The cost of converting the building shows the challenge of creating lab space in Manhattan
Deerfield Management Co. will spend $635 million to buy and convert a Park Avenue South building into lab space and offices for budding life sciences companies.
The Manhattan investment firm purchased 345 Park Ave. South for $345 million earlier this month and will spend about $290 million on renovations at the building, which was previously home to advertising agency Digitas. It is expected to open the office in early 2021.
Deerfield is interested in making the building a place where university researchers with promising discoveries can come to develop their companies near the investment firm, said James Flynn, managing partner at Deerfield. It has collaborated with researchers from Columbia, Cornell and Rockefeller universities as well as Memorial Sloan Kettering Cancer Center and out-of-town institutions such as Harvard, Vanderbilt and Johns Hopkins.
Want to publish your own articles on DistilINFO Publications?
Send us an email, we will get in touch with you.
Chicago-based Matter will run a health technology incubator on the site, connecting life sciences companies, researchers and investors from the two cities.
The 300,000-square-foot office, north of Madison Square Park, is close to transit hubs and can attract talent in a way that has proved challenging for other locations, Flynn said.
“A lot of the sites that are zoned for labs are really hard to get to,” Flynn said. “One of the things New York needs is talent. It’s got great academic discoveries, but it doesn’t, like Boston, have all the executive talent you need to incubate these companies. Some of the locations that are hard to get to, it’s also hard to attract talent there.”
The $290 million price tag to convert the building shows why developers haven’t been eager to build labs in Midtown. Flynn said the investment will include an HVAC system that can provide the needed level of air turnover as well as cabling to support companies’ use of data. Floors might also be added to the property.
“We’re not looking at the building as a profit center in the same way a real estate developer would,” Flynn said. “We’re looking at it more as a way to support the investment business. It doesn’t put the same kind of pressure on us to charge higher rents.”
New York City has sought to propel its life sciences industry to diversify its economy and create high-paying jobs. Mayor Bill de Blasio first announced a plan in December 2016 to invest $500 million over a decade in the sector, and Gov. Andrew Cuomo released a $650 million biotech plan the same month.
The Economic Development Corp. supported Deerfield’s project with about $90 million in tax subsidies throughout 20 years if the property hits certain benchmarks on building the labs and picking certain types of tenants, Flynn said. The companies at the campus are expected to create 1,400 jobs.
“The shortage of commercial laboratory, engineering and computing space has prevented us from developing cures for some of the most pressing medical conditions here in New York and nationally, but with LifeSci NYC we are changing that quickly,” EDC President and CEO James Patchett said in a statement.
The city’s plans for a life sciences hub have been slow to develop. The EDC has yet to designate a location for it. In January 2018 it offered property and $100 million to interested developers in the Kips Bay area of Manhattan, East Harlem and Long Island City. A spokeswoman for the EDC said the Deerfield project was proposed in response to its request for expressions of interest but will not use city funds or property.
“Long Island City is a great place, and we looked there, but you’re really far from some of the things you want to flow through there” such as universities, Flynn said.
Date: October 01, 2019
Source: Crain’s New York Business
