National Life Sciences Giant Longfellow Agrees To Partnership With UPenn To Develop First Philadelphia Project
Philadelphia is attracting national developers to its life sciences market at a rate its office market never dreamed of matching.
Longfellow Real Estate Partners, the largest private developer of life sciences space in the U.S., announced plans for its first project in Philadelphia on Thursday. The Boston-based company revealed renderings for a 455K SF development on a vacant parcel within the University of Pennsylvania's Pennovation Works campus in the Grays Ferry neighborhood.
Longfellow is leasing the ground at the 3401 Grays Ferry Ave. site from UPenn on a 75-year term. It plans to spend $365M on the construction of two lab and research buildings totaling 387K SF, with a 68K SF biomanufacturing building connecting the two. Construction financing has yet to be determined, but groundbreaking is scheduled to take place next summer on a speculative basis, with completion expected by the end of 2025, a representative for Longfellow told Bisnow in an email.
UPenn selected Longfellow at the end of a competitive request for proposals process to develop the site as part of the 23-acre Pennovation Works campus, which consists of the Pennovation Center, a building with a mix of coworking, lab incubator and light manufacturing space; a 65K SF lab building with modules for early stage companies; and a three-story office building for non-life sciences users.
With a nearly 15M SF portfolio of life sciences properties across the Boston, San Francisco, Silicon Valley and North Carolina Research Triangle markets, Longfellow is the asset class's largest private owner in the U.S. and has partnered with academic institutions in its markets before Philadelphia. UPenn, together with Drexel University, Thomas Jefferson University and Children's Hospital of Philadelphia, represents the knowledge core of what CBRE ranked as the eighth-most-fertile market for life sciences talent in the country, according to data it released Friday.
Philadelphia has seen confirmation several times over in the past 12 months that its national profile has risen, as large out-of-market companies either acquired or planned developments in the city for the first time. Those include:
— Oxford Properties Group, which signed on to be the majority equity partner for the ongoing life sciences development efforts by master developer Ensemble/Mosaic at the Philadelphia Navy Yard.
— Chicago powerhouse Sterling Bay, in partnership with Harrison Street Real Estate Capital and New York-based Botanic Properties, which plans to develop a 13-story lab building on Chestnut Street in University City.
— Breakthrough Properties, a joint venture of Tishman Speyer and Bellco Capital, which purchased a row of commercial buildings on the western side of Center City with plans for a life sciences overbuild.
Locally grown Gattuso Development Partners also has an ongoing project at the Navy Yard and has announced another lab building in University City. Gene therapy darling Spark Therapeutics has announced plans for a 500K SF biomanufacturing center on land owned by Drexel, though it has yet to select a developer.
Across the Schuylkill River from Grays Ferry, PIDC is actively seeking developers for a 40-acre site it has dubbed the Lower Schuylkill Innovation District, which could deepen the city's life sciences pipeline even more. With so many projects and plans announced but yet to begin construction, how much of the pipeline will actually deliver is a question on the minds of many in the city's business community.
In the near term, funding for life sciences companies has dropped off sharply this year as macroeconomic conditions have turned for the worse. After bringing in nearly $1B in venture capital funding in 2021, Philly is on a much slower pace for VC funding through one quarter of 2022, with less than $200M raised, CBRE reports.
Six of the seven markets ranked above Philadelphia for life sciences talent in CBRE's report have experienced similarly steep drop-offs in VC funding this year, with seventh-ranked Los Angeles bucking the trend.
Longfellow is betting on Philly's top status as a winner of funding from the National Institutes of Health, as well as its high talent ranking and strong institutions, to keep the market fertile for potential tenants if and when its Philadelphia project gets built, a spokesperson told Bisnow.