Monday, May 8, 2023

New Philadelphia Life Sciences Project Secures $130M

 By Barbara Ballinger

Breakthrough Properties, a developer of life sciences real estate backed by a joint venture of Tishman Speyer and Bellco Capital, has closed financing and begun construction on an eight-story, 223,000-square-foot life science building in the heart of Philadelphia’s Center City District. 

Breakthrough worked with Philadelphia-based D2 Capital Advisors to secure the $130 million construction loan from Corebridge Financial.

The building is scheduled to be completed for tenant fit-out by the summer of 2024.

The project is coming to life just as hints of softening in the life science sector emerge. It is joining the more than 40 million square feet of new lab/R&D space that is under construction in this year’s first quarter, according to CBRE, with more than one quarter of that space preleased.

CBRE also reports that the lab/R&D vacancy rate increased by 132 basis points quarter-over-quarter and 170 bps year-over-year to 6.7% for the first quarter, but the firm adds that continued demand for life science space should limit any future increases in vacancy.

The country’s top 13 markets had a combined 44,000 square feet of negative net absorption in the first quarter, according to CBRE, the lowest it has been since 2016.

But results vary greatly by city, with the San Francisco Bay Area posting 260,000 square feet of negative net absorption while Philadelphia – home to this latest project – had 460,000 square feet of positive net absorption.

Indeed, the Philadelphia market has become ripe for life science development, says Dan Belldegrun, Breakthrough’s CEO and Co-Founder.

“Over the past few years, Philadelphia has emerged as a leading research hub for pioneering new modalities in immunology, cell and gene therapy, and mRNA-based technologies to name a few,” he says in prepared remarks. “These advances have opened a new multi-billion dollar marketplace for local companies and made Philadelphia a hotspot for next generation discoveries.”

The company also notes that Greater Philadelphia is a national leader in NIH grant funding for cell and gene therapy. The city, which is anchored by a number of the leading research institutions, is home to more than 730,000 professionals with degrees in the engineering and science fields.

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