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Insight & Intelligence : Apr 6, 2012
Massachusetts Sees $2B Construction Boom from the Biopharma Industry
Growth has been built on academic expertise and fueled by tax breaks.
Shire Human Genetic Therapies recently vacated a Cambridge, MA site, moving employees to its campus in Lexington, MA, but the 115,000 square foot space won’t stay vacant for long. Pfizer will occupy it temporarily while a new permanent lab-office for it rises just 0.1 miles east.
Shire and Pfizer are among nearly a dozen biopharma companies, research institutions, and developers building a combined 3.5 million plus square feet of lab and office space totaling more than $2 billion across Massachusetts. The newest project emerged March 28, when Alexandria Real Estate Equities announced plans for a 414,000 square foot building in Boston’s Longwood Medical Area.
The Longwood site will be anchored by a 154,000 square foot lease with Dana-Farber Cancer Institute and also includes headquarters for Biogen Idec and Vertex Pharmaceuticals, lab space for Novartis and Broad Institute, a speculative building in Cambridge, and a pilot-scale biomanufacturing training center at Worcester Polytechnic Institute.
Massachusetts leads the nation in construction starts for new biopharma facilities across North America, according to Industrial Info Resources (IIR). The Massachusetts projects are among 42 across New England totaling $3.3 billion, followed by the Great Lakes with 108 projects totaling $2.3 billion, and the West Coast with 69 projects totaling $2.2 billion, the IIR report found.
The West Coast includes the nation’s largest biocluster, the San Francisco Bay Area. Its biggest project has Gilead Sciences pursuing a $600 million expansion of its 30-acre Foster City, CA, campus. Plans call for the company to double its space to 1.1 million square feet, starting with a $140 million, 192,054 square foot R&D facility. The firm broke ground for this site in October.
By contrast, the largest Massachusetts project under construction is the $900 million pair of 18-story buildings being built for Vertex Pharmaceuticals. Vertex will rent about 1.1 million square feet under a 15-year lease to start when the space is completed, expected to occur in late 2013, at a cost of $72.5 million. Vertex can renew its lease for 10 additional years. The company is temporarily leasing 56,000 square feet near one of the two new locations for accounting support and information systems functions.
Biogen Idec is also developing new headquarters. It will sublease the headquarters it opened in the Boston suburb of Weston, MA, just two years ago and move its HQ to two Cambridge office buildings totaling nearly 500,000 square feet. Both broke ground in October.
The relocations of Biogen Idec and Vertex could, but may not, benefit smaller companies long hard-pressed by the region’s dearth of available space. “Up until a few months ago, 2014 was viewed as a little bit of a relief valve year,” Brendan Carroll, svp of research for Boston commercial real estate firm Richard Barry Joyce & Partners, told GEN. “It’s still two years away, and there’s a lot of organic growth that’s likely to occur between now and the time that those sites will actually become available. It does seem like good new product to be able to have online, but at the same time it’s difficult to see that as a benefit to tenants that are space-constrained today.”
Another Cambridge project has Novartis developing a $600 million, 550,000 square foot addition to its Novartis Institute for Biomedical Research. The project consists of two lab-office buildings above a common underground foundation with a 400–450 space parking garage and other facilities. Site excavation and removal of existing building foundations began last week. Novartis’ construction manager, Skanska USA, is also self-financing a nearby $70 million 120,000 square foot lab-office building, which broke ground in September.
Also in Cambridge, Broad Institute will nearly double its lab and office space when it completes construction in 2014. The new roughly 250,000 square foot building will consist of 12 floors, six of which will connect to floors in Broad’s existing building. Broad funded the construction through $353.4 million in bonds issued by MassDevelopment, the state’s finance and development agency.
Another project breaking ground last year was the 240,000 square foot building where Pfizer plans to lease 180,000 square feet over 10 years for its cardiovascular, metabolic, endocrine diseases, and neuroscience research units. The cardiovascular and neuroscience units will move there this year from Groton, CT, from where the other units moved last year. Pfizer is also testing the real estate market in Massachusetts as a potential seller. The company recently placed for sale one of three buildings it inherited after acquiring Wyeth for $68 billion in 2009.
Beyond Cambridge and Boston, Shire is increasing its production capacity for Vpriv eight-fold, following approval from EMA to produce the drug for type 1 Gaucher disease at its new manufacturing plant in Lexington, MA. The $200 million, 200,000 square foot plant boosts capacity from the 1,000 L capacity of its other facility in Cambridge to 8,000 L. However, Shire has yet to win FDA approval to produce the drug for U.S. patients.
The plant is one of five buildings Shire occupies at a 96-acre Lexington campus it purchased for $165 million in 2010. The campus consists of the plant, three buildings built before Shire’s arrival, and a 170,000 square foot fourth building completed last year. The manufacturing facility will also handle purification of Replagal, the only human-cell-line-derived form of enzyme replacement therapy for long-term treatment of Fabry disease, and production of all pipeline products, Shire spokeswoman Jessica Cotrone told GEN.
Additionaly, Shire along with Abbott and Bristol-Myers Squibb assisted Worcester Polytechnic Institute (WPI) in facility planning and curriculum design for its $32 million Biomanufacturing Education and Training Center (BETC), a 10,000 square foot commercial-scale pilot plant now under construction at Worcester’s Gateway Park. All three BETC partner companies have manufacturing operations: Abbott’s Bioresearch Center is in Worcester, while BMS completed a $750 million bulk biologics manufacturing site in 2009.
Keeping MA Ahead
BETC received a $5.1 million capital grant from the Massachusetts Life Sciences Center (MLSC), the quasi-public agency that implements the 10-year, $1 billion Massachusetts Life Sciences Act, enacted in 2008 by Governor Deval Patrick. It includes $500 million in borrowed capital spending, of which $165 million has been spent on WPI and nine other projects, plus $250 million in research grants, and $250 million in tax incentives.
In February, Massachusetts Life Science Center awarded a total $21.2 million in tax incentives to 28 life sciences companies promising in return to create a combined 940 jobs. Shire won $3 million tied to adding 100 jobs, Vertex won $2.449 million for the 100 jobs it added since last year, and Biogen Idec, $1.836 million for 75 jobs.
A past MLSC beneficiary, a U.S. subsidiary of France’s Ipsen, Biomeasure, is in talks with Milford, MA, officials to amend its tax-increment financing agreement for a $45 million expansion of its R&D and technical operations facility. Biomeasure plans to build a new three-story, 62,000 square foot building and renovate one of its two existing buildings for research and process sciences labs, expected to allow the company to deliver five NMEs and three proofs-of-concept by 2015. Biomeasure has projected a mid-2012 groundbreaking, with completion in early 2014.
In 2008, Biomeasure joined Richard Lee, M.D., and Parth Patwari of Brigham and Women’s Hospital and Harvard Medical School in securing a three-year, $250,000 per year MLSC grant, matched by the company, toward preclinical tests of the company’s IGF-1 heparin-binding protein, designed to enhance cartilage regeneration after traumatic injury and treat osteoarthritis.
MLSC funds, fortuitously borrowed before the Great Recession, have stoked the biopharma building boom as well as earlier projects benefiting from tax breaks, such as BMS’ Devens plant, which won $60 million in state and local incentives. Yet for BMS, another important incentive involved time: State and local governments approved permits in less than six months.
Massachusetts is literally building a base of biopharma businesses on the solid foundation of its top-tier universities and research institutions. But for those employers, options for where to locate now stretch beyond the Bay Area into China and other emerging markets where manufacturing costs are much lower, regulatory red tape is much shorter, and the supply of researchers is growing in quantity and quality. How Massachusetts retains biopharma companies as global competition ramps up over the next decade will decide whether the Bay State can lead the construction lists of future years.
Alex Philippidis is senior news editor at Genetic Engineering & Biotechnology News.
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