New York City trying to get biotech start-ups to stick around
Mayor Michael Bloomberg has pushed to diversify New York City’s major industries to include the life sciences, part of a greater drive to make the city a high-tech hub.
But will projects like the Alexandria Center for Life Science and the redevelopment of the Brooklyn Army Terminal into start-up-friendly lab space pave the way for a self-sustaining commercial life sciences industry in the city?
“We know that New York has significant competitive advantages in it,” said Seth Pinsky, president of the New York City Economic Development Corporation. “We also understand that there have been challenges that have kept New York from fulfilling its potential.”
Including biotech, pharmaceutical and biomedical companies, among others, the life sciences industry is booming in places like Cambridge, Mass., Chapel Hill, N.C., and the San Francisco Bay area. But although New York City has the highest concentration of academic medical research institutions in the world, it hasn’t traditionally been home to the commercial start-ups that bear economic fruit.
“The culture of our major research institutions, historically, was not commercially oriented,” said Kathryn Wylde, president and CEO of the Partnership for New York City. “They were selling their patents to the places … around the country where the business was created, as opposed to working with their scientists to develop businesses here.”
Even though research institutions were spinning out around 20 to 30 commercial start-ups per year, they nearly always relocated because of the city’s lack of early-stage lab space, Pinsky and Wylde said.
“We did the initial market study and found that New York needed to develop about one million square feet of wet lab space to accommodate the companies that were being spun out,” Wylde said.
The Alexandria Center for Life Science and the so-called BioBAT in Brooklyn’s Sunset Park neighborhood are the main projects in a broader initiative to meet and surpass this goal. Of the three proposed towers at Alexandria—which is located between Bellevue Hospital and the NYU Medical Center—one has been built so far. Plans are in the works to break ground on the second tower before the end of 2013, according to Pinsky.
Alexandria’s first tower, which was opened in 2010 with approximately 300,000 square feet of space, has been a success, said Pinsky, adding that “for all intents and purposes it’s full.” (A spokesperson for Alexandria could not be reached for comment.)
In addition to the projected $700 million investment by the development firm Alexandria Real Estate Equities, the Alexandria Center is receiving upwards of $45 million from the city and state and $2 million from the federal government for infrastructure work associated with the project.
In the past, concerns were raised about the high cost of renting space in Manhattan, which can be an obstacle for start-ups.
According to Pinsky, Alexandria’s main tenants to date have been major pharmaceutical companies like Eli Lilly and Pfizer, but Alexandria is also home to a “science hotel” that provides short-term leases with start-up companies in mind. And unlike Manhattan, Brooklyn can offer more competitive rents.
“What we’re looking to do is to develop facilities that are affordable for different parts of the market,” Pinsky said. Still under construction, Brooklyn’s BioBAT, which is on the lower end of the spectrum, is costing the city $12 million and the state $50 million. Only a single anchor tenant, the International AIDS Vaccine Initiative, which already occupies a 40,000-square-foot space from an earlier construction phase, has signed on to date.
Nathan Tinker, executive director of the New York Biotechnology Association, said that more could still be done to promote the industries, which are being courted by states like Massachusetts, North Carolina and Michigan.
“There are no dedicated incentives in New York State for the life sciences,” he said. “In New York City, there’s a qualified tax credit of $250,000 a year for biotech companies, but that’s really the only specific targeted credit in the city as well.”
Tinker credited the Bloomberg administration for taking some positive steps, such as helping the Alexandria Center get off the ground. But he said Bloomberg must do more to take advantage of the concentration of world-class research institutions in the city and leverage that into a thriving commercial sector.
“It’s one thing to put up beautiful, expensive buildings, but it’s another thing to build them up them with the small and emerging companies that are really the life force of these industries,” he said.
But according to Wylde and Pinsky, the overall effort to bring the commercial life sciences to New York City is working, and more projects are in the offing.
Pinsky said that over the last year large pharmaceutical companies, academic medical centers and entrepreneurs have tried to put in place initiatives to build on the success of the new infrastructure in place.
“We should be announcing by the end of this year what those initiatives will consist of,” he said.
And according to statistics provided by the EDC, bioscience employment in New York City rose to 10,381 jobs in 2011, up 3.2 percent from 2010 and ahead of the 0.6 percent national growth rate. This was driven mainly by growth in biotech research and development and medical labs, which both increased by 10.5 percent.
“In New York you have about 11,000 people working in commercial bioscience,” Pinsky said. “In the Boston/Cambridge area, that number is over 40,000. And we don’t think there’s any reason why New York can’t be a competitor with Boston and Cambridge.”
This article first appeared in the Sept. 17 issue of City and State.
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