Recognized as a life sciences cluster and an established hub for cell and gene therapy, Philadelphia is experiencing exponential momentum in life sciences real estate and development. The region ranks third in the country for National Institutes of Health (NIH) funding and has seen $825M in venture capital since 2018. To discuss this booming sector from a diverse range of perspectives, SMPS Philadelphia organized “Leading Life Science,” a panel of experts moderated by KSS Partner Mayva Donnon. Mayva was joined by Mark Seltzer, Senior Vice President, East Region with Ensemble Real Estate Solutions & Investments; Dominique Casimir, Vice President, Real Estate with Thomas Jefferson University and Health Systems; Pete Cramer, Director of Development at Wexford Science + Technology; and Audrey Greenberg, Co-Founder of The Discovery Labs.
For those asking “why are we talking about cell and gene therapy in this region?,” Mark Seltzer of Ensemble gives a clear answer: because Philadelphia has been at the forefront of the discipline since gene therapy research was launched at the University of Pennsylvania 20 years ago by James M Wilson, MD, Ph.D. Since then, the first FDA-approved cell and gene therapies were developed in University City by Spark Therapeutics and Novartis, Children’s Hospital of Philadelphia and Penn Medicine collaborated to discover CAR T-cell cancer treatment therapy, and 27 of 30 approved gene therapy vectors were developed at Penn. Today, more than 30 cell and gene therapy development companies reside in University City and Greater Philadelphia. As Seltzer says, “this is not something we are positioning ourselves to be or telling an economic development story. This is the reality of what’s happening in Philadelphia and it’s happening because we have a two-decade head start.”
Homegrown + Outside Investment
The key ingredients for growth in the cell and gene therapy industry in Philadelphia, as noted in a report by Wexford Science + Technology and Econsult, are research infrastructure, human capital, and innovation output. The sector continues to grow in Philadelphia, powered by both homegrown companies as well as outside investment. According to Pete Cramer of Wexford Science + Technology, historically growth in their portfolio has been 90% organic growth versus out-of-market. Recently, Cramer says “as the area has transitioned from emerging to proven out, we’ve seen much more out-of-market interest and the ratio has come closer to 60-40.” Outside investment spans domestic players like Iovance Biotherapeutics, a California-based company whose state-of-the-art cell therapy manufacturing facility is under construction at the Philadelphia Navy Yard, to international capital from a Singapore sovereign wealth fund that joined a $930M venture backing life sciences development in University City.
Power of Proximity
In addition to being home to an established cell and gene therapy industry, Philadelphia’s geographic advantages enhance its attractiveness to investors. Institutions including University of Pennsylvania, Children’s Hospital of Philadelphia, and Drexel University are just a 15-minute drive from manufacturing facilities at the Navy Yard which is, in turn, just seven minutes from the airport. The close proximity of University City, the Navy Yard, and Philadelphia International Airport enables companies to shorten the time from innovation to manufacturing and distribution. In an industry such as cell and gene therapy, efficiencies like these can have live-saving impact.
The Future is Flexible
As an end-user, Dominique Casimir of Thomas Jefferson University (TJU) offered a unique perspective to the panel. In thinking about the future of healthcare—in terms of research as well as delivery of care—Casimir spoke to TJU’s approach, “Flexibility is a big play in regard to how we’re looking to design our spaces and upgrade our lab space. We want to make sure it’s much more collaborative and not just formed for one type of use.” In order to create these flexible spaces while also meeting market pressure, Casimir notes “ownership need to look at their building stock differently to see how it can service this growing demand.” Mayva Donnon seconded this point from an architectural perspective, noting “because historic industrial buildings often have 10-inch floor slabs and very high clear heights, there is a wide range of possibilities for how they can be purposed.”
Lab Space in High Demand
With Philadelphia rents for lab space at all-time highs and vacancies for lab space are at an all-time low, finding lab space in the Philadelphia market is incredibly difficult. Audrey Greenberg, Co-founder of Discovery Labs, notes that while a tremendous amount of space is under construction, it will not be enough to accommodate all of the demand, “we are at a 5x demand imbalance, growing to 50x in five years.” How can developers meet this demand? According to Greenberg, “innovator companies are very focused on capital preservation and optionality, coupled with speed to market. If you can meet these requirements, users will be very satisfied.” When it comes to the spaces themselves, floor loading capacity and slab height are important and emergency power is absolutely essential. Also highly sought after is space that accommodates growth in place—from a bench to a floor, to an entire building. In order to keep the companies that are born here, it is critical to be able to accommodate their entire life cycle.
Building Diverse Teams
With a significant volume of work in the pipeline to meet the aforementioned demand, developers are prioritizing diverse teams to compete for these projects. Mark Seltzer underscored Ensemble’s commitment to creating capacity for minority- and women-owned A/E firms in all projects; their objective is not simply to meet a participation goal, but to ensure substantive and meaningful roles for M/WBEs at every level of the project team. Through this approach, Ensemble hopes to help elevate M/WBEs so that over the course of a handful of projects firms are able to advance from subconsultants to the prime firm. It is important for the A/E community to take this approach seriously as they position teams to compete for these projects.
As this illuminating panel established, Philadelphia’s status as a life sciences hub is here to stay. We look forward to continuing the conversation around how design can support this thriving sector.