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Jones Lang LaSalle Reveals 16 U.S. Regions Vying as Established or Emerging Markets for Life Sciences Industry
Date:11/28/2011

CHICAGO, Nov. 28, 2011 /PRNewswire/ -- In light of rapid evolution in the life sciences sector, Jones Lang LaSalle conducted a comprehensive study to identify the top markets for real estate expansion for life sciences companies focused on pharmaceuticals, biotechnology, medical device technology, agricultural biotechnology and biofuels. The firm's Life Sciences Cluster Report ranks 16 emerging and established clusters in the United States according to relevant criteria to gauge where leading-edge companies are positioning their facilities to gain competitive advantage.

While Boston, New York/New Jersey and the Bay Area continue to top the U.S. list as established markets for life science industry expansion, Los Angeles and the Washington D.C. region are now considered established clusters. Los Angeles' vast number of hospitals, universities and research facilities and its large college-educated population should help propel its growing biotechnology sector to complement its mature medical device presence. Washington D.C./Suburban Maryland's close ties with government agencies and world-renowned academic research centers has supported a wave of early start-ups that has given way to mid-stage companies ripe for acquisition by major pharmaceutical companies. Rounding out the top seven established clusters are Philadelphia and San Diego.

The study also reveals several surprising U.S. regions are emerging as key players in the field including: Minneapolis, Chicago, Denver, Houston, Florida, Atlanta and Indianapolis. Emerging clusters like these in the United States are underway on new construction projects to foster innovation and training. This activity is expected to draw life science occupiers.

"A life sciences cluster typically develops as a result of a specific geographic region's educated workforce, plentiful venture capital and economic development incentives, industry-friendly political structures, strict patent protection laws and strong ties to top universities and other supporting infrastructures and organizations," said Bill Barrett, Executive Managing Director, Life Sciences at Jones Lang LaSalle. "While coastal hubs in the Northeast and California represent cornerstone locales and will continue to play an important role as the headquarters cities for many of the industry's largest players, other markets are steadily emerging as locations of interest."  

Rankings were based on the following criteria: percentage of total employment in high-tech research and hospital/medical fields; number of science & engineering graduate students; National Institutes of Health (NIH) funding; venture capital funding; R&D spend as a percentage of region's total state GDP; and square-footage of academic and research facilities.  To view the full chart, click here.

"Within the United States, life science-focused clusters are at various stages in their evolution, but we expect that the emerging clusters will become more competitive as we emerge from the global recession," said Richard McBlaine, Principal, Solutions Development, Life Sciences at Jones Lang LaSalle. "Ultimately, it is about the effectiveness of the discovery and innovation produced that draws additional investment."

Though market activity is picking up in most clusters, speculative construction continues to be rare in nearly all clusters demonstrating market awareness of constricted demand. However, several companies are executing large-scale built-to-suit projects, signalling a long-term commitment to their respective clusters. These include Astellas' 445,000-square-foot headquarters project in Chicago, GlaxoSmithKline's $81 million, 205,000-square-foot headquarters in Philadelphia, and Biogen's 497,000-square-feet headquarters in Cambridge, Mass.

The Drive for Discovery and Innovation

The drive for discovery and innovation is causing life sciences companies to rethink the way they make location decisions, creating a new focus on balancing the real estate costs of established life sciences clusters with their increased efficiency in generating innovation.

"While real estate costs are higher within the most established clusters, the intellectual capacity and enhanced odds of discovering the next powerful, profitable drug justifies the price premium," said Barrett. "Since ideas are the new currency of the modern enterprise, the knowledge workers within established clusters can compete globally based on the quality of their innovation, regardless of the hard costs of location."

This dynamic is bifurcating in what regions the drug discovery process takes place, with discovery aspects likely to remain in-house and in already established, high-cost clusters while testing and viability measures will leverage the lower costs of emerging clusters – both in the U.S. and globally - via contract research organizations (CROs) and other outsourced resources.

Global Landscape

Though the United States, along with Europe and Japan, continues to be a world leader in the life sciences sector, especially in the R&D aspects of the value chain, emerging clusters in regions such as Brazil, India, China and others located throughout Asia and Latin America are playing a more prominent role.

Manufacturing facilities represent a large share of operations in emerging clusters, and while investment in non-R&D facilities experienced a pause during the recession, Barrett expects to see investments return to emerging clusters as we come out of the recession.  "Factors such as growing economies, large populations, rising personal income levels and progressive political policies in emerging clusters encourage growth and direct investment from industry leaders.   Additionally, companies will leverage favorable conditions in emerging clusters as they bring on additional manufacturing capacity to take advantage of lower cost structures."

Also, emerging market governments in Asia and Latin America are making significant capital investments and improving political policies in order to become more competitive in high-tech aspects of the industry and to be in contention for CRO opportunities. To view more of Jones Lang LaSalle's global perspectives on the report's findings, click here.  To download a copy of the full report, click here.

Jones Lang LaSalle has a team of real estate experts dedicated to helping Life Sciences companies optimize their real estate portfolios. We provide a comprehensive range of facilities management services covering 70 million square feet of space including research, manufacturing and commercial sites with more than 1,000 staff on-site. As the life sciences industry changes, our experts continue to evolve to accommodate the changing environment that companies face.  Our industry leading full-service platform includes: integrated facilities management, engineering and operations, energy and sustainability, transaction management, lease administration and project management.

About Jones Lang LaSalle

Jones Lang LaSalle (NYSE: JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2010 global revenue of more than $2.9 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.8 billion square feet worldwide. LaSalle Investment Management, the company's investment management business, is one of the world's largest and most diverse in real estate with $47.9 billion of assets under management. For further information, please visit our website, www.joneslanglasalle.com.


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