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How Life Sciences are Strengthening Commercial Development in NYC

As the future of commercial development in NYC remains uncertain, an unlikely industry may contribute to its revival—the life sciences industry. 

In the aftermath of the pandemic, hospitals and pharmaceutical companies have had to staff up, innovate, and work rather quickly to secure public health. It’s been imperative that they do so in locations where Covid and its variants have hit the hardest, such as NYC.

Both public and private investment have poured into life science-related developments. The hope is to improve public health and brand NYC as one of America’s premier hubs for life sciences. 

Despite growing support, commercial real estate projects dedicated to life sciences enterprises face unique barriers. There’s the physical challenge of adapting building structures to fit the spatial needs of life sciences, which are increasingly particular. There’s also the fiscal challenge of funding these expensive developments. 

However, substantial financial and societal benefits are also associated with developing real estate for life sciences organizations. Depending on what kind of investor you are and where you focus, venturing into real estate development for life sciences enterprises may be a wise and profitable move. 

Opportunities for Real Estate & Life Sciences

Marks Paneth Real Estate recently hosted a virtual seminar, “How Life Sciences Can Drive New York’s Real Estate Reinvention.” In the seminar, co-partners Neil Sonenberg and Michael Siino explored unique opportunities presented to real estate investors and developers in the life sciences field. 

With growing optimism spreading throughout the NYC business environment, joining two profitable sectors like real estate and life sciences seems inevitable. In his opening remarks, Sonenberg noted that investments on behalf of public and private organizations are forming a “renaissance in making New York a premier hosting hub of the life sciences.” The partnership between life sciences enterprise and real estate development is desirable for two specific reasons: geography and access to capital.

Geographic Advantage

New York’s proximity to an educated workforce and key facilities needed for life sciences’ work make NYC a prime location for life sciences enterprises. It’s understandable that life sciences entities would want to brush shoulders with academic institutions and labs, given that much of their work is affected and informed by research.

An NYC location also streamlines the hiring process for life sciences organizations, seeing as though the industry requires specialized talent, including; doctors, pharmacists, epidemiologists, etc. 

Access to Financial Capital

Aside from academic knowledge, New York City also provides the life sciences industry access to financial capital. As the heart of the country’s financial sector, it’s no wonder why various businesses prefer to be located in the Big Apple. This is especially important for the life sciences industry because of how much capital is needed to fund life sciences start-ups. 

Since 2016, there’s been considerable venture capital directed towards health entrepreneurs. Investors are well-aware that some of the most important pharmaceutical breakthroughs have come from health start-ups in recent history. This has influenced a shift from investing in only big-name health companies to investing in smaller health-related businesses. 

An Expensive Investment with Unique Incentives

Still, investing in the life sciences industry can be quite daunting, especially for new investors. Many facilities would require totally new construction or specified accommodations to existing buildings—both of which increase the price tag on any given development. Take for instance, a lab where dangerous chemicals would be housed; the lab wouldn’t be built next to a shopping center or residential area. It’s likely to require its own building altogether.

However, investors still see potential in life sciences structures because of the tax benefits associated with such developments. 

Although the initial costs would be higher than other projects, a life sciences development welcomes tax benefits designated specifically for labs, incubators, and other health sciences-related spaces. Developers and investors would be able to apply for these tax benefits when implementing the build-from-scratch model and upgrading an existing space. 

The tax benefits associated with life sciences projects can trickle down to shareholders and members and owners and tenants. It’s a win-win situation for more than just the developers and investors. 

Vivian Tejada is a freelance writer and small business strategist based out of Providence, RI. She specializes in writing SEO blogs for clients in the real estate, travel, and hospitality sectors. She’s an avid traveler who’s lived abroad in Cuba and Brazil. The best part about being a freelancer for Vivian is the ability to be location-independent and work with clients she vibes with. When she’s not working you can find her at the gym, at a family cookout, or at brunch with her girls.

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