Here’s How Cities Woo Biotech Amid Housing, Regulatory Hurdles
Government intervention isn’t anything new in life sciences. Expansive federal funding through National Institutes of Health investment has arguably been one of the industry’s main catalysts, and government money helped boost mRNA technology during the race for a coronavirus vaccine.
But today, it has become much more localized.
City and state investment in the industry has become more sophisticated and widespread. Despite some of the challenges, such as increased pressure on housing affordability, that come with the industry’s high salaries and expansive space needs, cities are looking to invest in talent, encourage life sciences-led multi-use development and bring biotech bucks home.
“They saw our industry was really holding up the economy,” said Melanie Cohn, senior director of regional policy and government affairs at industry group Biocom California.
She said that while not all cities are doing this, there are “absolutely” more localities than ever competing to land labs and life sciences development.
Some of the largest deals in the life sciences space in the last few months are an Advanced Research Projects Agency for Health federal research hub locating in Dallas, the Texas Research Quarter project seeking approval in nearby Plano, Texas, and Atlanta’s forthcoming Science Square project. They have all advanced due to aggressive action by local governments to court and incentivize development.
There has been a clear uptick in local government incentives and support in recent years, Cohn said. Pre-pandemic, there were a handful of clear local leaders in terms of offering incentives to boost their biotech ecosystems. But more and more municipalities became focused on life sciences, noticing it as a growing sector during its early pandemic expansion. Its long-term leases and sense of place are unlike tech firms, which were much more likely to pack up and relocate or go remote. And the politics of the place don’t matter.
“One of the places that has done the best work with us to attract biotech is Berkeley,” Cohn said. “And you really wouldn’t necessarily think Berkeley would be friendly to business. But they released a whole set of changes called Keep Innovation in Berkeley.”
There has been a slowdown in the industry this year, but experts characterize this year’s funding drop from the 2022 peak as more of a correction than a retraction.
Lots of new developers have entered the industry, Cohn said, and larger firms and Big Pharma companies are seeking to expand. In response, municipalities are reforming zoning codes to encourage more development, like in Vacaville, California, a Bay Area city that fast-tracked biotech permitting to bring in more biomanufacturing.
Often, Cohn said, cities don’t know what outdated regulations pose a problem, which is where groups like Biocom come in. The city of Pasadena, California, reworked its hazardous materials reporting rule, which happened to be much stricter than the state standard. Relaxing the rule made it easier for biotech firms to operate and encouraged more to relocate.
“It's not something that the city would have known was a problem,” Cohn said. Biocom brought it to the city’s attention in March, and it was just changed earlier this month. Now, Biocom is working on an additional suite of zoning changes and tweaks to make it easier to develop labs in Pasadena. It’ll take years for new buildings to open based on these changes, but for now, it’s important to let the industry know the city is open for business.”
While most cities competing for more lab space tend to be near or adjacent to existing hubs, seeking spillover development and new real estate projects, others, especially larger cities, tend to focus more incentives on spurring new innovation and business development.
New York City has spent a decade investing in infrastructure and talent to become a larger biotech hub, including incubator spaces and the Science Park and Research Campus at Kip’s Bay. Its economic development office has also made an effort to build out lab space and attract more tech-forward biotech firms, said Susan Rosenthal, senior vice president of life sciences and healthcare at the NYC Economic Development Corp.
State programs such as the Excelsior Jobs Program, which provides tax credits for those relocating to the state, and the New York State Biodefense Commercialization Fund help complement the work of the city’s economic development arm, which doubled its life sciences budget in 2021 with plans to invest $1B total. Mayor Eric Adams’ City of Yes effort to alter regulations to encourage faster development also will have life sciences components, Rosenthal said.
“I would say that it is intense, the competition we do see across the region,” she said. “We want to make sure companies that start here stay here and grow here.”
Incentives and regulatory support help. But it is really about where companies can find talent, Rosenthal said. New York City is about to pass 20,000 jobs in life sciences and over 500 companies.
But that effort won’t work if the talent has nowhere to go. Cohn said that one of the issues challenging cities seeking to attract labs is housing, specifically missing-middle and moderate-income housing, which is in short supply. Over the last two or three years, she said it has been a universal challenge in big biotech hubs.