A pair of major developments on opposite sides of downtown Baltimore are striving to support growth of the region’s life sciences/biotech sector. The initiatives, however, face softened market conditions.
In November, state and city governments announced a $2.2 million loan package for Connect Labs – 35,000 square feet of pre-built laboratories, support services and office space inside the 4MLK tower at University of Maryland’s Biopark in West Baltimore.
A joint venture between Wexford Science & Technology and UMD, Connect Labs is designed to support small and emerging technology firms and researchers. With lease spaces ranging from 500 square feet to 2,000 square feet, its design is tailored to companies that are too large for technology accelerators but not large enough to build out their own labs. Wexford expects the facility to attract emerging companies in life sciences, computational engineering and the energy industry.
“We’re building out a more dynamic and inclusive life sciences ecosystem that supports entrepreneurs and attracts national attention to Baltimore,” Colin Tarbert, President of the Baltimore Development Corporation, said in a statement.
“We have tremendous innovation coming from our universities and our private sector, and this new space will help those ideas grow from the lab to the marketplace,” Maryland Commerce Secretary Kevin Anderson said in an announcement of the funding package.
The goal of the eight-story, 250,000-square-foot MLK tower is to become an epicenter of biotech researchers, innovators, experts and entrepreneurs, and foster companies’ collaboration with University of Maryland Baltimore and the University of Maryland Medical Center. Its buildout will include custom and speculative labs, manufacturing space, offices and communal space.
Meanwhile, Johns Hopkins University is preparing to break ground in 2025 on its new life sciences center in East Baltimore. The 500,000-square-foot building will house 920 scientists, 1,200 lab benches and several hundred graduate students. By bringing together researchers from five JHU schools (medicine, nursing, public health, engineering, and arts and sciences), the facility is designed to support biomedical innovations and spinoff companies.
The Baltimore-Washington Corridor, which ranks as the third largest biopharma cluster in the country, has seen numerous successful companies spin off from academic research and collaborations. Maryland is currently home to about 500 life sciences companies.
“Dr. Bert Vogelstein’s lab at Johns Hopkins spins out a lot of very successful companies,” said Matthew Seward, Senior Director at Cushman and Wakefield, and a member of the company’s life sciences practice group. Seward handles marketing and leasing for the Johns Hopkins Science and Technology Park.
“One example of a recent success story is Haystack Oncology,” Seward said. “They started out at Fast Forward, the accelerator at Johns Hopkins research park. After they received their Series A financing, they outgrew the Fast Forward space, and relocated to City Garage, which is adjacent to the Baltimore Peninsula. Hopefully, that leaves room at Fast Forward for the next successful spinoff company from Johns Hopkins.”
Those spinoff success stories and life sciences developments, however, don’t necessarily mean that greater Baltimore is about to see a major uptick in the life sciences real estate market.
Across the country, CRE professionals have seen occupancy and rental rates decline in life sciences spaces over the past year. Nationwide, the life sciences vacancy rate reached 30 percent in the third quarter and rents dropped 9 percent to equal rents at the beginning of 2022, according to analysis by JLL. Furthermore, JLL projected those numbers will continue to soften in the foreseeable future as the market contends with an oversupply of available space.
Increased vacancies nationwide, according to market analysis by Cushman & Wakefield, have been driven by two factors — an influx of available sublease space and the delivery of some new construction projects that are not leased.
“This trend should start winding down in 2025 as the life sciences construction pipeline contracts and occupiers absorb some of the current vacancy,” the Cushman & Wakefield report stated.