Life Sciences. An evolving industry: Today s clusters creating tomorrow s breakthroughs. New Jersey JLL Research

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1 Life Sciences New Jersey 2017 An evolving industry: Today s clusters creating tomorrow s breakthroughs JLL Research

2 2 New Jersey Over the course of the past 130 years, the pharmaceutical/life sciences industry has developed into one of New Jersey s leading economic engines. The state is home to the headquarters or major facilities for 13 of the largest pharmaceutical/life sciences companies in the world. New Jersey s large amount of peer companies combined with a highly skilled workforce, world-class universities and top teaching hospitals have helped make the state a hub for the pharmaceutical/life sciences sector. 287 Major lab supply: Clusters of established lab stock with long-time industry presence 80 Bronx Queens 4 Emerging lab supply: Areas with limited lab stock today that are poised for growth 78 Brooklyn Staten Island Life Sciences supply: Clusters of space devoted to pharmaceutical, biological or medical device & instrument Northern New Jersey Northern New Jersey includes Bergen, Essex, Hudson, Morris and Passaic counties. The owner-occupied and leased R&D/ lab inventory totals approximately 3.7 million square feet. Roche s Clifton/Nutley research campus formerly represented one of the largest concentrations of lab space in this market. However, Roche ceased operations here in Prism Capital Partners recently closed on its purchase of the campus, which will allow the developer to redevelop the 116-acre site with a mix of commercial, retail and residential components. The new Seton Hall-Hackensack Meridian School of Medicine signed a 25-year lease to occupy 477,151 square feet in two buildings on the campus, with the first school year scheduled for fall of Central New Jersey More than three-quarters of the R&D/lab space in the state is focused in Central New Jersey, which includes Hunterdon, Mercer, Middlesex, Monmouth, Somerset and Union counties. Totaling nearly 12.5 million square feet, more than 70 percent of this space is comprised of owner-occupied R&D/lab facilities used for research, and support operations. Most of the inventory is focused along the Route 1 corridor from North Brunswick south to Princeton, the Bridgewater area in Somerset County and Kenilworth/Summit in Union County. In late 2016, Bristol-Myers Squibb announced a phased closure of its Hopewell campus by mid-2020, while investing in the development of new facilities in Lawrenceville and New Brunswick.

3 3 Scorecard Economic Though still housing the world s highest concentration of scientists per square mile, New Jersey s life sciences employment trended lower during the past several years in response to consolidations and mergers among the larger pharmaceutical players. The state s life sciences industry employed 75,860 people statewide, with an annual economic impact estimated at nearly $50 billion. Cluster score: 47.5 Workforce Total life sciences % Life sciences to private employment Year-over-year growth Employment 75, % -0.8% Establishments 1, % -0.4% Funding Total life sciences % To total U.S. VC funding $141.5m 1.4% NIH funding $229.8m 0.9% Average asking Inventory Total supply % Total vacancy rent (NNN) 16.2M s.f. 7.7% $18.39 p.s.f. The pharmaceutical and medicine sector maintained the largest portion of employment in New Jersey s life sciences sector. This cluster s average annual wage was nearly $150,000 compared to $143,190 in Bristol-Myers Squibb, Johnson & Johnson, Merck, Novartis and Pfizer are among the state s well-known employers in the pharmaceutical and medicine cluster. Life sciences employment composition 30% 16% Life sciences employment 75,863 6% 14% 9% non-lab using lab using Pharma & medicine Electromedical instrument Medical equipment & supplies Testing laboratories Research & development Medical & diagnostic laboratories M&A activity will continue to reshape the local life sciences landscape as companies look to diversify their business lines, increase revenue and gain market share. Such transactions could be boosted by a potential inflow of foreign cash and improved stock valuations under the Trump administration. President Trump has advocated allowing U.S. companies to pay a lower tax rate when bringing back overseas cash. Life sciences establishment composition 12% Life sciences establishments 1,703 10% 11% 17% Pharma & Medicine MFG Electromedical Instrument MFG Medical Equipment & Supplies Testing Laboratories R&D Medical & Diagnostic Laboratories

4 New Jersey Northern New Jersey Allergan signs largest office lease in the state during 2016 Prism Capital Partners closed on its purchase of the former Roche Clifton/Nutley research campus, which

4 4 New Jersey Northern New Jersey Allergan signs largest office lease in the state during 2016 Prism Capital Partners closed on its purchase of the former Roche Clifton/Nutley research campus, which will allow the developer to redevelop the 116-acre site with a mix of commercial, retail and residential components. The new Seton Hall-Hackensack Meridian School of Medicine signed a 25-year lease to occupy two buildings totaling 477,151 square feet on the campus. Allergan leased a 431,4-square-foot office building at 5 Giralda Farms in Madison for its new U.S. headquarters. The Dublin-based pharmaceutical company was awarded a 10-year, $58.2 million Grow New Jersey award to consolidate its Bridgewater, Jersey City and Parsippany offices to Madison. Facilities scorecard Supply Northern NJ Central NJ Rentable lab stock Owner occupied lab stock (% of total lab stock) Total vacancy (Change year-over-year) 1.5M s.f. 2.3M s.f. 23.1% 9.6% +0.5 ppts 3.5M s.f. 9.0M s.f. 76.9% 7.2% -2.0 ppts # of large blocks over 50,000 s.f. 5 9 Under construction (s.f.) 0 s.f. 0 s.f. Demand # of requirements Total s.f. requirements Pricing Average asking rent (NNN) (Change year-over-year) 6 0.4M s.f. $25.81 p.s.f. -0.7% 4 0.7M s.f. $15.85 p.s.f. -6.9% Central New Jersey Life sciences companies active on leasing and disposition fronts Mallinckrodt Pharmaceuticals leased 233,000 square feet at 1405 and 1425 Route 206 Somerset Financial Center in Bedminster. Consolidations by Valeant Pharmaceuticals led to 310,000 square feet being placed on the market for sublease at Somerset Corporate Center III in Bridgewater. This availability represented the largest block of sublease space in the Route 78 Class A market. Russo Development is under contract to purchase Merck & Co s former 1 million square foot research campus at 1011 Morris Avenue in Union. Transit-oriented luxury rentals, restaurants and retail components are expected to be included in the redevelopment plans for the property. While Bristol-Myers Squibb announced a phased closure of its Hopewell site by mid-2020, the drug maker plans on investing in the development of new facilities in Lawrenceville and New Brunswick. Recent activity Allergan 5 Giralda Farms Northern N.J. / Route ,4 s.f. Class A office lease Mallinckrodt Pharmaceuticals Somerset Financial Center Central N.J. / Route ,000 s.f. Class A office lease Activity key: Leasing Sales Under construction Large blocks of space Former Roche Clifton/Nutley campus Prism Capital Partners Northern N.J. / Route 80/ acre site Avantor Performance Materials NJ Center of Excellence Central N.J. / Route 78 26,769 s.f. R&D/lab lease

Want to know more? Contact: Roger Humphrey Executive Managing Director Life Sciences +1 (908) 698-2867 Roger.Humphrey@am.jll.

Loughlin@am.jll.com Lisa Strope Director, New England Research +1 (617) 531-4243 Lisa.Strope@am.jll.com Wes Simon Analyst, Boston Research +1 (617) 531-4216 Wes.Simon@am.jll.com Megan Shields Analyst, Boston Research +1 (617) 531-4243 Megan.

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At year-end 2016, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 77,000. As of December 31, 2016, LaSalle Investment Management has $60.

5 Want to know more? Contact: Roger Humphrey Executive Managing Director Life Sciences +1 (908) Richard McBlaine International Director Corporate Client Development +1 (312) Dan Loughlin Managing Director Brokerage, New Jersey +1 (973) Lisa Strope Director, New England Research +1 (617) Wes Simon Analyst, Boston Research +1 (617) Megan Shields Analyst, Boston Research +1 (617) About JLL JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At year-end 2016, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 77,000. As of December 31, 2016, LaSalle Investment Management has $60.1 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit About JLL Research JLL s research team delivers intelligence, analysis and insight through market-leading reports and services that illuminate today s commercial real estate dynamics and identify tomorrow s challenges and opportunities. Our more than 400 global research professionals track and analyze economic and property trends and forecast future conditions in over 60 countries, producing unrivalled local and global perspectives. Our research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and optimal real estate decisions Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.

Life Sciences Outlook

New Jersey 2018 JLL Research Report Life Sciences Outlook Breakthrough discoveries at a breathtaking pace 2 New Jersey The pharmaceutical/life sciences industry has historically been one of New Jersey