To hedge against slowing office market, Taconic turns to life sciences – Business Observer
Taconic Partners will shift from developing office space for technology companies to an increased focus on the life sciences sector as a hedge against work-from-home trends.
Taconic will spin off its life sciences portfolio into its own subsidiary, Improve search properties, which will begin to transform office buildings into laboratory spaces. Taconic plans to lease and manage more than $2 billion in life science assets across 1.4 million square feet, The Wall Street Journal reported for the first time. Executive Vice President of Taconic Matt Weirwho will lead Elevate, described the move as protection against a slow return to offices as life sciences workers have no choice but to perform in-person work.
“You can’t work from home when you’re a lab researcher,” Weir said Tuesday during a Commercial Observer roundtable. “So I think the big picture is that the diversity of economies is so important for cities. New York learned that after the Great Recession, after 9/11, it had dramatically expanded the tech business under Mayor Bloomberg. This has proven to have a major positive impact on the city, and I think life sciences is a great example of that.
Elevate Research Properties plans to exit the portal and spend more than $250 million to reposition office properties owned by a joint venture between Taconic and Nuveen Real Estate close to medical research centers such as Mount Sinai Hospital in the laboratory space, according to Log.
With the intersection of the life science industry and academia, National Institutes of Health funding and workforce trends, Weir said on Tuesday’s CO panel that there’s almost a “machine” behind the momentum in the lab space.
Taconic already has two life science centers: a 400,000 square foot, $600 million lab development at 125 West End Avenue scheduled for completion in the second quarter of 2023, and Hudson Research Centera 320,000 square foot building in 619 West 54th Street already rented to New York Stem Cell Foundation, Hiber Cell, C16 Biosciences and Rensselaer Polytechnic Institute.
Elevate also breaks down the details for 309 East 94th Streeta 200,000 square foot Class A research laboratory development Taconic and Nuveen bought for $70 million in December.
Meanwhile, occupancy rates in major office markets nationwide have stagnated at 43% over the past two months, according to research by Castle systemswhile the space for life sciences saw record demand.
Taconic isn’t the only real estate organization hoping to ride this wave. According to a study by CBRE. The firm also found that the the life sciences workforce grew by 79% between 2001 and 2021 against 8% growth for all occupations in the United States
Graduates in biological and biomedical sciences have doubled in the past 15 years, totaling more than 163,000 in 2020, according to CBRE.
Marc Hallum can be contacted at [email protected].