Locally born life sciences companies no longer have to worry about a lack of high-quality lab space forcing them to leave town as they grow, thanks to developers racing to build it during the COVID-19 pandemic. Where those companies decide to go in the Chicago area is a separate issue, and one that is shaping the next chapter of the city’s evolution into a biotech and pharmaceutical research hub.
While more mature life sciences markets like Boston, Raleigh-Durham and San Diego feature centralized clusters of startups, well-established companies and lab buildings all close to academic institutions that churn out research, Chicago’s growing biotech landscape thus far has been anything but concentrated. New lab space in the area has been scattered by geographically separated universities and where real estate developers want to build, fragmenting the momentum among city and suburban nodes that all show promise, but have little connective tissue.
Much of the recent growth has been close to downtown, where Sterling Bay broke ground in October on a big lab building at Lincoln Yards and Northwestern University spinout Vanqua Bio inked a lease for 25,000 square feet of research space in the Fulton Market District, just blocks from where a new 425,000-square-foot lab building is slated to open early next year.
Yet there are also many green shoots in the suburbs. In Skokie, Chicago-based Singerman Real Estate paid $75 million in October for the 286,000-square-foot lab portion of the Illinois Science & Technology Park—almost the same price the entire 23-acre campus sold for four years ago—and immunotherapy company Cour Pharmaceuticals last month more than doubled its footprint on the campus to 25,000 square feet. In Lake County, the area’s historical hotbed of pharmaceutical giants, Rosalind Franklin University last month snagged $2 million from the state of Illinois to fast-track the buildout of a life sciences startup incubator with lab space for both faculty and commercial tenants.
The dispersion amounts to a new real estate challenge facing the local life sciences sector: A geographically diverse framework and lack of market coordination that could play a role in how quickly Chicago’s star rises in the eyes of the bioscience community. Industry experts say it could stifle progress in some ways as companies crave a larger campus setting with like-minded scientific peers, yet it could also create a unique offering with multiple locations and rental price points to serve a wide variety of researchers.
“In an ideal world, it would be centralized. Everyone would be right there, and you could scale and grow and that would be the place to be,” says David Saad, an executive vice president at real estate services giant CBRE, who has spent more than a decade brokering leases for life sciences companies downtown and in the suburbs. “Unfortunately, it’s not happening (that way) yet.”
Companies have historically flocked to clusters like Kendall Square in Cambridge, Mass., and Research Triangle Park in central North Carolina because of the proximity of everything they need to thrive: incubation space, larger lab facilities, access to universities and hospital systems and nearby amenities that help them recruit top talent.
The research that seeds many of the life sciences companies grown in Chicago, meanwhile, has historically been done closer to Northwestern in Evanston, University of Chicago in Hyde Park and the hospital systems in the Illinois Medical District on the city’s Near West Side. But instead of building more lab space on or near those campuses, developers have been jockeying to create what they hope will emerge as the nucleus for local life sciences startups in places like Fulton Market or Lincoln Yards.
One such effort is in Bronzeville, where a group led by Farpoint Development will break ground next summer on a 500,000-square-foot building anchored by a medical research facility affiliated with Israel’s Sheba Medical Center, the centerpiece of what could become a mixed-use campus rife with lab and research space on the former site of Michael Reese Hospital.
Farpoint CEO Scott Goodman contends his site has an advantage because it’s easily accessible from so many major universities and hospitals in the city, whose researchers tend to be territorial.
“The hospitals and universities are like dogs,” Goodman says. “We’re trying to create the dog park to make them play together well.”
Establishing a core district where biotech and pharmaceutical companies want to gather would help Chicago compete with top-tier life sciences markets, says Suzet McKinney, former CEO of the Illinois Medical District, who now leads Sterling Bay’s push into life sciences. She is focused on building such a campus at Lincoln Yards, but says the market needs all of the lab space developments to succeed to create an “ecosystem” that attracts early-stage bioscience companies.
“Instead of looking at this from a competitive standpoint, we really need to be collaborating and we need strong collaboration from the city and state” to help incentivize researchers to choose Chicago, McKinney says.
Multiple small clusters of lab space also might help Chicago stand out from rival markets as “not a one-size-fits-all community,” says John Conrad, president and CEO of the Illinois Biotechnology Innovation Organization industry trade group.
“If you want to build out in Boston, it’s Cambridge. And that means paying Cambridge prices,” he says. “Companies are going to have different needs.”
Xeris Pharmaceuticals CEO Paul Edick, whose injectable drug-maker company relocated its lab operations to Fulton Market last year from San Diego, downplays the significance of Chicago’s decentralized network of lab spaces—early researchers in Cambridge “felt like they were on an island for a while,” he says—but Chicago will only become a “vibrant life sciences city” if the area’s big pharmaceutical players like Abbott Laboratories, AbbVie and Baxter International in the northern suburbs establish a presence downtown among biotech startups, and vice versa.
“You have people in Chicago who love coming to the city and others who would rather (work) in the suburbs,” he says. “You need both.”