Given its status as the country’s fourth largest life sciences market, New Jersey is a major center for the pharmaceuticals and biotech businesses. There are currently six major tenants in the market seeking approximately 440,000 sq. ft. of Class A lab/R&D space, but only 400,000 sq. ft. available to meet demand. The 400,000 sq. ft. BeiGene biologic pharmaceutical manufacturing center is scheduled for completion in Q2 2023 and will serve as the firm’s flagship location. In addition, Infinity Biologix is expanding its Sampled SMART Labs facility in Piscataway, creating a state-of-the-art, 140,000-sq.-ft. lab and biorepository that will be one of the largest of its kind in the world when completed later this year. No other development is currently on the horizon.
Among the largest lease transactions in New Jersey during Q1 was Roche Molecular Systems’ 82,000-sq.-ft. renewal in Branchburg. The top sale transaction was Onyx/Machine Investment Group’s acquisition of 1.4 million sq. ft. in the Parkway North submarket and Ares Industrial RE Income Trust’s $7.7 million acquisition of a 50,000 sq. ft. facility in Princeton.
Nationally, lab vacancy increased across the top 13 U.S. life sciences markets in the first quarter, providing relief for companies that had found little available space in recent years. Average vacancy of 6.7% in the first quarter marked an increase of 170 basis points from a year earlier. That compares to an average of 7.7% in the first quarter of 2020, before the pandemic sparked a wave of activity in the life sciences sector. The low point for vacancy (4.6%) came during the second quarter of 2022.
Other measures differed in the first quarter, indicating a sector cooling to red hot from white hot. Despite announcements of layoffs, U.S. life sciences employment increased by 3.5% in February from a year earlier, exceeding the overall job-growth rate of 2.9%. Average rental rates increased by 3.2% from the fourth quarter to a record $65.62 per sq. ft. in the first.