Life Sciences Outlook. Greater Toronto Area 2016

Transcription

1 Life Sciences Outlook Greater Toronto Area 2016

2 Greater Toronto Area The Greater Toronto Area is home to Canada s largest combined life sciences sector. It is the Canadian home for 6 of the top 10 global pharmaceutical companies including Roche, Johnson & Johnson and GlaxoSmithKline. It is also home to Canada s most concentrated life sciences research node, the Discovery District, which has seen significant expansion over the past decade. Toronto is expected to maintain its attractiveness as a major life sciences hub as it continues to invest in major infrastructure developments and leverage the cost advantage from the federal and provincial grants, public sector incentive programs and tax credit system. Federal and provincial government grants and public sector incentive programs can reduce research and development (R&D) costs by up to 60 percent. Toronto also offers significant labour cost savings over established life sciences clusters in American cities. Brampton Major lab supply: Clusters of established lab stock with long-time industry presence Emerging lab supply: Areas with limited lab stock today that are poised for growth 403 Toronto Life Sciences manufacturing supply: Clusters of manufacturing space devoted to pharmaceutical, biological or medical device & instrument manufacturing Downtown Toronto Discovery District Toronto s Discovery District is a unique 2.5 square kilometre research park and one of the most concentrated mix of research, biomedical companies, finance and business support services in the world. The University of Toronto, which is ranked 4 th in North America for medical research spending, is also located in this node. More than $1 billion is directed annually to research activities and the area continues to see major new infrastructure development that will support the commercialization of new scientific discoveries in the Toronto area. Commonly known as the Pill Hill, the Meadowvale node within has developed a substantial reputation for its life sciences cluster. It is a highly concentrated node of pharmaceutical companies that base their sales, marketing, clinical studies and manufacturing within the node. is home to more than 353 life sciences companies that employ more than 24,800 people across the region. Markham Located just north of the city of Toronto, Markham is a bustling technology hub currently looking to leverage its strengths in high technology and software development to grow its life science sector. Notable companies include Johnson & Johnson, Huawei and Abbott Laboratories. JLL Greater Toronto Area Life Sciences Outlook

3 Economic scorecard % life sciences to private Year-overyear growth WORKFORCE Total life sciences employment Employment 44, % 32.8% Establishments 1,296 FUNDING Total life sciences % to all of Canada VC funding $196.2 million 37.5% Small companies dominate the life science industry (63.0 percent of Ontario companies employ less than 10 people) so the direct impact on real estate is limited. Pharma manufacturers have the largest percentage of medium and large companies who are most likely to drive real estate demand. Ontario s share of Canadian venture capital (VC) funding has declined 20% since The Pharmaceutical sub sector anchors the overall life sciences ecosystem, consisting of a number of large multi-national enterprises that focus on sales, marketing, clinical trails, operations support and manufacturing in the GTA. The research, testing and medical laboratory segments are relatively small, but one of the fastest growing sectors within life sciences and poised for future growth. Life sciences employment composition 17% 17% 18% Life sciences employment 44,100 16% 32% non-lab using lab using Pharma & medicine manufacturing Electromedical instrument manufacturing Medical equipment & supplies manufacturing Research & development Medical & diagnostic laboratories Life sciences historical employment ( 000s) In 2015, the life science sector is at a peak level of employment with 44,100 employees in the GTA. We expect long-term growth in the GTA as firms are receiving increasing levels of support by academic organizations and government agencies alike. This backing will allow the GTA to continue to be a major force in North American life science sector. JLL Greater Toronto Area Life Sciences Outlook

4 Downtown Toronto/ Downtown Toronto Tightening market conditions Toronto's Discovery District, located within the Downtown North submarket, has experienced considerable tightening in the last 12 months. Total vacancy in the Downtown North submarket has contracted to its lowest levels since Q at 3.7 percent. MaRS Centre has leased or contractually leased over 120,000 square feet since the beginning the year, contributing to the tightening market conditions. In the spring of 2016, Johnson & Johnson opened its first JLABS outside the United States at the MaRS West Tower, which will provide 40,000 square feet of shared cutting edge lab space. Landlords in the University Avenue corridor are increasing net rental rates and decreasing inducements. This trend will continue as options in the area diminish and landlords react to the tightening market conditions. Facilities scorecard SUPPLY Toronto Rentable lab stock (% of total stock) Direct vacancy (Change year-over-year) 2.1 m.s.f. 74.9% 0.0% bps 720,000 s.f. 93.4% # of large blocks over 100,000 s.f % N/A Under construction (s.f.) 0 s.f. 0 s.f. DEMAND # of requirements Total s.f. requirements PRICING Average asking rent (Net) (Change year-over-year) 2 80,000 s.f. $30.00 p.s.f. 0.0% 0 0 s.f. $24.00 p.s.f. N/A Available lab space in is rare Commonly known as the Pill Hill, the Meadowvale node in has developed a substantial reputation for its life sciences cluster, that focus on sales, marketing, clinical trails, operations support and manufacturing for companies like Amgen, Baxter, McKesson, GlaxoSmithKline, Hoffman La-Roche (Roche), and Bayer. One interesting trend over the past year has been the life science leasing activity is the node of as Fresenius Kabi, McKesson Canada and PointClickCare all signed major leases in the area. PointClickCare took Target s former space in the recently completed 5570 Explorer Drive while Fresenius Kabi leased brand new space at 165 Galaxy Blvd. and McKesson Canada completely renovated Sobeys former headquarters at 6355 Viscount Rd. The research and development hub of Sheridan Park in south west contains the bulk of the cities lab space with major tenants such as Exova, Vale and Suncor, however, the majority of that space is currently not being used by life science tenants. With very limited lab vacancy and no new lab construction currently underway, new proposed lab space will be key to expanding lab presence of the life science industry in. PointClickCare 5570 Explorer Drive 185,088 s.f. $21.75 Net McKesson Canada 6355 Viscount Road 93,000 s.f. Class B $16.00 Net Activity key: Leasing Sales Fresenius Kabi 165 Galaxy Boulevard 25,500 s.f. $21.50 Net Cancer Care Ontario 525 University Ave. Downtown North 74,000 s.f. $25.00 Net Under construction Large blocks of space JLL Greater Toronto Area Life Sciences Outlook

5 For more information, please contact: Thomas Forr Research Manager Toronto Chad Piche Research Analyst About JLL JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $5.2 billion and gross revenue of $6.0 billion, JLL has more than 280 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in Its investment management business, LaSalle Investment Management, has $58.3 billion of real estate assets under 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. This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without prior written consent of Jones Lang LaSalle IP, Inc. COPYRIGHT JONES LANG LASALLE IP, INC. 2016