Page 14 - RE-NJ

12 APRIL 2023
It wasn’t for a lack of interest
in the life sciences sector, according to Onyx Equities’ John
Saraceno, whose firm has resisted the urge to convert some of New Jersey’s largest, best-located office
simply upgrading those spaces for traditional users.
That only added to the appeal of the 108-acre Merck & Co. campus in Kenilworth, which Onyx acquired earlier this year under a joint venture with Machine Investment Group.
“We have office buildings on that site, but almost a million and a half square feet to two million feet is already built and designed as lab, life sciences and manufacturing space, which just doesn’t exist in the state,” said Saraceno, a co- founder and managing principal with Onyx. “And now it’s not
a function of conversion or convincing ourselves or fighting off an office tenant, because they’re
not office buildings, so now we can implement a strategy that we’ve sort of trained for and practiced for 10 years.”
It’s a reminder of the sustained demand for turnkey, high-end life sciences space — from established pharmaceutical and biotech firms, startups and a growing pool of international players — in an asset class that is seemingly underserved in New Jersey despite its deep talent pool and history of innovation. According to JLL, direct asking
rents at Class A lab space averaged $66.40 per square foot at year-end 2022, compared with $29.54 overall, while top-quality options are limited to just a handful of properties in the state.
That has created an opportunity for owners of the few remaining legacy pharmaceutical campuses in the state, where they can offer second- generation space built by the likes of Merck, Sanofi and Bristol-Myers Squibb. The same is true for those that can successfully convert
office buildings or find other ways to create new space without building speculatively, which is
John Saraceno
campuses to the type of lab and research space that is hard
to find in the state. In those cases, he said, the demand for top-tier office space was
high enough to merit the less complex, less costly option of
Merck & Co. has sold its 108-acre campus in Kenilworth to
a joint venture of Onyx Equities and Machine Investment Group, creating what will be an infusion of new laboratory and research space for life sciences users.
SEEKING SOLUTIONS
Demand for lab, R&D space in New Jersey still surging as developers hunt for new supply
By Joshua Burd
Courtesy: Onyx