Manufacturing Is The Missing Piece For Philly's Life Sciences Industry

The growth of the life sciences industry in Philadelphia has only accelerated since the onset of the coronavirus pandemic, but in order for it to continue along its trajectory, a major piece of the puzzle is missing.

Laboratory and research space in Philadelphia is 98.6% occupied, Philadelphia Department of Commerce Director of Life Sciences & Biotechnology Sam Woods Thomas said on Bisnow’s Philly Life Sciences Update webinar Nov. 19, but the area is severely lacking in manufacturing for the advanced cell and gene therapies for which the city has become known.

Large-scale biotechnology manufacturing facilities are operational in several markets from the mid-Atlantic to the West Coast — “basically everywhere but Pennsylvania,” LucasPye Bio founder and CEO Tia Lyles-Williams said. Philly is crying out for even more small-scale manufacturing, as Chinese contract development and manufacturing organization WuXi Apptec’s rapid expansion in the Philadelphia Navy Yard has proved.

“I am most excited about Philadelphia transitioning to that small-scale manufacturing space for drugs, medical devices and software,” Lyles-Williams said. “Getting into that area offers investors [the chance] to see more viability in their investment. … It helps these companies attract more investors, and [it gets] companies to grow faster because they have better access to manufacturing, which allows patients to get treatments faster.”

In the 12 months culminating in this year’s second quarter, Philadelphia brought in just under $1B in venture capital funding for life sciences, according to a CBRE report, and has won $1.2B in grants from the National Institutes of Health, said Frank Angelini, the national science and technology practice leader at AKF Group. That funding, combined with the paralyzing uncertainty the pandemic has wreaked on the office market, led Brandywine Realty Trust to pivot a planned office/multifamily mixed-use project to a 500K SF life sciences building at its Schuylkill Yards development complex.

Tenants are rapidly filling what life sciences lab/office space comes available and asking for more. One uCity Square, the next phase of Wexford Science + Technology’s joint venture with Ventas (now co-owned by Singaporean sovereign wealth fund GIC), has had early leasing success soon after breaking ground. Spark Therapeutics, which Woods Thomas called the “tip of the spear” for Philly’s cell and gene therapy success, has already outgrown its new headquarters in Schuylkill Yards, forcing Brandywine to convert two floors at nearby office tower Cira Centre to lab space.

Cell-therapy firm Imvax had Keystone Property Group convert part of The Curtis in Old City from office to lab space and is already working on using the former publishing plant’s large floor plates and empty shafts to add clean rooms.

Incubation and accelerator spaces have been consistently full in uCity Square, a bit farther west at University Place and in Pennovation Works to the south in Grays Ferry, Woods Thomas said. In order to capitalize on the continued growth from well-capitalized companies and keep startups from leaving the market as they expand, all of those manufacturing needs will need to be met.

“To accommodate these companies from the incubation phase to the manufacturing phase, we need to think as a city about how to do that,” Woods Thomas said. “We really need to give these companies room to grow, and we’re beginning to do a much better job now.”

When Iovance Biotherapeutics completes the construction of its lab and manufacturing building at the Navy Yard, that will free up some manufacturing space at Wuxi’s facilities, and some former industrial buildings in North Philadelphia are garnering interest, Angelini said. 

Adding manufacturing capability wouldn’t only benefit the companies that need it, panelists agreed. The job growth that manufacturing promises is not restricted to those with graduate degrees, like so many research and lab positions are. That would present an opportunity to shore up a portion of the industry that Woods Thomas acknowledged is lacking.

“I’m excited for Philly to move into manufacturing,” Woods Thomas said. “One of the biggest criticisms about life sciences is that it’s not an equitable industry, and it really is turning into an equitable industry. These are good jobs that don’t require a college degree: manufacturing jobs, which is something that we are all in favor of.”

Precious few places in Greater Philadelphia offer the specific training courses required to certify workers for Food and Drug Administration-approved manufacturing environments. With more investment from the city’s “eds and meds” and the companies in need of said workforce, that could add a pipeline to quality jobs that city officials demand of nearly every major development project in this day and age.

“The challenge is getting the institutions and facilities necessary to train these people up,” Woods Thomas said. “And it’s getting the buy-ins from the larger institutions and companies to say they are willing to work with the workforce in Philly that is eager and ready to go.”

Since demand is all but assured, one major hindrance to the development of manufacturing for Philly’s life sciences industry is the pattern by which the real estate market in the city tends to operate. Apart from apartment buildings and distribution centers, Philadelphia developers have struggled to finance speculative construction projects, and Angelini reports that prospective life sciences tenants’ most common question is, “How soon can we move in?”

“We’ve got this kind of Kevin Costner thing going on where we know that if you build this space, the scientists will come,” Woods Thomas said. “A lot of developers are reticent to build a large-scale space like a manufacturing facility at, say, the Navy Yard, because they don’t have guarantees that tenants will come. Meanwhile, businesses are reticent to sign leases until they see shovels in the ground.”