Alexandria Real Estate Equities has spent the last two years locked in a legal battle with New York City over a project that would add 550K SF to its floundering life sciences real estate market.

Now, the developer claims the government is working to undermine the firm’s existing campus on the East Side of Manhattan. But in multiple rulings this year, judges have sided with the city.

At the center of the suit is the Alexandria Center for Life Science, a $1.5B research park that the REIT alleges the city is trying to evict it from.

In 2006, Alexandria reached an agreement with the city to lease the ground between Bellevue Hospital and NYU Medical Center at 430 and 450 E. 29th St. and subsequently started construction. The project’s East Tower was delivered in 2010, followed by the West Tower in 2013, together totaling nearly 730K SF. 

When the campus first broke ground, New York City’s life sciences ecosystem was essentially nonexistent. In 2016, the city made a $1B commitment to growing the sector through an initiative called LifeSci NYC. 

Since then, lab inventory has ballooned to 3M SF, according to a report by Savills, but the development has suffered from a rapid decline in venture capital and leasing. The city's vacancy rate was 32.5% as of the second quarter, although Alexandria's property was 95% leased at the end of last year. 

In 2018, ARE opted to build a third building, which would be known as the North Tower, bringing the campus to 1.3M SF of office and laboratory space. The company had sunk $183M in preconstruction costs into the parcel as of June 30, according to Securities and Exchange Commission filings.

Seven years later, Alexandria still hasn’t begun construction. The reason is being disputed by the parties.

In court records, the city alleges that Alexandria failed to close on the option by the deadline of Nov. 3, 2024, but has also refused to walk away. The city also claims it is entitled to retain a $5M security deposit as part of the agreement, along with at least $3.8M in damages.

In August 2024, three months before the deadline, ARE sued the New York City Economic Development Corp. and NYC Health + Hospitals, alleging the city deliberately strung the developer along to shift the cost of building a floodwall onto the project, delaying its construction in the process. Earlier this year, a judge threw out Alexandria’s accusations that the city acted in bad faith. 

The dispute over whether Alexandria has the right to develop the parcel is ongoing. 

As the case slogs through court, the city sent Alexandria a default notice in April, saying the developer failed to provide certain disclosures, including sublease, tax and financial information, required by the ground lease. If Alexandria failed to cure the default, the city has the right to terminate its leasehold. 

In its counterclaims, filed in April, the city said Alexandria chose not to close on the deal because of weakness in the market. Court records reference ARE’s original complaint, where the developer admitted that it “miss[ed] the life science bull market” and that there has been “a material overbuilding of life science space in NYC.”

NYCEDC declined to comment on ongoing litigation. H+H and Alexandria didn’t immediately respond to Bisnow’s requests for comment.

Alexandria replied to the default notice by filing another lawsuit. 

“The Default Notice is not an isolated dispute over disclosure,” said the complaint, filed May 12. “It is one front in a coordinated, multi-pronged campaign by HHC and EDC to devalue ARE’s leasehold and force its forfeiture.”

Alexandria alleges that the city seeks to use the company’s disclosures to divert its subtenants to competing city-backed life sciences projects, including SPARC Kips Bay and the Brooklyn Navy Yard.

The complaint cites an example of an unnamed tenant who decided to relocate to the Brooklyn Navy Yard. When asked, the tenant allegedly said it “got an incredible deal to move there” and “there was just no deal like this.”

Alexandria added that the city has selected other firms to develop large-scale facilities, providing tax incentives to do so.

“These initiatives reflect a sustained effort to seed competing developments — many with limited demonstrated demand,” the complaint says. “None of their efforts are consistent with prevailing market realities, as demand for life sciences space is currently muted.”

At the same time, the city has “grossly inflated” ARE’s payment in lieu of taxes, according to the complaint. 

Alexandria asked the court to approve a temporary restraining order and Yellowstone injunction to pause the clock on the default notice and stop the city from taking back the property. The court denied both, and an appeal filed by ARE is pending. 

The Pasadena, California-based company has minimized its footprint elsewhere in the city. In January, it sold a three-story building in Long Island City for $34.5M, a $40.5M discount from its 2018 purchase price.

Its business has suffered amid the broader slump in life sciences real estate. Its occupancy fell from 91% to 87% between December and June, and its quarterly revenue fell to $663M in the second quarter from $762M a year prior.