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Eastward Ho! Beckman Coulter Leases Indy Facility for Relocated Palo Alto Operations


Beckman Coulter will move its centrifuge manufacturing site from Palo Alto, Calif., to 142,500 square feet within Building 87 at the Park 100 industrial campus owned by Duke Realty Corporation.

Beckman Coulter began delivering last week on an eight-month-old promise to move its centrifuge manufacturing operations from California’s Silicon Valley to the Indianapolis region, where it agreed to lease nearly one-third of the space at a vacant industrial building.
Beckman Coulter has signed a long-term lease for 142,500 square feet at Building 87, one of 73 buildings totaling 12 million square feet owned within the Park 100 industrial campus by its developer, Indianapolis-based Duke Realty Corporation; another 74 buildings within the campus have other owners.
“The Palo Alto facility had served Beckman Coulter well over the years, but moving was the best approach to continue the long-term growth and health of that product line for us. Hopefully, we’re able to lower some of our costs and remain competitive by moving into Indianapolis,” Beckman Coulter spokeswoman Mary Luthy told BioRegion News in a Sept. 19 interview.
The deal, announced Sept. 18 by Duke Realty rather than Beckman Coulter, will allow the medical device giant to carry out plans announced Jan. 10 to move its life sciences operations east from Palo Alto, Calif. Beckman Coulter expects to base 120 of its current 220 Palo Alto jobs at the new facility, but Luthy said some of the 120 may be shifted to an existing facility the company operates in Indianapolis: “Until transition plans are finalized, we can't really say how many will move and how many will be new.”
Beckman Coulter plans to finish its move to Indy and shut down its Palo Alto facility by September 2008. “At this point, they’re still developing a transition plan that will guide if there is any movement that happens before 2008,” Luthy said, adding that none has been decided.
The Palo Alto shutdown came after a review of facilities and operations touched off by the “One Company” restructuring announced by Beckman Coulter in July 2005, six months after Scott Garrett took over as CEO.
As part of that restructuring — the company’s second in three years — Beckman Coulter cut 350 jobs and fused two operating divisions into one. The company also created four business groups, including the one that covers the centrifuge manufacturing operation, “Discovery and Automation Systems.”
The company has projected the restructuring will save it $7 million a year starting in 2008; Beckman Coulter would not break out how much of that savings will come from the move out of Palo Alto.
During the first half of 2007, the company listed restructuring charges of $9.7 million, on top of $14.3 million in 2006 and $36.4 million in 2005.
In a similar cost-conscious vein, Beckman Coulter this past spring ended its attempt to acquire diagnostic products maker Biosite once its bid was surpassed by the $1.67 billion offer of Inverness Medical Innovations. Earlier this month, Garrett, who is also Beckman Coulter’s president, told Reuters his company was still interested in acquisitions, but will pursue instead smaller deals in promising areas like immunoassays and molecular diagnostics.
During the second quarter, Beckman Coulter saw its net earnings zoom 56 percent, to $69.4 million from $44.6 million, on revenue that rose 11.9 percent, to $689.7 million from $616.3 million.
The Palo Alto facility is several hours’ drive north of Beckman Coulter’s headquarters in Fullerton, Calif. Beckman Coulter leases the Palo Alto site now, and will vacate the space when it completes its move to Indiana.
Indy Incentives
Beckman Coulter’s new Indianapolis site is near an existing company facility for its discovery and automation business within Park 100, at 7451 Winton Drive. Some 150 workers are based at that facility, which has some research and product development operations, and some life science laboratory automation systems such as those designed to handle lab fluids as part of a testing process.
“The proximity to our existing facility probably had a lot to do with [the decision to expand in Indianapolis],” Luthy said. “What we were also looking at was the quality of the workforce, the quality of living in the region, the region’s emphasis on trying to get more companies in the life sciences area.”
Beckman Coulter will receive incentives from Indiana's lead economic development agency, the public-private Indiana Economic Development Corporation, and the city of Indianapolis. The IEDC earlier this year announced it was offering Beckman Coulter about $2.7 million in tax credits that hinge on meeting commitments for job creation and capital investment, as well as $670,000 in job training grants; an IEDC spokesman did not return calls from BioRegion News.
On Sept. 19, the Indianapolis city government’s Metropolitan Development Commission approved a 10-year tax abatement allowing the company to save $644,000, reflecting about half its real and property taxes. After 10 years the company will pay close to $116,000 in annual property taxes, compared with the $8,800 now paid by Building 87.
According to the state’s leading life sciences industry advocate, another factor in Beckman Coulter’s Indianapolis expansion was a desire to grow in a region where many of its customers are based.
“There’s a great deal of discovery research, clinical work, that’s being done in Indiana and central Indiana, so it’s been a natural place for Beckman Coulter to be,” David Johnson, president and CEO of BioCrossroads, the state’s life sciences industry group, told BioRegion News. “Because we have such a large piece of the pharmaceutical and device business, and very active discovery operations within our hospitals and the medical school, there’s a pretty large supplier network there, and Beckman Coulter is one of the best, so they’ve had a strong presence in the area for a long time.
“They are very good jobs, in the manufacturing and distribution area. We have a lot of strengths in that field. But [Beckman Coulter’s expansion] really adds to our ability to characterizer ourselves as a leading life sciences region,” Johnson added. “They’re moving from Palo Alto, which is another leading life science region. That’s good news for us.”
While Beckman Coulter is a significant employer, Johnson said, it is not the largest of the life sciences businesses in and around Indianapolis, which include headquarters for both Eli Lilly and Semafore Pharmaceuticals.
The metropolitan service area consisting of Indianapolis and its suburbs houses the nation’s ninth-largest biopharma cluster, according to “Growing the Nation’s Bioscience Sector: A Regional Perspective,”a report released in January by Battelle. The report based its ranking on 2004 employment totals showing the Indy metropolitan area had 24,051 bioscience jobs.
However, medical device jobs accounted for only 4,808 of those jobs. Had Battelle’s rankings been based on medical device jobs, the Indianapolis region would have placed 17th, behind the rest of the top 10 overall bioscience metropolitan areas and those of Dallas-Fort Worth-Arlington, Miami-Fort Lauderdale-Miami Beach, Salt Lake City, Tampa-St. Petersburg-Clearwater, Seattle-Tacoma-Bellevue, and Milwaukee-Waukesha-West Allis.
Since 2004, Indiana life science leaders have focused on boosting not only biopharma but the state’s medical device sector, hoping to capitalize on the presence of three of the nation’s top five prosthetics makers — Biomet, DePuy, and Zimmer — plus the presence of pharma companies that have spawned spinoff companies. On the state’s northern end, Warsaw, Ind., has drawn its own cluster of device makers specializing in orthopedic products as well as replacement knees and hips.

“The Palo Alto facility had served Beckman Coulter well over the years, but moving was the best approach to continue the long-term growth and health of that product line for us. Hopefully, we’re able to lower some of our costs and remain competitive by moving into Indianapolis.”

In the case of Beckman Coulter, BioCrossroads teamed up with the Indiana Economic Development Corporation to promote Indiana as a less costly alternative to Palo Alto late last year, early in the company’s site search.
“They were contemplating a move, but they were not sure where. They weren’t even sure at the time it was going to be in the US,” Johnson said. “We worked with the IEDC to lay out the case for why they should move their operations from a more expensive area to central Indiana, where they can get the same quality of work done for less cost.”
Johnson said BioCrossroads hopes to lay the groundwork for additional biopharma expansions and relocations next month at the fourth annual Indiana Life Sciences Forum, which it will co-present with Burrill and Company at the Westin Indianapolis hotel Oct. 22-23.
Finding a Vacant Site
Once Beckman Coulter decided on the Indianapolis region in January, the company worked with the IEDC and property owners to decide on a specific site.
Beckman Coulter said it found what it wanted at Park 100 — specifically Building 87, (5355 West 76th St.), which had been vacant since last year, when Epson USA grew out of the entire single-story, 462,000-square-foot industrial building and opened a new 730,000-square-foot distribution center in the Indianapolis suburb of Plainfield, Ind. Epson has promised to create there 130 new jobs, bringing its total employment to more than 500.
In addition to being close to Beckman’s customer support training facility, Building 87 had other features suitable for manufacturing, such as a 24-foot ceiling height, 40-foot by 60-foot column bay spacing, 42 dock doors, and parking for 354 cars.
Building 87 also has plenty of additional space for Beckman Coulter, or other would-be tenants. On its website last week, Duke Realty was marketing the two remaining sections or “suites” at Building 87 — one of 191,961 square feet, the other 127,780 square feet — for $3.45 per square foot, triple net, or $3.35 per square foot, triple net, for a tenant willing to lease all available 319,741 square feet.
Next to the building is 3.5 acres of adjacent land Duke Realty said was suitable for building expansion or for car or trailer parking.
“We have industrial parks, but there are a lot of other industrial parks around this area that could have easily accommodated them. I think [Beckman Coulter’s choice of Building 87] had a lot to do with the proximity to their existing facility. That was one of the determining factors, as well as property availability — finding the right building at the right price,” Joel Reuter, a spokesman for Duke Realty, told BioRegion News.
He would not discuss lease terms except to say Beckman Coulter signed a “long-term” lease.
Reuter said Park 100 offered “a good location because of the transportation.” The industrial park sits along Interstate 465, between West 71st and West 86th Streets. A recently expanded, full cloverleaf exit serves I-465 at West 71st Street, a commercial corridor served by city bus. And the campus is a 10-minute ride south on I-465 to both Indianapolis International Airport and downtown Indianapolis.
Park 100 is one of three Duke Realty industrial campuses that are within a federal Foreign Trade Zone. The zones allow tenant companies to apply for benefits such as exemption from US Customs duties for re-exports, deferral of duties on imports, access to streamlined Customs procedures such as filing a single Customs entry weekly rather than per shipment, and exemption from state/local inventory taxes on foreign goods and domestic goods held for export.
Reuter said the Beckman Coulter lease reflected a recent trend of life sciences companies showing more than casual interest in Park 100 and other properties owned by Duke Realty. That trend, he said, should enhance leasing at Duke Realty’s 1,700-acre Anson mixed-use community in the Indianapolis suburb of Boone County — especially since Anson is closer to Purdue University in West Lafayette, Ind., than Indianapolis, which is an hour’s drive away.
Headquartered in Indianapolis, Duke Realty is the nation’s largest publicly traded office/industrial real estate company, with a portfolio of about 117 million rentable square feet leased by approximately 3,500 tenants, as well as about 7,500 acres of undeveloped land that can support over 111 million square feet of additional development.
“We’ve been seeing an increase in life sciences, and it’s in no small part due to BioCrossroads,” Reuter said. “I think that we’re seeing some actual results for the years of early planning, either growth from existing customers who have continued to expand in the area, or new customers.”

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