Chicago Just Missed Out On Becoming A Top-Tier City For Life Sciences, But The Next Few Years Could Change Everything
Small life sciences companies abound in Chicago, many nourished by the region’s top universities and its global pharmaceutical firms, but all face a major obstacle to growth: The city currently does not have much lab space.
That hard fact leads many homegrown life sciences startups to eventually flee to coastal cities like Boston, San Diego and San Francisco, all stocked with millions of square feet of modern laboratories.
The lack of lab space kept Chicago out of JLL’s new list of the top 10 U.S. life sciences markets. But all those homegrown entrepreneurs could provide developers with a ready source of demand for the 878K SF of lab space in three buildings currently under construction and the nearly 1.6M additional SF that has been proposed or is in the planning stages, JLL researchers told Bisnow. Sleek new life sciences buildings in rising neighborhoods such as Fulton Market could help the city crack the list and become a true industry hub.
“I can see us breaking into the top 10 in the near future,” JLL Managing Director Paul Giannopulos said.
Existing lab space in Chicago totals about 1.1M SF in 11 buildings, he added, so the buildings now underway will nearly double the rentable lab space. That would still leave Chicago far behind life sciences giants like the Boston metro, which offers around 30M SF, with another 8M SF set to deliver in 2022. But even a few new modern buildings will change the calculations for local firms.
“We’re already starting to see that small innovative companies are growing and staying here,” Giannopulos said.
Developer Trammell Crow opened this year its 300K SF 1375 West Fulton St., a 14-story building in Fulton Market that’s part of what will eventually be a 725K SF life sciences campus, and it’s already having an impact. Life sciences business incubator Portal Innovations agreed to occupy 46K SF by Q1 2022, and provide lab and office space to local startups along with seed capital and management expertise.
The startups assisted by Portal Innovations typically have well-developed business plans and the ability to attract additional funding, according to Giannopulos.
“They don’t just let any company into their incubator,” he said. “Before, these groups had to leave Chicago if they wanted to grow because there wasn’t the space.”
Trammell Crow broke ground in July 2020 on 400 North Aberdeen St., the 425K SF second phase of the campus, and plans to finish that laboratory facility by early next year.
Other local developers also see opportunity in the sector.
“Chicago is on the verge of becoming a top-tier market in life sciences,” according to Dr. Suzet McKinney, director of Sterling Bay’s life sciences division.
Sterling Bay decided to make life sciences a key component of its Lincoln Yards development, a planned 10M SF mixed-use complex on Chicago’s North Side, she added. It will break ground in the next few weeks on Ally at 1229 West Concord, a 320K SF building dedicated to life sciences.
It will be the first building completed for Lincoln Yards, but it’s not Sterling Bay’s first foray into life sciences. In 2019, the company began renovating 2430 North Halsted St. in Lincoln Park, formerly the Stanley Manne Children's Research Institute, into a 125K SF life sciences hub. Now called The Labs, it’s all full, McKinney said. The majority of space is taken by startups or emerging firms that could graduate into the future hub at nearby Lincoln Yards.
“That facility was Sterling Bay’s first entry into the life sciences space, and we essentially used it as a test case,” McKinney said.
Both McKinney and Giannopulos point to the Chicago region’s universities as the most important source of strength for local life sciences. According to JLL, every year more than 1,000 people in the area get a life sciences Ph.D. That’s roughly one-third the total for Boston, but it does land Chicago in 12th place nationally, and some of the firms with roots in local universities are attracting notice.
Vanqua Bio, a biotechnology startup focused on the research and development of novel therapies for neurological disorders such as Parkinson’s, signed a 4K SF lease at The Labs in 2020, and last week it secured $85M in funding, McKinney said. It was started in 2019 based on research conducted by co-founder Dr. Dimitri Krainc, professor and chairman of Davee Department of Neurology at Feinberg School of Medicine, Northwestern University.
Local successes like that are bound to attract notice, and further encourage ambitious firms to keep their homes in Chicago, Giannopulos said. But the big test will be whether the city can not only nurture local firms like Vanqua Bio, but also attract the big established players from the coasts.
“That’s still an unknown,” he said.