Can Philly Be A Model For Chicago's Emerging Life Sciences Industry? If So, It Will Start With Science

It has been a successful number of years for Philadelphia’s life sciences market, and CRE heads in Chicago aren't just noticing — they are looking to replicate it. 

With new life sciences towers and spaces dedicated to biotech coming online, Chicago boasts major improvements in accommodating an industry that has historically been starved for Class-A lab space.

Now, some think Chicago is poised to become the next Philadelphia if it looks to the city as a model for its emerging market, though it is hard to predict where the chips will fall, with real estate professionals noting it is up to advancements in science and technology to lead the way.

Adopting a Philadelphia model, which values extensive collaboration across the entire ecosystem and coalesces around a particular expertise — gene and cell therapies, in Philly's case — could spur growth within Chicago’s emerging life sciences market, Sterling Bay Director of Life Sciences Suzet McKinney told Bisnow in an interview this month.

“Chicago, which has a wealth of science-based resources, such as research hospitals, universities and leading pharma companies, will continue to see industry growth but will, nonetheless, have work to do growing its life sciences ecosystem,” McKinney said. 

That ecosystem goes beyond life sciences startups and incorporates hospitals and research being conducted out of universities to form collaborative partnerships across the market that drive industry growth.

Philadelphia, which ranked No. 8 among the top 25 life sciences research talent clusters in CBRE’s 2022 Life Science Research Talent report, made a name for itself in 2017 after the Food and Drug Administration approved the first gene therapy process developed by Spark Therapeutics for treating a genetic condition.

This followed the FDA’s approval of Novartis’ breakthrough, the first cell therapy for pediatric and young adult patients with certain forms of leukemia, which originated from the research of Dr. Carl June's laboratory at the University of Pennsylvania.

Those two occurrences were the catalysts that triggered Philadelphia’s boom, according to Scott Mazo, founder and CEO at development firm University Place Associates. Mazo’s firm is finishing up a cell and gene therapy building expected to be ready for leasing in the next two months.

He said if Chicago wants to grow its market, it all begins, first and foremost, with science. Chicago ranks 10th on the CBRE list of the top 25 talent clusters.

“Philadelphia was definitely driven by the cell and gene therapy science, period, so I think it’s really about energizing scientists,” Mazo said. “I don’t know how you create that in a market. It’s really about the particular strengths in the science areas of the city’s major universities.”

While Chicago hasn't had one specific breakthrough, many of the city’s builders pivoted from office development to the life sciences sector over the past two years in light of office shrinkages and an uptick in demand for healthcare-related research due to the coronavirus. 

Progress is underway on several major projects, including Farpoint’s Bronzeville Lakefront Development, Sterling Bay’s Lincoln Yards and Related Midwest’s The 78. Google’s rumored deal to lease about 200K SF at Trammell Crow’s new Aberdeen building, along with the emergence of Fulton Market as a life sciences hub, has kept the city’s name in the mouths of companies across the nation, though interest in Chicago as a market has largely been local. 

But that could change. More than 20 venture capital-backed life sciences firms were founded in the city over the past few years, Paul Giannopulos, senior managing director of JLL, told the Chicago Tribune, suggesting some gathering energy.

Historically, Chicago was focused on major mature pharmaceutical companies on the North Shore, according to Chicago-based Newmark Associate Director Jack Trager. He said the pandemic marked a clear turning point.

“In order to foster these young and middle-market companies, Chicago needs to create an ecosystem for these companies to thrive, and that’s where these developers have seen the opportunity to assist and draw companies here locally," Trager said. "Not only companies that are mature and are Fortune 500 but really the middle-market and startup companies.”

Trager said it “remains a bit early to declare a single industry our magnet” but pointed to the city’s diversity in corporations as a good sign for the market.

Attracted by the nation’s third-highest concentration of science and engineering graduates from schools like Northwestern University and the University of Illinois, industry insiders said it is vital the city retains a talent pool of graduates dedicated to staying in the city after college to help grow its economy.

Though the city’s cost of living relative to its coastal partners remains a selling point, the perception of Chicago as especially dangerous and crime-ridden stands to be a hindrance in retaining top talent, according to McKinney, who said the business community needs to get more aggressive in collaborating with media partners on how they report on issues in Chicago.

Mazo said a similar narrative followed Philadelphia over the years before cell and gene therapy discoveries created excitement that helped adjust perception.

“Philadelphia’s Center City was going through a lot of the same things Chicago’s was," he said. "When I look at Philadelphia and the research triangle, all of that improvement happens when science happens. When new companies are being formed, the interest in real estate follows."