed on the NYC biocampus. Genzyme recently inked a 10-year renewal of its lease for 98,000 square feet at 521-33 West 57th St., on the West Side of midtown Manhattan, while OSI Pharmaceuticals opted instead to buy an all-but-vacant Greenburgh, NY, pharma campus for consolidating operations now scattered on Long Island, in Boulder, Colo., and Cedar Knolls, NJ.
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"Lilly is a multi-national pharmaceutical company that has operations all over. OSI is really a boutique biotech company" whose suburban workforce accounts for the company ultimately consolidating operations in a single suburban campus, Marcus said.
"They [OSI] were looking for a very cheap buy, and they found one. They're very lucky that the market kind of crashed," Marcus said.
"Genzyme has kind of a distribution operation in New York; it's not heavy-duty research," Marcus said, adding that "we did not really have any discussions with [Genzyme]."
East River Science Park is a $700 million life-sci campus approved for a total 1.1 million square feet of lab and office space on a 3.7-acre 1st Avenue site between 28th and 30th Streets.
Over the next several months, Marcus told BRN, Alexandria expects to sign additional tenants for the East Tower.
"We'll have some additional big pharmas, some smaller companies, some translational research work going in. It'll be a pretty sophisticated, varied combination [of tenants], much like we've done in Cambridge, [Mass.,] and [San Francisco's] Mission Bay," Marcus added. "We plan to have a very fully integrated community."
Cambridge's urban setting and proximity to institutions like MIT and Harvard, Marcus noted, have prompted Novartis to shift its US research base there in recent years: "Why did Novartis move worldwide research from Basel to Cambridge? They could have moved it anywhere. They could have moved it to Kentucky. But nobody does great research, and hires great people, unless they're in the heart of the city environment. The heavy-duty, very-well capitalized, and top-tier firms stay in the cluster markets. Other people go to the secondary markets."
The higher cost of urban lab campuses compared with their suburban counterparts is unlikely to deter top-tier companies, Marcus added: "The cost of developing a drug is, you're paying large amounts of money for your researchers, and you're paying large amounts of money for your clinical trials. Rent is by and large not that big of a factor."
Marcus would not disclose the asking rent for the East River Science Park space that ImClone will occupy, saying Alexandria typically keeps that confidential.
"In suburbia, you don't get to walk across the street to the institutions. That's just a different type of company that's out there," Marcus said. "Anybody that wants to collaborate with the nine different institutions in New York, you've got to be here, on the street, on the pavement."