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Despite the challenging and uncertain economic climate in New Jersey where the unemployment rate is now at its highest level in three decades and major companies are placing large blocks of space on the market, there is at least one encouraging sign of progress and glimmer of hope. Due to a number of factors, small and mid-sized biotech companies are choosing Central New Jersey — and areas adjacent to the Interstate 287/78 corridor — to base their operations.
Several companies have located their headquarters or expanded branch functions in the I-287/78 corridor during 2012. In Bridgewater, Allergan leased 93,000 square feet, Dendreon leased 39,940 square feet, while Aptalis Pharma expanded into a total of 50,000 square feet. In Basking Ridge, Celgene renewed its 90,000-square-foot lease and Ipsen leased 32,500 square feet. Outside the I-287/78 corridor, Watson Pharmaceuticals recently expanded into an additional 32,000 square feet in Parsippany, and leased 32,000 square feet of lab/administrative space in North Brunswick.
A recent study from BioNJ, a 300-member organization founded in 1994 that is focused on advancing the growth and prosperity of New Jersey’s biotechnology cluster, reinforces this trend and paints a vivid picture of its impact over the past few years.
The number of biotech companies has grown by more than 13 percent since 2010 to a total of more than 340 in 2012, according to the study. The number of jobs also increased from approximately 15,000 in 2010 to an estimated 16,400 today, reflecting a 9.3 percent increase. The forecast looks bright too as, although down slightly from previous studies, 71 percent of survey respondents indicated they plan to hire new employees during 2012.
Nearly half of these survey respondents (46 percent), have operated in the state for five years or less, with 37 percent having been in business for five years or less. These companies comprise a mix of new company formations, spinouts from other firms or universities, and relocations from other states or countries.
So, what makes New Jersey so attractive to these firms?
Mergers and acquisitions among the larger pharmaceutical players have created opportunities for mid-tier biotech firms. Workforce downsizings and excess space released to the market have been among the byproducts of these consolidations. Growing biotech firms have been able to tap this pool of highly skilled employees, while also locating suitable space for their operations.
The New Jersey Economic Development Authority (EDA) administers the Innovative Technology Business Tax Certificate Transfer Program, which recently approved 75 emerging technology and biotechnology businesses to share a $60 million allocation. This was double the figure from the previous year. The program enables companies to sell New Jersey tax losses and/or research and development tax credits to raise funds. Established in 1999, more than 1,530 applicants have been approved for $630 million.
The government has fostered a sense of collaboration by providing plentiful incentives to encourage biotech companies to locate and grow in the state. Additionally, these companies are afforded convenient access to best-in-class academia, a diverse and highly skilled workforce and the ability to easily work with other companies in the industry. Not to be counted out, the overall quality of life in the Garden State is incomparable. A rural environment combined with the convenience of suburban living has been among the factors driving population as well as biotech growth along the I-287/78 corridor.
Emerging biotech companies will continue to seek out New Jersey because of the wealth of advantages that having a location here provides to them. As they grow, these firms will no doubt have an increasingly positive impact on the state’s economy and will encourage, not only innovation, but also others to follow their lead.
— Daniel Loughlin, MCR, SIOR, is a managing director in Jones Lang LaSalle’s New Jersey office. He spearheads the firm’s Brokerage Services Division, providing corporate representation in both the acquisition and disposition of commercial real estate, strategic planning and site development activities, with a focus in the pharmaceutical and biotech industry.