By: Joey Garrand
2 min read January 2021 — Money is pouring into Philadelphia’s life sciences market, which is among the most active and innovative in the country. Finding lab space, however, is proving easier said than done as the explosion of the life sciences market in the city has resulted in a shortage.
Lab space at University City (UCity), which provides about 2 million square feet of lab and office facilities out of the city’s 9 million, has an eye-popping 2% vacancy rate. The creators of UCity (Wexford Science and Technology, University City Science Center and Ventas, Inc.) are expanding the property, and companies are eagerly signing up to use the yet to be completed expansions. The availability of new lab space evaporates so quickly because many of the life sciences companies within Philadelphia are flush with the cash of eager investors.
Over the past month, billions of dollars have been committed to various life science purposes within Philadelphia, and lab space has logically been a huge target for investors given the need for more of it. Earlier in December, Silverstein and Cantor Fitzgerald committed $56 million to a 250,000-square-foot life sciences building within UCity. Of course, the total UCity project amounts to billions of dollars and is funded by a variety of entities. For example, Brandywine Realty Trust dedicated $3.5 billion to Schuylkill Yards, much of which is dedicated specifically to life sciences purposes.
But there’s much more to the story than just real estate. The University of Pennsylvania is one of the top receivers of National Institutes of Health (NIH) funding in the country. For fiscal year 2020, the University of Pennsylvania was awarded $585 million by the NIH. The purpose of this funding is to support innovation. Other universities in the area are also receiving NIH funding, which is estimated to total over $1 billion. According to the CBRE, NIH funding grew by 6.7% annually from 2015 to 2019, and that upward trend doesn’t seem to be stopping any time soon. From a government that is very fiscally flexible, this NIH funding can be viewed as a constant flow of capital that will help serve as a foundation to the life sciences economy within Philly.
Of course, private firms are also receiving a tremendous amount of capital. Philadelphia-area life sciences firms amassed over $500 million in venture capital deals over the course of 2020. Already in 2021, there have also been a few very large deals. For example, Aro Biotherapeutics secured $88 million of Series A funding just a few days ago. Carisma Therapeutics Inc. secured $47 million of Series B financing yesterday.
Philadelphia rose from eight-ranked within the “U.S Top Life Science Clusters” to seventh from 2019 to 2020. With a bustling environment for life science innovation and ample, consistent funding from a variety of sources, Philadelphia is poised to climb higher on that list. The Philadelphia region is a leader when it comes to cell, gene and immunotherapies innovation, and everyone from the government to the private sector is looking to help bring more revolutionary advancements to market. As the life sciences sector continues to grow, it will further nurture the economy around it.
