As UCity's Largest Lab Building Yet Approaches Groundbreaking, Accelerators Dominate Leasing

Millions of square feet are under development for life sciences in Philadelphia, much of it concentrated in the Philadelphia Navy Yard and the University City neighborhood. But for now, the most popular spaces being taken up by tenants seem to be on the smaller side.

Gattuso Development Partners has announced the first tenant at its soon-to-be-built lab development at 3200 Arch St. in UCity, which is likely to be the largest such building in Philadelphia when completed.

Gattuso's project, rising on Drexel University's campus thanks to a ground lease with the university, is 55% leased according to Gattuso co-founder and principal John Gattuso, though accelerator and serviced lab operator SmartLabs is the first tenant to be made public. The Boston-based company will take two floors at the 500K SF building, making Philly its third market after Boston and San Francisco.

The announcement comes on the eve of 3200 Arch's first presentation to the city's Civic Design Review on Tuesday. The 12-story project is large enough to automatically trigger the nonbinding CDR process, but it can proceed without zoning variances.

SmartLabs subleases space varying from a couple of benches to 30K SF at its properties, offering what it calls laboratory as a service. That includes arranging biowaste disposal, vivarium cleaning services, connections with vendors and other nitty-gritty details of running a business that entrepreneurs with science backgrounds may not have the capacity to manage themselves, as SmartLabs co-founder and CEO Amrit Chaudhuri told Bisnow in the past.

Though full-size tenants have signed leases at places like the Curtis in Old City and the soon-to-be-completed One uCity Square a few blocks west of the Gattuso project, tenants that sublease and manage lab space have been among the most aggressive expanders in the city in recent years. Incubator Biolabs expanded its footprint at the Curtis this summer, while innovation campus Cambridge Innovation Center is doubling its lab bench count this year at 3675 Market St. — also part of uCity Square, the latest in several expansions since it opened a handful of years ago.

While Brandywine Realty Trust is under construction on the first ground-up portion of its Schuylkill Yards megaproject in UCity and set to launch its second, neither has announced any tenants as of yet. Meanwhile, B.Labs, the accelerator space it built out of two vacated office floors at nearby Cira Centre, is fully leased. Brandywine plans to expand it to four more floors at Cira Centre when other office tenants depart, the Philadelphia Business Journal reports.

At 41st and Market streets, 3.0 University Place is also set to deliver in the next 12 months, with an entire floor dedicated to an incubator managed by Ben Franklin Technology Partners and another devoted to space for incubated companies to grow into.

Pennovation, the University of Pennsylvania's own combination incubator and accelerator, has expanded multiple times over the past decade and is set to do so again when Longfellow Real Estate Partners breaks ground at the complex in the next year or two.

Growing a life sciences startup, especially in the relatively new fields of cell and gene therapy, means navigating not just the complexities of the science, but the arduous process of raising private capital after basic research — often funded by sources like the National Institutes of Health — has demonstrated a proof of concept but before approval of a therapy and its subsequent commercialization. 

That difficult period, known in some circles as the valley of death, is what nearly every cell and gene therapy company in Philadelphia is either in right now or will be in the next couple of years; only Spark Therapeutics has achieved commercialization on a gene therapy to date.

While speculative projects for larger tenants and biomanufacturing, like what Gattuso itself is building at the Navy Yard, are underway in anticipation of more therapies hitting that crucial milestone, life sciences uses tailored to earlier-phase companies seem to be meeting the market where it is right now.