New life science tower is coming to RTP. But first its owner must land tenants.
Developers are constructing a mini-city in the middle of Research Triangle Park. Called Hub RTP, the complex between Highway 54 and Interstate 40 is slated to include office buildings, shops, a Renaissance hotel, and 406 multifamily residential units — the first residential housing in the 64-year history of the Park.
Hub RTP marks a departure from its surroundings, as the area historically emphasized secluded corporate campuses that gave employees little reason to remain after the work day.
“This is a huge bet and investment,” said Scott Levitan, CEO of the Research Triangle Foundation.
Joining Hub RTP is an eight-story tower from the Boston-based life science real estate firm Longfellow expected to include 265,000 square feet for offices and labs. Called Via, the building will sit next to a parking garage near the Hub’s I-40 entrance. Its first floor ceilings will be higher than the rest to accommodate manufacturers in addition to research and development.
Last week, Longfellow took a group of local journalists around the anticipated Via site. The firm hopes to break ground on the building in 2024, though spokesperson Casey Angel said they seek to secure pre-leases for roughly 20% to 30% of the tower before starting construction.
“We are in advanced talks with several companies, but no official pre-leases we can release at this time,” Angel said in an email.
Lab space vacancies rose in Raleigh-Durham
It has not been the easiest year for filling life science spaces, said Greg Capps, managing director at Longfellow Real Estate Partners.
“Through COVID, not only did we stay steady, the demand for lab space shot up,” Capps said. “We’ve (now) seen a little bit of a slowdown.”
Many typical occupants of life science complexes like early-stage startups have been hamstrung by decreased funding from venture capital and private equity firms, Capps said.
According to the commercial real estate investment firm CBRE, the Raleigh-Durham area saw vacancy rates for life science lab space go from 7.6% to 8.7% in the first half of 2023. This rate is higher than those in Boston (5.1%,) Seattle (7.4%,) and Denver (8.3%,) but lower than the lab space vacancy rates in San Diego (9.7%,) New York City (10.7%,) and the Bay Area (11%.)
“Leasing activity remains muted, but major pharmaceutical companies continue to invest in owned facilities in the region,” CBRE wrote of the Raleigh-Durham market in its life science real estate review of the most second quarter. The area is among the 10 largest markets for lab space, according to CBRE, with a total inventory (occupied and vacant) of 9,259,100 square feet.
Better positioned than office space?
Despite the “dip this year,” Capps said buildings that offer lab space are still well positioned to succeed, even in a time of increased remote work.
“Fortunately, it’s not the kind of dip that the office world has felt,” Capps said. “Our tenants can’t work from home. Ultimately, they can’t do their day-to-day jobs in the labs anywhere but in the building.”
He noted that he has seen the market tick back up in the past few months.
Longfellow has a nationwide development portfolio, including roughly 5 million square feet in the Triangle. This includes the Durham ID building in downtown Durham and two other life science locations in RTP.
The firm believes the location of Via, in the Park’s future downtown, will be a major selling point to potential occupants and their employees.
“No offense to other parts of RTP, but it’s got a different feel,” Angel said of Hub RTP. “So if someone wants to be part of this excitement, I think it’s a big draw.”
Like Via, the rest of Hub RTP expects to open in 2024.
This story was originally published September 25, 2023 at 7:00 AM.
