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John McCLoud is editor of Industrial Property Journal.

Trenton, NJ—The decision of the Biotechnology Council of New Jersey to change its name to BioNJ as of the end of September marks a subtle but significant step in the state’s effort to push itself to the forefront of the emerging biotech industry. The locally based 220-member trade organization also unveiled a new logo, a DNA chain within the outline of New Jersey, and marketing slogan, “Advancing the State of Biotechnology.”

“We’ve experienced tremendous growth over the last several years, and we expect the growth to continue,” says BioNJ president Debbie Hart, who helped found the organization in 1994 with CEOs from several New Jersey biotech companies. “Depending on which figures you use, we’re either the third or the fifth largest biotech cluster in the nation. We had 230 companies as of the last count in 2006, and I expect the number is above 240 now.”

According to a report prepared for BioNJ by New York City-based Deloitte & Touche, the biotech industry directly supported more than 10,000 jobs in New Jersey this year, a 28% increase from 2003. Businesses supporting the biotech industry accounted for an additional 9,300 jobs. The economic impact of the industry on the state was estimated to be in excess of $1.7 billion.

Hart tells IPJ the state has instituted a wide range of loan, grant and tax incentive programs expressly designed to boost life science development. But as the Deloitte report makes clear, other states have been equally aggressive in courting the industry. In addition, biotech clusters in the San Francisco and Boston areas have grown so large that the two regions not only dominate the field now but also use that dominance to attract additional businesses.

But New Jersey has its own advantages, says Christopher Kinum, a broker in the East Rutherford, NJ office of Cushman & Wakefield, who earlier this year was named executive director of the firm’s newly formed global life science practice group. He says the Garden State has the nation’s highest concentration of businesses producing prescription and over-the-counter medications, vitamins, diagnostic drugs and medical devices. Fourteen of the 25 largest drug companies in the world have major facilities in New Jersey, including 11 national or global headquarters. Furthermore, New Jersey accounts for half the nation’s $30-billion investment in R&D in new drugs.

“The pharmaceutical industry has created a large employee base that is already working in related fields,” says Kinum. So-called “Big Pharma” is also a major funding source for biotech companies, some of which are spinoffs of the major pharmaceutical companies, he adds. Others are offshoots of university research.

Nonetheless, both Boston and San Francisco are far ahead of New Jersey in terms of translating research into real estate demand. Just in the past few months, six biotech companies announced plans to expand or move R&D operations to the San Francisco Peninsula area around Palo Alto and Redwood City, CA. Four others announced plans to expand or open manufacturing facilities there.

But Hart reports the state is making rapid advances, as evidenced by the recent decision of the state’s Economic Development Authority to build a new research center for companies that have outgrown a state-funded life science incubator facility. The center will be located on the 50-acre Technology Centre of New Jersey on US Highway One in New Brunswick.

In June, New Jersey Governor Jon Corzine approved nearly $9.2 million in predevelopment funding for creation of the Stem Cell Institute of New Jersey in New Brunswick. The funds are part of legislation signed in December ultimately allocating $150 million for the institute and $130 million to develop facilities for cancer and biomedical research. A $450 million bond measure to provide additional stem cell funding will appear on the state ballot in November.

The biggest problem facing the industry in New Jersey, say both Hart and Kinum, is the shortage of land. “There’s a big need for space but not a lot of land to build,” Hart observes, noting that the state is currently studying ways to turn brownfields into affordable lab sites. “We’ve got a kind of situation that’s sort of ‘if you build it, they will come,’ but it’s difficult to build it.”

Affordability is a significant obstacle, agrees Kinum, who acknowledges New Jersey is “an expensive place to live and do business.” Because biotech lab space is inherently costly to build, keeping land costs low becomes a critical factor in life science companies’ location decisions. He estimates biotech research space costs from $120 per sf to $400 per sf to build, depending on the technical and regulatory requirements, while offices cost about $80 per sf.

But in Hart’s opinion, the state’s high land costs are counterbalanced somewhat by a greater ease of getting science-based projects approved. “Because of the pharmaceutical industry, we have a long track record trying to work things out in a positive way,” she says. “People are already familiar with the issues here, so the opposition is not as great as it might be elsewhere. In fact, we have a number of communities that are eager to get this type of development because of the high pay scales and relatively benign impact on the environment.”

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