Life Sciences Outlook

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1 New Jersey 2018 JLL Research Report Life Sciences Outlook Breakthrough discoveries at a breathtaking pace

2 2 New Jersey The pharmaceutical/life sciences industry has historically been 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. The repurposing of large vacant life sciences campuses, including New Jersey Center of Excellence in Bridgewater, New York Center for Innovation in Pearl River, NY and ON 3 in Clifton/Nutley, are providing lab space opportunities for growing biotech companies. 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 5.2 million square feet. Roche s former Clifton/Nutley research campus, rebranded ON3 following its acquisition by Prism Capital Partners in 2016, continued to generate headlines into Modern Meadow recently leased 72,900 square feet of existing space and 46,240 square feet of planned construction at ON3 after receiving state economic incentives to move its headquarters from Brooklyn. The biotech company will join the new Seton Hall- Hackensack Meridian School of Medicine on the campus, which is scheduled to welcome its first 60-student class in July Central New Jersey More than two-thirds 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 10.9 million square feet, more than 70.0 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. Several recently announced incubator/research space ventures within Central New Jersey are expected to foster the growth of new pharmaceutical and biotech companies.

3 Scorecard Economic 3 After trending lower during the past several years in response to consolidations and mergers among the larger pharmaceutical players, New Jersey s life sciences sector recorded a nearly 5.0 percent yearover-year gain, as its workforce numbered more than 79,500 people. Growing biotechnology and generic drug companies contributed to the recent employment uptick. The state s life sciences industry generated an estimated annual economic impact of nearly $50.0 billion. Cluster score: 40.1 Workforce Total life sciences % Life sciences to private employment Year-over-year growth Employment 79, % 4.8% Establishments 1, % 2.3% Funding Total life sciences % To total U.S. VC funding $270.3M 1.4% NIH funding $228.7M 0.9% Average asking Inventory Total supply % Total vacancy rent (NNN) 16.1M s.f. 14.9% $19.99 p.s.f. Research & development focused companies accounted for more than one-third of New Jersey s life sciences employment composition. In 2017, 50.0 percent of new FDA drug approvals originated from life sciences companies with a presence in the state. The pharmaceutical and medicine sector comprised nearly one-quarter of the state s life sciences employment. Bristol-Myers Squibb, Johnson & Johnson, Merck, Novartis and Pfizer are among the state s well-known employers in this cluster. Life sciences employment composition 34% 14% Life sciences employment 79,508 6% 24% 13% 9% non-lab using lab using Pharma & medicine Electromedical instrument Medical equipment & supplies Testing laboratories Research & development Medical & diagnostic laboratories Future growth within the state s life sciences sector will be fueled by smaller and mid-sized biotech and generic companies that are moving into the campuses vacated by the larger pharmaceutical players. Furthermore, talent recruitment will be a critical component needed to sustain these growing companies. The search for a highly educated labor pool will encourage life sciences companies to establish footprints in mass transitcentric urban areas like Jersey City, Newark and New Brunswick. Life sciences establishment composition 25% 27% 12% Life sciences establishments 1,742 10% 10% 16% Pharma & Medicine MFG Electromedical Instrument MFG Medical Equipment & Supplies Testing Laboratories R&D Medical & Diagnostic Laboratories

4 New Jersey Northern New Jersey Former Roche campus remains in the headlines Modern Meadow leased 72,900 square feet of existing space and 46,240 square feet of planned construction at ON3, the

4 4 New Jersey Northern New Jersey Former Roche campus remains in the headlines Modern Meadow leased 72,900 square feet of existing space and 46,240 square feet of planned construction at ON3, the former Roche Clifton/Nutley research campus. The biotech company was awarded a 10-year, $32.3 million Grow New Jersey tax credit to move its headquarters from Brooklyn. Lonza America signed a lease expansion and extension totaling more than 77,000 square feet at 412 Mount Kemble Avenue in Morristown. The chemicals and biotechnology company will be vacating about 100,000 square feet in Allendale as part of this expansion. Central New Jersey Incubator spaces providing opportunities for startups Princeton University and BioLabs have developed a 31,000-square-foot incubator for high-tech startups needing access to lab space, while Celgene launched a 16,000-square-foot incubator and collaboration center on its Summit campus. In addition, the New Jersey Economic Development Authority (NJEDA) has repurposed a facility on its North Brunswick campus to support new pharmaceutical and biotech companies. Integra LifeSciences Corporation leased a 167,000- square-foot building at 1100 Campus Road in Plainsboro. The global medical technology company received a 10-year, $17.8 million state tax credit to relocate its operations within Middlesex County. Governor Phil Murphy announced his support of Devco s redevelopment project called The New Brunswick as a research and innovation campus for the state. The NJEDA approved an agreement with Devco to prepare a preliminary assessment and strategy study for the site, which is approved for more than 2.0 million square feet of office/r&d, retail and residential space. Facilities scorecard Supply Northern NJ Central NJ Rentable lab stock Owner occupied lab stock (% of total lab stock) Total vacancy (Change year-over-year) 3.3M s.f. 1.9M s.f. 32.5% 33.5% -2.4 ppts 3.2M s.f. 7.7M s.f. 67.5% 6.0% -1.2 ppts # of large blocks over 50,000 s.f. 6 5 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) Recent activity Integra LifeSciences 1100 Campus Rd Central N.J. / Princeton 167,000 s.f. Class A Lonza America 412 Mt Kemble Ave Northern N.J. / Route 24 77,048 s.f. expansion/extension Class A Activity key: ,000 s.f. $22.15 p.s.f. -4-7% Leasing Sales Under construction Large blocks of space 13 9,500 s.f. $18.90 p.s.f. +8.0% Bristol-Myers Squibb Princeton West Campus 311 Pennington Rocky Hill Rd Central N.J. / Princeton 1.15 m.s.f. R&D lab for lease/sale Vertice Pharma NJ Center of Excellence Central N.J. / Route 78 12,733 s.f. R&D/lab lease expansion

Want to know more? Lisa Strope Director, Life Sciences and Healthcare Research Americas Research +1 (617) 316-6407 Lisa.Strope@am.jll.

Roger Humphrey Executive Managing Director Life Sciences +1 908 698 1379 Roger.Humphrey@am.jll.

com Dan Loughlin Vice Chairman, Life Sciences Brokerage Brokerage, New Jersey +1 973 939 3869 Dan.Loughlin@am.jll.

A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.

4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $145 billion.

As of June 30, 2017, LaSalle Investment Management had $57.6 billion of real estate under asset management.

About JLL Research JLL s research team delivers intelligence, analysis and insight through market-leading reports and services that illuminate today s commercial

5 Want to know more? Lisa Strope Director, Life Sciences and Healthcare Research Americas Research +1 (617) David Coffman Analyst, Research Americas Research +1 (617) Need Life Sciences industry expertise? Roger Humphrey Executive Managing Director Life Sciences Richard McBlaine International Director Corporate Client Development Dan Loughlin Vice Chairman, Life Sciences Brokerage Brokerage, New Jersey 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 $145 billion. At the end of the second quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of nearly 80,000. As of June 30, 2017, LaSalle Investment Management had $57.6 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 ir.jll.com. 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. An evolving industry: Today s clusters creating tomorrow s breakthroughs. New Jersey JLL Research

Life Sciences. An evolving industry: Today s clusters creating tomorrow s breakthroughs. New Jersey JLL Research Life Sciences New Jersey 2017 An evolving industry: Today s clusters creating tomorrow s breakthroughs JLL Research 2 New Jersey Over the course of the past 130 years, the pharmaceutical/life sciences