“Pretty strong” demand has emboldened a Florida developer to triple the size of a life science space situated on a 120-acre parcel located in a master-planned community within the eastern-coast city of Port St. Lucie.
Two research institutes this month announced plans to develop new facilities in the development of Tradition, Fla. The expanded plans call for the Florida Center for Innovation to occupy more than 1.5 million square feet of space — including 900,000 square feet of research and development space that Tradition owner-developer Core Communities has begun marketing to life science users.
The 900,000 square feet is in addition to 675,000 square feet already spoken for within FCI by three users. Two of the users announced plans earlier this month: A development entity formed by pioneer biomedical entrepreneur-philanthropist Alfred Mann said it would build a 400,000-square-foot research complex, while Oregon Health and Science University’s Vaccine and Gene Therapy Institute said it would build its first satellite campus outside its namesake state within Tradition.
The third user, the Torrey Pines Institute for Molecular Research, is currently well into building a new 100,000-square-foot facility within FCI.
Last fall, plans for FCI called for only 400,000 square feet of research space and 100,000 square feet of medical and office space, in addition to 80,000 square feet of retail and restaurant space, a 300-bed hospital, and a 300-room hotel. At the time, however, Core said it could expand the campus if the market warranted it [BioRegion News, Oct. 8].
Dan Ward, a spokesman for Core Communities, told BioRegion News the FCI expansion reflects its confidence that demand will grow over the next few years from nonprofit research institutes and life science businesses enriched by the nearly $1 billion in economic development subsidies spent during this decade by state and local governments.
“It depends on market demand, and market demand is pretty strong,” Ward said in an interview.
Core is marketing the space both through in-house and outside local brokers. Asked if Core would seek additional institutional users or life science businesses as it begins marketing the additional space, Ward replied: “We’re definitely open to just about anything. The goal is really to establish a life sciences cluster here. We’re well on our way.”
Among selling points to prospective users, he said, was FCI’s location on the southwest corner of Interstate 95 and Tradition Parkway: “It’s got great frontage on I-95, and it’s a location that a lot of life sciences organizations are starting to move into, and hopefully it’s establishing some momentum.”
Two other potential draws are the facts that FCI is located 90 minutes from four of Florida’s largest cities — Orlando, Tampa, Miami, and Fort Lauderdale — and that the price of housing near FCI is lower than the state’s median.
In the Fort Pierce-Port St. Lucie region, the median price for a single family house slid 17 percent in the 12 months ended November 2007 to $206,300 from $247,600, according to the Florida Association of Realtors.
The state median of $215,800 is itself 10 percent lower than it was one year earlier.
Bucking the trend, however, are median condo prices in Ft. Pierce-Port St. Lucie, which rose 6 percent to $185,000 from $174,000 during the year ended November 2007.
Coast to Coast
FCI’s latest life sciences plan became public last week when Gov. Charlie Crist announced that Oregon Health and Science University’s Vaccine and Gene Therapy Institute would build its first satellite facility outside Oregon.
Jim Newman, a spokesman for VGTI, told BRN that the institute’s Florida facility would complement its facility in Beaverton, Ore. “The research will be basically infectious disease research, heavily involved in AIDS research, heavily involved in improving vaccination for elderly Americans and other certain diseases that require better vaccines or better methods for vaccinating against them.”
No Oregon staffers will be shifted to the FCI facility.
VGTI will build a 130,000-square-foot facility on 12 of FCI’s acres where it will base 200 jobs it expects to create over the next 10 years. In return, VGTI will receive $60 million from the state of Florida; a $2.9 million property tax abatement from St. Lucie County; another $1.5 million property tax break from the city of St. Lucie; $400,000 in rebates on impact fees collected by the county; a probable tax rebate; and, perhaps most importantly, the benefit of $53 million in infrastructure improvements the city will build for all of FCI.
Port St. Lucie city manager Donald Cooper told BioRegion News that the $53 million will pay for water and sewer lines, roads, and interchanges benefiting VGTI and other projects within FCI, as well as Core’s planned 900,000 square feet of R&D space.
“We do expect some other [projects] to come in,” said Cooper, but declined to discuss prospective projects for FCI.
Cooper rejected the argument that Port St. Lucie’s incentives were a response to losing a recent bid to attract a life sciences anchor considering Florida: In October 2007, the Burnham Institute for Medical Research, based in La Jolla, Calif., broke ground on an $80 million, 175,000-square-foot facility in the Orlando master-planned, mixed-use community of Lake Nona.
“We didn’t have the Orlando airport, [Walt Disney World], and all the rest of those Orlando amenities,” Cooper said.
Meantime, the state’s plan to subsidize VGTI will exhaust the Innovation Incentive Fund, created in 2006 and increased last year to stimulate development of larger projects in biotech and other technologies. Since last summer, Crist has earmarked $94 million of the fund for a new research center for Germany’s Max Planck Institute on the Jupiter, Fla., campus of Florida Atlantic University; while the Florida legislature carved out $80 million for the University of Miami's Institute for Human Genomics, which opened Dec. 4, 2007, at UM’s South campus.
Crist, who took office last year, has continued spending on economic incentives for life science research institutions begun by his predecessor, Jeb Bush, also a Republican.
To state officials the pending will pay off: They have projected VGTI Florida and future spin-off companies will generate 1,466 direct and indirect positions over 20 years, resulting in $2 billion in salaries and $4.2 billion in gross state product. Florida’s gross state product was a projected $609.9 billion in 2006, the latest available figure from the US Bureau of Economic Analysis.
Relationship Building
Jim Newman, a spokesman for VGTI, said the institute’s move to Florida was less an issue of responding to incentives than of taking the next step in a relationship with Torrey Pines, another Florida-bound West Coast research institute, that originated from a friendship between their leaders.
VGTI’s Jay Nelson met Torrey Pines founder and president Richard Houghten in the 1980s. Both stayed in touch since then, and about four years ago began teaming up after VGTI began using a combinatorial chemistry library developed by Torrey Pines.
“It’s as simple as this,” Sara Misselhorn, a Torrey Pines spokeswoman, told BRN via e-mail. “Richard called Jay and asked if he would consider Florida for an expansion. The rest was making the introductions.
“TPIMS and VGTI will continue to work together to enhance scientific discoveries, sharing the 5.5 million compounds in the library and working on new ways to collaborate,” said Misselhorn.
Last May, Houghten gained VGTI’s approval to arrange a meeting with it and officials from the public-private Economic Development Council of St. Lucie County.
“When Dr. Houghten first announced his intention to build [Torrey Pines’] headquarters in Port St. Lucie, he made it clear that he felt a responsibility to help us build a true research cluster here,” Larry Pelton, the EDC’s executive director, said in the Jan. 8 statement announcing VGTI’s expansion into Florida.
Four months later, OHSU was contacted by the state of Florida and invited to apply for funding. The university agreed after concluding it lacked the room to expand its West Campus in Beaverton, where VGTI is based.
“As a result of the creation of this new institute and new partnerships, the national recognition of OHSU will increase,” OHSU predicted in a section of its website devoted to the project. “This will lead to new opportunities and perhaps increased philanthropy.”
Torrey Pines is constructing its $80 million, 100,000-square-foot campus, which workers topped off at its maximum height last month. “Drywall is being completed and fume hoods have been delivered,” Misselhorn said, adding that occupancy was anticipated for late fall 2008.
|
“The goal is really to establish a life sciences cluster here. We’re well on our way.” |
Torrey Pines has agreed to accommodate VGTI’s research for three years while VGTI waits for its permanent facility to be built. No construction timetable has beet set because a deal with Core had not yet been finalized, Newman said. “It is hard to say when exactly [construction] will actually occur,” he added.
Another 22 of TCI’s acres will be occupied by Mann Research Center, a development entity formed by pioneer biomedical entrepreneur-philanthropist Alfred Mann. The $100 million complex will consist of six two- to four-story buildings that will comprise 300,000 square feet of R&D space, the rest medical office space. Construction is set to start by the end of this year [BioRegion News, Jan. 7].
Mann Research Center, Mann’s research campus arm, acquired the site from Core Communities for an undisclosed sum, the Tradition developer announced on Jan. 4.
Mann Research Center is marketing the project through two real estate brokerages: SLC Commercial, which has offices in Port St. Lucie and neighboring Stuart; and Jim Linn of the Santa Clarita, Calif., office of Grubb & Ellis.
In addition to Mann, TGVI, and TPIMS, the roster of users at FCI includes a healthcare campus and an all-suites hotel called Homewood Suites by Hilton, envisioned for researchers and others working at FCI.
Martin Memorial Health Systems won a certificate of need from the Florida Agency for Health Care Administration in June 2007 to build a 700,000-square-foot patient facility in western St. Lucie County. But construction remains in limbo after two HCA-owned rival hospitals, St. Lucie Medical Center and Lawnwood Regional Medical Center, appealed to the agency to reverse the decision. An administrative hearing is set for November, MMHS spokesman Scott Samples said.
The not-for-profit MMHS, based in Stuart, has projected the appeal could delay construction by one to two years.
The 300-suite Homewood Suites by Hilton “is commencing construction shortly [and plans] to be open early next year,” another Core spokesperson, Elizabeth Johnson, told BRN. A pair of Albany, NY, developers, BBL Development Group and Equinox Companies, will build the hotel along with two restaurants.
Tradition has been approved for 8 million square feet of commercial, retail, R&D, and industrial space over 25 years, including the components of FCI.
Legislative Wrangling, Weak Tax Receipts Cloud Fla. Bid to Build Life-Science Anchor
By joining with local governments to shower hundreds of millions of dollars on subsidies to life science employers, Florida hopes to re-anchor its economy away from its traditional bailiwick of seasonal and lower-paying sectors such as tourism.
Yet an economist warns that the Sunshine State’s fiscal future remains clouded by turbulent tax growth and an inability among state officials to agree to long-term budget and spending reforms aimed at reigning in the economic turbulence of recent years.
“That’s a good question: ‘How do we fund state and local government to manage an economy that is going to be a trillion-dollar economy within four to five years?’” said Sean Snaith, director of the Institute for Economic Competitiveness, within the University of Central Florida’s College of Business Administration.
“We’ve got industry groups and local governments that recognize the benefits of trying to court and support and partner with the universities to try to grow the knowledge-based economy, and recognize that’s the wave of the future,” he told BRN last week.
At the same time, he said, the state’s revenues are shrinking. Since recording a $2.5 billion gain for the 12 months ended June 30, 2006, state revenues have grown, but below projections. For fiscal 2008, which began July 1, 2007, recurring revenue is projected to grow just 0.3 percent, or $70 million, to $26 billion.
But over the next two years, the state has projected increases of 5.5 percent for 2008-09 and 7.2 percent for 2009-10, with an updated revenue forecast due next month.
State lawmakers have responded by cutting spending while insulating senior citizens and winter residents from huge property tax hikes.
To that end, officials have placed on the Jan. 29 state primary ballot a referendum on a series of state constitutional amendments aimed at cushioning the effect of expected future property tax hikes.
The amendment includes:
- Raising the homestead exemption between $50,000 and $75,000 by exempting the assessed value from all property taxes except those levied by school districts;
- Allowing homeowners to transfer to their new homestead the homestead benefits they accumulated under the state’s Save-Our-Homes law;
- Exempting from property taxes the first $25,000 in assessed value of tangible personal property; and
- Limiting assessment increases to 10 percent each year for non-homestead property, with school taxes also being the exception. This provision would expire Jan. 1, 2019.
“I believe the struggle with the property taxes has revealed it is something that we really need to return our focus to, and rethink how we govern the state,” Snaith said. “How long that will take, I am not sure.”
That is because it is hard, he said, to gauge how lawmakers will reconcile the longtime resistance to state government spending with the desire by life sciences advocates and other interests for more state largesse.
Snaith recently authored a three-year economic forecast of economic trends shaping the state and 12 of its most populated regions. According to Florida & Metro Forecast: 2007-2010, which can be read here, the fastest-growing segment of Florida’s economy during the period will be professional and business services, which is set to rise by 22 percent or 297,100 jobs, from about 1.4 million in the fourth quarter of 2007, from under 1.4 million now to almost 1.7 million jobs.
The number of jobs in education and health services is also set to rise, but by the third-highest percentage of 2.4 percent, or by about 68,900 jobs, from almost 1.02 million to about 1.09 million.
Those trends could bode well for future growth in the life sciences industry, Snaith said, since biotech jobs can fall into either category.
“Relative to how economic development typically occurs, which is more of a glacial movement, this will be happening very fast,” Snaith said.
That should help bounce the state’s job growth rate back after this year, according to Snaith. Florida’s annual job growth rate is projected to rise from 1.6 percent in 2007 to 1.7 percent in 2008, 2.8 percent through 2009, and back to 2.6 percent in 2010. “The fundamentals of the state — housing correction aside — are still pretty solid,” he said.