Hudson Valley Region Banking on Future Biotech Growth

John Jordan | April 2017

WHITE PLAINS—The recent approval by the Westchester County Legislature of a planned $1.2-billion biotechnology park on mostly county-owned land in Valhalla is a clear sign that political and business leaders are counting on the biotechnology and healthcare sectors to be economic engines for the region in coming years.

Earlier this month, the Westchester County Board of Legislators unanimously approved a 99-year lease of 60 vacant acres of county-owned land on its Grasslands Campus to Greenwich, CT-based development firm Fareri Associates. (Editor’s Note: See story). The Westchester Bioscience & Technology Center project to be built on approximately 80 acres will total nearly 3-million square feet when fully built out. The development will include 2,252,600 square feet of biotech/research space; 400,000 square feet of medical offices; a 100,000-square-foot hotel with 100 rooms; 114,000 square feet of ground-level retail space and a 34,000-square-foot Children’s Living Science Center.

The first phase of the project will total 500,000 square feet and will feature 220,000 square feet of biotech/research space, 100,000 square feet of medical space, 80,000 square feet of shopping/ground-level retail space and a 100,000-square-foot hotel.

Reaction from business leaders has been overwhelmingly supportive, although some tempered their enthusiasm noting that the project must secure municipal approvals from the Town of Mount Pleasant, that realistically means construction will not likely begin on the venture for about two years from now or more.

Dr. Marsha Gordon, president and CEO of The Business Council of Westchester, said that with the “astounding expansion” of Regeneron Pharmaceuticals in Westchester, along with Acorda Therapeutics growth and the emergence of the Biotech Incubator (BioInc@NYMC) at New York Medical College in Valhalla, “Westchester stands ready to build on the burgeoning bioscience cluster that has already taken root and to take a leadership role regionally and nationally in the high tech, high-growth life and bio sciences arena.”

She said that the Business Council fully-endorsed the public-private partnership to develop the biotech park at the Grasslands campus and was very pleased the initiative garnered bi-partisan support of the County Board of Legislators. The BCW is also seeking to secure life science incentives to be included in this year’s New York State budget.

“The Board of Legislators’ vote was an endorsement of the importance of public/private partnerships in fostering infrastructure and economic development,” Dr. Gordon said. “For the residents of Westchester County, the approval of the lease is a singularly important step forward in securing the economic future of the county, the region and the state.”

Laurence P. Gottlieb, president and CEO of the Hudson Valley Economic Development Corp., has been a long-time proponent of biotechnology as a key economic driver for the region. First as the director of the Office of Economic Development for Westchester County from 2010 to 2013 and in his current role at the HVEDC since Feb. 2013, Gottlieb has been a strong supporter of biotechnology and in fact launched HVEDC’s NY BioHud Valley, an initiative geared at transforming the Hudson Valley region into a successful biotech center for New York State.

Gottlieb said the biotech sector in the Hudson Valley features Regeneron, Acorda Therapeutics in Ardsley, Contrafect Corp, in Yonkers, the former Pfizer complex in Pearl River (now being redeveloped by Industrial Realty Group) as well as more than 80 other pharmaceutical, biotechnology, medical device and digital health companies.

Concerning the future Westchester County biotech development, Gottlieb is confident that there is demand for biotechnology-oriented space in Westchester and the region. “Clearly if you look at the example of Regeneron less than a mile away from where this massive campus is going to be constructed, it is clear that there is tremendous growth in the biotech sector,” he said.

He continued that the region can take advantage of and capitalize on the growth in biotech in New York City and market conditions there that may lead these fledgling companies to look for lower cost environments.

“As New York City gets more and more expensive, it is sending firms and mostly individuals out of the city looking for greener pastures,” Gottlieb said. “And so Westchester offers a great crossroads of opportunity for cluster development.”

He noted that individuals and small firms can begin operations at the Biotech Incubator at nearby New York Medical College and grow out of that space in future years to within nearly walking distance at the new Westchester Bioscience & Technology Center.

Creating a cluster development in the region “was always the dream of NY BioHud Valley since it was originally conceptualized,” he added, noting that the new campus will provide a venue for mid-sized companies to locate and be housed with resources that create a “scientific and healthcare-driven downtown area.”

Longtime Westchester commercial broker William V. Cuddy Jr., an executive vice president with CBRE, is also supportive of the new biotech campus at the North 60, but related that its impact will likely not be felt for some time since municipal approvals sometimes take two years or more to secure.

Cuddy characterized the County Board’s approval of the project as a “wonderful first step,” but warned that New York State’s SEQRA (State Environmental Quality Review Act) regulations have caused major projects like this to take two years and sometimes significantly longer to garner final approvals.

“Now comes the heavy lifting,” Cuddy said, noting that the project has to be engineered, planned and financed. In addition, the county and the developer estimate approximately $40 million in infrastructure work needs to be performed before any commercial space is constructed. The veteran broker described the county’s approval of the project as the first lap in a mile race.

However, with those caveats, Cuddy said Westchester is already a biotech center and med-tech district, and boasts a world-class healthcare environment with major institutions such as New York Presbyterian Hospital, Montefiore Medical Center, Westchester Medical Center and Northwell Health for example. He added the project’s location is excellent and would have a synergy with nearby Regeneron as well as New York Medical College.

While he noted that commercial real estate brokers and investors are hopeful that the new biotech center can help accommodate the expected healthcare and biotech growth in the years to come, there are some risks outside of the region that could negatively impact that sector’s growth.

For example, massive cuts proposed by the Trump Administration in federal healthcare and research funding as well as possible modifications to the federal tax laws “could have pretty serious consequences for growth and demand in that sector,” Cuddy said. In March, the Trump Administration proposed a 20% cut in funding ($5.8 billion) for the National Institute of Health and Republicans are trying to reform or replace the Affordable Care Act.

The New York State Department of Labor issued a report last month that listed the five top trending jobs for the Hudson Valley region this year. Three out of the five positions are in the healthcare/biotech field: 1. Physical Therapists ($91,630), 2. Registered Nurses ($82,230), 3. Accountants and Auditors ($77,940), 4. Biochemists and Biophysicists ($73,260) and 5. Electricians ($58,520).

John Jordan
Editor, Real Estate In-Depth