Biotech startups ditch New York and Boston over rising rent prices

Image Credit: Bert Kaufmann

(Reuters) — The biotech industry is facing high rents and tight lab space in Boston, New York and San Francisco, forcing companies into the suburbs in a sign the “live, work and play” movement into big cities may have hit a roadblock.

For example, Modern Meadow, a biotech start-up poised to commercially manufacture leather from synthetic animal protein, was looking at a prohibitive $200 million cost to build its own lab in New York City.

Instead, it found existing lab space at the former U.S. headquarters of Swiss drug-maker Roche in Nutley, New Jersey, a scant 12 miles (19 km) from Midtown Manhattan.

Modern Meadow also secured $32.2 million in New Jersey tax credits at ON3, as the former Hoffman-La Roche site has been named by its new owner, Prism Partners.

The start-up’s search for adequate facilities is shared by other biotech firms that are encountering tight lab availability in New York, San Francisco and Boston, which attract the lion’s share of biotech venture capital funding.

Tight spaces, big expectations

Cities, especially those with powerhouse educational institutions that excel in sciences, are attractive to biotech companies because they provide better collaboration and transition from classroom to commercial production.

The issue with lab space in these cities is that real estate is very expensive, both to build and operate, said Andras Forgacs, chief executive of Modern Meadow.

“We don’t have the time and we don’t have the capital to…

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