GoLocalProv | Rhode Island Is Investing $45M in Biotech
Monday, May 06, 2024
In Rhode Island, the new economic development initiative of the day by state government is biotech and life sciences.
Rhode Island is presently investing $45 million in the field. Governor Dan McKee and Speaker of the House Joe Shekarchi have championed the investment. The monies were approved in last year’s budget.
Commerce’s website features Rhode Island’s success in the industry and zeroes in on one company that the agency gave major incentives to move to the state in 2018.
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Commerce Features Company That Closed Two Years Ago
While Rhode Island is spending millions, Rhode Island Commerce seems to be out of the loop.
Companies potentially looking to locate in Rhode Island may be surprised who Rhode Island officials are featuring.
Commerce hypes Rubius Therapeutics on its website — on its main “biotech” link.
“When Cambridge, Mass.-based Rubius Therapeutics decided to open a manufacturing facility in Smithfield, Rhode Island, access to high caliber talent was critical to its decision. ‘There were already two or three biotech firms nearby, so the existing labor base in that area was incredible,’ says Pablo Cagnoni, the company’s CEO. In addition, when the company acquired a 135,000-square-foot manufacturing facility from another biotech firm, it was able to retain some of the senior leadership, giving it a leg up on its new venture,” states the Commerce Corp website.
Just one problem: the company closed its Rhode Island operations two years ago.
When state officials announced the arrival of Rubius in 2018, it crowed about the potential. Then-Governor Gina Raimondo promised a major economic engine.
The company would invest as much as $155 million over a five-year period to renovate a 135,000-square-foot manufacturing facility in Smithfield. Rubius took over the facility, which was formerly Alexion — a company that closed its Rhode Island facility in September of 2017, jettisoning 250 positions.
“This is more outstanding news for Rhode Island. I’m thrilled that Rubius has decided to invest here, adding to the growing list of companies bringing highly-skilled jobs to our state. There are more jobs in Rhode Island than ever before, and we’re continuing to make progress. Today’s announcement is more proof that our approach is working,” said Raimondo in 2018.
But the company was a bust.
By 2023, Rubius, once worth $2 billion, was liquidating. But the news has not hit the folks at Commerce.
That exact building where Rubius and Alexion failed was built in the 1990s with state funds for another biotech firm.
“In 1992, Rhode Island succeeded in enticing Alpha-Beta to build its manufacturing plant outside of Massachusetts. Rhode Island borrowed $30 million to construct the 40,000-square-foot manufacturing facility in Smithfield. In addition, Rhode Island spent about $3 million to buy a 120-acre parcel where the plant was built,” wrote Boston Business Journal in 1999.
The Commerce website section on Biotech also features quotes from Commerce Secretary Stefan Pryor. He left the agency two years ago — in May of 2022.
RI Building When Boston Has a Glut of Vacant Space
While McKee and legislative leaders are investing millions of taxpayer dollars to build new lab space, just up the road in Boston, one of the leading hubs for life sciences, there is currently a high vacancy rate for lab space.
It is an industry that requires a highly educated workforce, top scientists, and tremendous private capital; however, investment from venture capital in Boston into the life sciences has fallen dramatically.
In 2023, Shekarchi announced he was pushing the $45 million for life sciences.
“The life sciences sector is experiencing major growth, and I am very excited about Rhode Island’s potential to become a hub for this sector,” said Shekarchi. “The pandemic highlighted the need for more scientific breakthroughs, and the life sciences industry could significantly improve the health of humankind and our planet in areas like cell therapy, emerging health threats, or cleaner fuels. It’s also a major catalyst for economic development. By making strategic investments in the industries that have the most potential for growth, we’re setting our local economy up for long-term success.”
But, in Boston, lab space vacancy is at a ten-year high, according to a report by the real estate firm Colliers in November of 2023:
– Boston area life sciences vacancies have not yet peaked, even after rising for two years.
– Cambridge, Boston and the Suburbs each have a record amount of sublease space available.
– Millions of square feet of uncommitted space is under construction.
Boston area life sciences vacancies rose in the third quarter. The 11.7% total availability rate is the highest it’s been in about 10 years, and availability in Boston, Cambridge, and the suburbs is well above historical averages. For the first time on record, more than five million square feet of space is on the market — a drastic change from the 300,000 square feet available two years ago.
Vacancies are heavily concentrated in the newest product. While a miniscule 0.1% of space in 2020–21 vintage ground up construction is available, 17% of the square footage in 2022 deliveries and 30% of space in 2023 completions has yet to be leased. Including conversions, properties that came online in 2022–23 contain nearly 2.2 million square feet of uncommitted space, 40% of all vacant space in the metro. Given the combination of muted demand and millions of square feet of yet-to-be-leased space under construction across the metro, vacancies are likely to rise further.
A report this past week by CBRE paints an equally weak market in the Boston area.
But, the trends in Boston may be slightly improving. According to CBRE:
– Life science leasing activity increased by 15% quarter-over-quarter — which was driven by renewals.
– But, the overall vacancy continues at 13.7%
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