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Jobs aren’t the only casualty stemming from last year’s flurry of mergers between pharmaceutical companies, including Pfizer and Wyeth, Roche and Genentech, and Merck and Schering-Plough. The mergers have also had an effect on the real estate market, says Chris Kinum, Executive Director, Cushman and Wakefield Life Sciences Global Practice (East Rutherford, NJ). “The impact on real estate is simple,” he says. “When you make an acquisition of this magnitude, in order to recapture that incredibly large investment, you must look immediately to a consolidation plan. There must be a cost payback.”
When that occurs, he says, spaces are abandoned (as Pfizer is planning to do in 2011 with its 750,000-square-foot research headquarters in New London, CT) and demand for these companies to expand into new spaces decreases. As a result, there is currently a “tremendous imbalance of supply versus demand,” Kinum says.
But there is a silver lining: “For many in the US, it means low-cost opportunities for companies to get into these properties,” Kinum says.
Some of these opportunities will come by way of real estate investment trusts (REITs) and universities transforming these giant properties into research parks. Kinum points to the University of Michigan’s June 2009 purchase of a former Pfizer research complex in Ann Arbor, MI, now called the North Campus Research Center, as one such example.
Look for the 2010 Site Selection Report, featuring more comments from Kinum and other industry experts, in the April issue of