New biomed office-and-lab building proposed for SEPTA-owned land near 30th Street Station

A development group involving the Washington-based developer Republic Properties Corp. is proposing an eight-story building with office and lab space for burgeoning biotechnology companies on land it has a deal to lease from SEPTA near 30th Street Station.

Republic and PHL Next State Med LLC, an investment partnership that counts former State Rep. Richard Hayden of Philadelphia among its members, are seeking tenants for the 125,000-square-foot project that would rise at the current site of a SEPTA maintenance building near 32nd and Arch Streets, beside the Powelton Yard rail property.

The proposal is a response to a growing demand within Philadelphia’s flourishing gene- and cell-therapy industries for specialized lab space to test and manufacture treatments, said Brad A. Molotsky, an attorney at Duane Morris LLP in Philadelphia who is representing the development team on the project.

Philadelphia’s growing profile as a biotech hub has spurred the locally founded gene-therapy firm Spark Therapeutics Inc. to grow into a new headquarters in the city and has led the California-based cancer-treatment company Iovance Biotherapeutics Inc. to plan a new office and laboratory complex here.

Developer Scott Mazo’s University Place Associates also announced this week that it was teaming with the Wistar Institute biomedical research center to develop its long-planned 3.0 University Place project at 4101 Market St. as an office-and-lab facility for life-sciences tenants.

Molotsky said Republic and PHL Next "feel like Philly has something going on in the cell-therapy and biotech arena that a lot of people are unaware of. ... They’re very bullish.”

The project would be an amplified version of the 20,800-square-foot shared office suite for life-science and medical-device companies that PHL Next opened in the former Philadelphia Bulletin newspaper building at 3001 Market St. in 2015.

That facility will close this summer so the Bulletin Building, as it’s now known, can be redeveloped by the Philadelphia-based developer Brandywine Realty Trust into the Spark Therapeutics headquarters as part of its Schuylkill Yards development plan for a large swath of properties around 30th Street Station.

The site for PHL Next’s proposed new project with Republic was secured from SEPTA through an August 2018 solicitation issued by the transit agency seeking developers for the property.

Of the two responses received, only the PHL Next-Republic proposal was deemed “acceptable," according to SEPTA records concerning the transaction.

The transit agency’s board approved plans in March to lease the property to the companies for nearly 90 years, including extensions. Under the deal, the development group can make a $2.8 million upfront payment or pay $182,000 annually for the lease’s initial term of about 30 years.

Those terms were based on a fair-market appraisal of the development site, according to the resolution approving the lease.

The arrangement, which still must be approved by the Federal Transit Administration, also obliges the developers to provide SEPTA with 6,000 square feet of space to replace the maintenance offices now at the site for nominal rent.

Molotsky said PHL Next and Republic would pursue development permits as they recruit tenants for the project in hopes of completing the project by the end of 2021.

The $83.5 million project received $2.5 million in support from the state’s Redevelopment Assistance Capital Program fund in 2017.

And while the project will be structured to take advantage of its location in a so-called Qualified Opportunity Zone, through which investors in the project can get big tax breaks, Molotsky said his clients would likely be planning their building without that incentive.

“They feel very confident, given where the economy is and where cell therapy and gene therapy are,” he said.