While many Center City offices sit empty, a proposed lab space doubles down on Philly’s life-sciences industry

A proposed nine-story research, laboratory and office building at 23rd and Market Streets marks another sign of the life sciences boom in Philadelphia.

The almost 200,000-square-foot development, by Los Angeles-based Breakthrough Properties, would incorporate the former Art Institute of Philadelphia’s culinary school building at 2300 Market St. as well as the decorative terra-cotta facade of the neighboring structure at 2314 Market. A six-story addition is proposed to be built above 2300 Market, and a nine-story addition is proposed on the remaining site.

“We are delivering a long-term life science asset that is flexible to changing times,” said Joe Traynor, director of asset management and development at Breakthrough Properties. “We want to deliver a strong streetscape and design aesthetic, and a harmonious blend between the old and the new.”

The proposed Breakthrough project at 23rd and Market is the latest new development in this corner of Center City. Aramark’s new headquarters, which face the Schuylkill River, opened in 2018. At the beginning of 2020, right next to Breakthrough’s site, the Parkway Corp. announced a 19-story office building for 23rd and Market.

Breakthrough’s proposal is a sign of how commercial development trends have shifted since the onset of the pandemic. Life sciences buildings, which cater to such industries as pharmaceuticals and biotech, usually house smaller workforces than their traditional counterparts. Unlike the massed cubicles of a normal office building, more space is devoted to research facilities. If much of the back-end support work can be done remotely, the number of employees can be even smaller.

Traynor says there are still a lot of unknowns when it comes to development of commercial space in a COVID-19 era, and that’s why Breakthrough is designing the interior to be flexible. Clients will be able to increase or reduce the amount of office space, depending on the size of the non-laboratory workforce.

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But unlike many white-collar workspaces, there will always remain a need for in-person workspaces in the life sciences sector.

“Research and development is not something you can do from home, that’s why we like the asset class,” Traynor said.

There is currently 4.6 million square feet of life sciences laboratory inventory in the Philadelphia region, according to Longfellow Real Estate Partners, the largest privately held life sciences developer in the country.

About a third of the inventory is based in Philadelphia itself, with six buildings — totaling 1.3 million square feet — in University City. Other prominent locations include King of Prussia;New Castle, Del.; and the exurban area around Exton, which boasts nine buildings with just under a million square feet of space total.

In Center City, the life sciences industry exists on a much smaller scale. The only existing space is in portions of the Curtis Center and the Terminal Office Building at 401 N. Broad St., but in neither case do laboratories comprise even half of the space. In addition to Breakthrough’s project on 23rd and Market, another research facility is being proposed by Miller Investment Management at 2323 Chestnut St.

The development environment is expected to become more challenging, as interest rates rise, supply chains continue to be strained, and COVID continues to periodically surge. But as uncertainties multiply, investors are seeing the life sciences as a possible source of respite.

“The majority of companies are still working out their long-term work-from-home strategy, and that’s going to reshape the consumption of space,” said Lauren Gilchrist, managing director of research with Longfellow. “That’s fueled a lot of the interest from institutional capital in laboratory space. There’s a sense it’s more immune to shifting workplace strategies. You can’t operate a Bunsen burner at home.”

An earlier version of this story misstated where Breakthrough Properties is based. Its headquarters is in Los Angeles.