Alexandria Real Estate Equities plans to build a third tower as part of its life science campus in Kips Bay, but construction is not expected to begin until after 2024.
The north tower, part of the Alexandria Center for Life Science campus, has been a long time in the making.
Alexandria reached an agreement in 2018 with the city to amend its long-term lease to allow for the construction of a tower at 430 East 29th Street spanning 550,000 square feet, larger than originally planned. The Pasadena-based real estate investment trust filed initial permits for the project in January 2020.
The tower was delayed, in part, by the pandemic, and now faces the challenge of finding an anchor tenant in a sluggish market.
The city, which owns the land, expects financing for the project to close in late 2024 or early 2025, and for construction to begin shortly thereafter.
A representative for Alexandria did not return messages seeking comment.
In 2020, the REIT filed an application asking City Planning to sign off on minor changes to the 2001 special permit that paved the way for construction on the campus to move forward. Specifically, the REIT is seeking tweaks to a restrictive declaration tied to the permit, to reflect design changes to the third tower that affect the boundaries of open space planned as part of the project.
The design was changed to accommodate a larger project, as approved in 2018, and “create an efficient laboratory layout and to deflect wind and improve pedestrian wind comfort at the plaza level,” according to the application.
The REIT also filed an application this month seeking approval for a temporary outdoor café and lawn games nearby. In a letter to City Planning, attorneys for the company noted that once construction on the north tower begins, it will operate the café and lawn games for as long as it can. If construction is delayed, the REIT may seek to renew permission to operate both.
When completed, the campus is expected to span 1.3 million square feet. The East and West towers were completed in 2010 and 2014, respectively.
Demand for lab space across the top eight life science markets (New York ranks seventh) was more than 25 million square feet in 2021, but fell to 10 million by mid-2023, according to a recent report by JLL. The report concludes that the industry is poised to rebound because venture capital firms focused on life science are keen to deploy capital: They have raised $22 billion since 2021.
For its part, Alexandria has doubled down on the sector. During the second quarter, the REIT shed more than $700 million worth of its properties unrelated to its life science campuses, with plans to sell off $1 billion more. In July, the company indicated that it may convert Pfizer’s old headquarters at 219 East 42nd Street, to laboratory space.
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