The first phase of a 1 million-square-foot biomedical facility, “built on spec,” has hit the market in the Research Triangle.
Massachusetts-based developer King Street Properties has delivered the core and shell of the initial two buildings on its new 75-acre Pathway Triangle campus at 4880 McCrimmon Parkway in Morrisville, about a 5-minute drive northeast to Raleigh-Durham International Airport.
In total, some 370,000 square feet of purpose-built “turn-key” biomanufacturing space — a footprint (minus second floors) the size of five football fields — is now ready for tenant upfit, the company said.
Among its selling points: 40-foot ceilings for high-bay space, precast concrete panels, six loading docks, as well as footings and columns already sized to accommodate future second-floor expansions. (The first building, at 168,000 square feet, has the capacity to expand up to 260,000 square feet. The second building, 202,000 square feet, has the option to expand to 300,000 square feet.)
“Our buildings are the tallest in town,” said King Street’s Raleigh-based managing director Sara McTyeire, during a tour earlier this week. “It’s scaled where you could bring in a prefabricated clean room and not have to take any ‘skin’ off the building.” (In industry terms, the “skin” is the building’s exterior.)
The buildings are also contiguous. Their exterior can be removed to combine them. Companies could use them for developing lifesaving drugs and therapies, medical devices or harnessing renewable materials. “We’ve found multi purposes for this type of asset,” she said as planes roared overhead. (The site is also in the airport overlay district.)
This is King Street’s second purpose-built biomanufacturing campus, McTyeire added. The first is Pathway Devens in Massachusetts. “We know these buildings work.”
In August 2019, the town extended McCrimmon Parkway to give roadway access to the then-undeveloped land. And in 2021, it changed its zoning regulations to allow mixed-use projects in this corridor.
Not long after, King Street paid $9.46 million for its assemblage and broke ground, the Triangle Business Journal reported. The firm built the buildings “on spec.” In other words, they developed their project without any tenant commitments.
It’s a calculated risk, especially since they’re not the only shiny new $1 billion biotech campus on the block. Directly across the street is the site of another billion dollar hub, Spark Life Science (or Spark LS), also under construction. It’s expected to deliver by the year’s end.
Despite the competition — and the Triangle’s tough commercial market — McTyeire said she’s optimistic about their prospects. They’ve already received interest from several high-profile companies, including “a Fortune 100 company, a pharmaceutical company, industries in aerospace, defense and clean energy,” she said. Most are from out-of-state; some are even from abroad.
“We’re under non-disclosure agreements for all of them, but it really runs the gamut,” she said. “We’re quite bullish.” In addition to the two buildings, the first phase includes a third 140,000-square-foot building for research and development. It’s in the process of getting final permit approvals and is set to break ground shortly. Plans are also underway for a 12,000-square-foot amenity building with a gym, golf simulator, conference center, lounge, outdoor patio, bike stations and storage and food options.
The second phase includes a 140,000-square foot research and development building, as well as two biomanufacturing buildings: one is 160,000 square feet; the other is 200,000 square feet.
Founded in 2002, King Street is headquartered in Boston. In addition to Morrisville, it has hubs in New York, San Diego and the San Francisco Bay area.
In September 2020, it entered the Triangle market when it acquired EastRidge at Perimeter Park for almost $46 million. The 479,000 square-foot, nine-building life science park at 100-1000 Perimeter Park Drive is just o! Airport Boulevard and around the corner from Pathway.
King Street has since renovated to include a new amenity building. Plans are also underway to convert portions of the existing space to life science, the company said.
In addition, it manages the 114,000-square-foot warehouse-conversion Carmichael Building and a research laboratory in Durham. Both are fully occupied by Duke University.
THE TRIANGLE’S BIOTECH SCENE
Raleigh-Durham is ranked fifth among the nation’s life science clusters, according to a new JLL report.
Most of the major real estate players in Boston’s life-science world, like King Street, have a presence in the Research Triangle area or are considering one.
But the market is currently saturated with biotech space, according to the latest data from CBRE, as higher interest rates and softening economic conditions have tempered tenant demand over the last year and the construction pipeline empties.
Some 9.5 million square feet of life science space is available for lease. Vacancy rates have risen to 14.3% as of the second quarter of 2024, CBRE found. That’s up from 8.7% in the same period in 2023.
On the plus side: that’s still significantly lower than the roughly 20% vacancy rate for traditional office space.
Avison Young’s managing director Kathy Gigac said she remains positive. “Pre-COVID, we didn’t have large blocks of space for companies to come here,” she said. “Now, when we’re up against places like Austin or Nashville, we can definitely be a player.”
From Chantal Allam at The News & Observer: https://www.newsobserver.com/news/business/real-estate-news/article294532734.html