WESTON, FLA. — Academic institutions and developers in Florida are scrambling to build new facilities to capitalize on a wave of startups they expect to be spawned in the state over the next few years, whether through their own commercialization programs or those of research institutes expanding into the state.
The furthest along of these facilities will open next month. The University of Florida’s Sid Martin Biotechnology Incubator will cut a ceremonial ribbon Nov. 19 to mark completion of a 3,600-square-foot office annex across from its current facility, within Progress Corporate Park in Alachua, Fla., northwest of Gainesville, Fla. The space will be leased to startups at cost, with services that include Internet service and housekeeping.
Patti Breedlove, the incubator’s assistant director, told BioRegion News the annex will bring much-needed office space to Sid Martin, which now houses 12 tenant companies in its 40,000-square-foot facility, consisting of 18 wet labs. Completed in 1995 for $11.5 million, the incubator focuses exclusively on life science startups and has been full the past three years.
Breedlove spoke minutes after discussing the incubator at “Redefining the Cluster: Florida’s Research Parks, Incubators and Facilities,” a panel discussion during the 10th annual conference of BioFlorida, the state’s life sciences industry group. The conference took place here at the Hyatt Regency Bonaventure hotel and conference center.
Increasingly in recent years, she said, startups at Sid Martin have needed the office space that the annex will provide.
“We don’t have enough office space for the companies that are in our incubator program,” Breedlove said. “For a company that has more people up front now, because they’re growing faster, they have investment, we’ve been challenged on a number of interesting fronts as our companies have begun to mature more quickly.”
Of 36 companies accepted into the incubator since it opened, 12 are there now. Florida’s life sciences growth, Breedlove said, explains why the last four startups approved at Sid Martin have private investor capital and management teams with business experience, plus extensive tech transfer versus the largely faculty-driven ventures fueled by their own funds with SBIR grants.
What hasn’t changed in the newer startups, she added, was their need for lab space.
“We’re the only game in town still. Eventually they’ll have more options, but right now the incubator program plays an absolutely essential role in helping grow some of the very small startups to spin out of UF,” Breedlove said in the panel talk.
Leaving the Nest
While the annex should help short-term, Sid Martin’s longer-term plan is to add space. The incubator is in talks with a prospective donor of a building adjacent to its 6-acre property it would not identify. But any additional space won’t cause Sid Martin to relax its length-of-stay rule: No more than five one-year renewable terms, with extensions possible by consent of UF’s Biotechnology Development Institute and Biotechnology Advisory Committee.
“We’re not interested in simply growing, growing, and growing the incubator. We’re interested in seeing people graduate and move into private space,” Breedlove said.
To keep those companies in the area, Innovation Partners Limited, the developer group that owns Progress Corporate Park, last May completed a 33,000 square foot, build-to-suit lab-office building. Tenants include AxoGen, a developer of nerve repair and regeneration products that outgrew its space at Sid Martin. AxoGen licenses technologies from UF’s McKnight Brain Institute and other institutions.
This week Innovation Partners broke ground on two new 33,000 square foot buildings. The two are set to be completed in March 2008, creating a total of 100,000 new square feet developed over the past year.
“The [Sid Martin] biotech incubator is a great feeder for the other buildings, as well as for [office properties along US Route] 441 in Alachua,” Sandy Burgess, the manager of Progress Corporate Park, told BioRegion News via e-mail.
Incubator companies pay rent of $26 per square foot per year, allowing them use its animal facility, climate-controlled greenhouse, $1 million in shared scientific equipment, and pilot-scale fermentation facilities. The facilities reflect the fact that many of the companies being spun out of UF are therapeutics companies that need the incubator’s specialized equipment, versus med device businesses requiring less extensive amenities, Breedlove said.
Sid Martin this past year was judged the nation’s best incubator, and first runner up in the National Business Incubator Association’s global “2007 Incubator of the Year” award.
Proximity to Scripps
Also set to open soon is a 46,000-square-foot incubator space being built by Alexandria Real Estate Equities in Jupiter, Fla. The Pasadena, Calif.-based real estate investment trust says its Alexandria Innovation Center at 555 Heritage Drive is designed to draw startups seeking to be close to the Scripps Florida research institute now under construction about 2 miles southwest.
Alexandria will open its new facility “in a couple of months,” said Patrick Kay, director of Florida operations for Alexandria, during the panel talk.
Kay said Alexandria’s Florida project will also capitalize on a close relationship his company has developed with Scripps in housing many of its startups in and around the institute’s home base of La Jolla, Calif. La Jolla is in the San Diego region, where Alexandria owns and manages 1.3 million square feet of lab space.
Florida, Kay said, will be one of the smallest markets for Alexandria, but one with tremendous growth potential. The REIT now oversees a total 11 million-square-foot lab portfolio worldwide, plus another 6 million square feet of lab space in development stages.
“Florida is really what we see as a region with a lot of cluster potential, but different than, I think, a lot of the other clusters” in emerging so far as a series of nodes, or sub-pockets of research activity, Kay said.
One of those nodes, he said, was Jupiter, given the presence of Florida Atlantic University and especially, Scripps’ construction in progress of a 364,000-square-foot facility consisting of three buildings within a 100-acre portion of the Florida Atlantic University campus in Jupiter, Fla. The facility is set to open in 2009.
Scripps is one of at least two institutes envisioned for Palm Beach County; Germany’s Max Planck Society has announced plans to open its first institute in the US within the FAU campus. Max Planck is in talks with officials from Palm Beach County and Enetrprise Florida, the state’s public-private economic development agency, to secure $190 million of incentives.
“The way we operate is really, we want to be next to the scientific capital, where we feel that is where knowledge and that is where the growth is going to be,” Kay said.
When Scripps announced its plan for Jupiter in 2006, a year after a lawsuit torpedoed its original plan to build a $137 million, 100-acre campus at Palm Beach County’s undeveloped Mecca Farms property, Kay said, Alexandria began scouting nearby sites it could develop into lab space quickly. It found what it wanted at 555 Heritage Drive, a two-story building it is renovating into a series of wet lab suites.
“Our vision for this is really to create a series of small spinouts from Scripps, maybe spinouts from Max Planck, smaller companies that want to come here and get started because they want to be by those resources,” Kay said. “We located in Jupiter as close as we can [to Scripps], less than one half mile away from their campus as well as Florida Atlantic University.”
To nurture those startups, Kay said, Alexandria envisions creating and investing in syndicates formed to assist startups in Jupiter as it has elsewhere. Those startups would not have to be tenants of the Alexandria Innovation Center.
Scripps is one of four research institutes that either are expanding or planning to expand into Florida, swayed in no small part by a combined billion dollars in state and local economic subsidies awarded over the past three years. Scripps accounts for just over half that total, or $510 million from the state and Palm Beach County.
In addition to Scripps and Max Planck:
- Torrey Pines Institute for Molecular Studies is constructing a new $80 million, 100,000-square-foot campus on 20 acres within the Florida Center for Innovation at the master-planned Tradition community in Port St. Lucie. The facility is set to open in December 2008. Torrey Pines won $71.5 million in subsidies, including $40 million from Port St. Lucie toward infrastructure improvements at FCI, in return for guaranteeing at least 189 jobs over the next decade.
- SRI International has announced plans for a 35,000-square-foot marine research and technology facility in St. Petersburg. SRI plans to grow to 100 jobs over the next five years, half the 200 projected over the next decade. SRI will receive $20 million from the state Innovation Incentive Fund, $5 million each from the state and Pinellas County toward design and construction, while St. Petersburg provided the project site and will build a facility for 100 employees at the Port of St. Petersburg, which the city will lease directly to SRI.
- Burnham Institute for Medical Research broke ground Oct. 3 on an $80 million, 175,000-square-foot facility within the Orlando, Fla., master-planned community of Lake Nona, set to open in spring 2009. The project has received $350 million in state and local subsidies.
The Burnham facility will rise within part of the 7,000-acre Lake Nona, a $2 billion master-planned community being developed within Orlando, Fla. Burnham already employs 21 people within 14,000 square feet of temporary space donated by Florida's Blood Centers at its building within Orlando Central Park
Rasesh Thakkar, senior managing director with Lake Nona owner-developer Tavistock Group, said Burnham will be among several science-oriented projects to rise within a 600-acre science and technology park within Lake Nona. Others include the new $68 million University of Central Florida, which on Oct. 3 moved the first dirt on its $68 million College of Medicine, in a joint ceremony with Burnham; a 200,000-square-foot University of Florida research center to be shared with Burnham; a $600 million Veterans Affairs Medical Center; and a Nemours Children’s Hospital campus with research facilities. UCF’s medical college is set to open about the same time as Burnham’s site.
The science-tech park will include “no less than 75,000 square feet, and it may even go up to 150,000 square feet” of wet-lab space, Thakaar said, within buildings to be built on spec, without signed tenants.
“We have prospective recruits that we’re thinking about bringing to this market. … But in an emerging market like Florida, there is no way we can take the risk of bringing up a spec building at this point.”
The lab space is now in design phases. “We’re going to start building as soon as we feel comfortable with the design,” Thakkar said, answering a BioRegion News question at the panel discussion.“As soon as one building is one-third to one-half committed, we’ll start on the next one.”
“We are developing what we hope will be a unique cluster that in a perfect world will become a model for the country, a place where people come together in the best environment of live, work, and play, where they truly believe they can change the world,” Thakkar said.
Plans for Lake Nona also include 5 million square feet of R&D space; 9,000 residences, 2,000 of which have already been built; 2 million square feet of office space; a 1.1 million-square-foot retail “town center;” 2,250 hotel rooms; a 324-acre city park; and 44 miles of trails. Lake Nona’s Golf and Country Club can boast of having pro golfers Ernie Els and Sergio Garcia among its members-in-residence.
To date, Thakkar said, Tavistock has built 2,000 of the residences and is now studying how to incorporate a health and wellness theme into its retail center, as well as build a child development center and a magnet school specializing in the sciences.
Headquartered in San Diego, Tavistock is a global private investment company whose holdings range from properties, to the largest share of Bear Stearns stock, to the San Antonio Spurs basketball team. Tavistock owns its land holdings debt-free – a practice that Thakkar said will allow the developer to stick to its vision for Lake Nona, even if it takes several years: “We have to be patient. This is going to take time. It’s not going to happen overnight.”
Forty percent of Lake Nona will remain undeveloped, Thakkar said.
John Fremstad, vice president of technology business development for the Metro Orlando Economic Development Council, said at the panel talk Orlando hopes to draw life science companies in part due to its presence of tech-based companies serving the space and defense markets – as well as through a recent publicity spate from national magazines. Entrepreneur labeled Orlando the nation’s top “Entrepreneur City” while Business Week grouped Orlando with Stockholm, Sweden, and Singapore as three “hot” communities.
Financing Additional Space
South of Orlando in Florida’s southwest region, Florida Atlantic University hopes the state will generate enough life sciences activity to fill, then expand, two tech-based research parks, one in Boca Raton, the other in Deerfield Beach.
Since 1985, FAU has left it to a state-created authority to develop the research parks intended to nurture spinoffs spawned by its technologies. Last week the Florida Atlantic Research and Development Authority closed on a new round of capital that will allow it to build three more buildings totaling 75,000 square feet. The new space is part of the total 300,000 additional square feet in expansion space allowed for the Deerfield Beach park, said Scott Ellington, the authority’s executive director.
He said another 200,000 square feet can be built at the Boca Raton park.
FAU enhanced its chances of filling its Deerfield Research Park when, for the first time, it hired a commercial real estate brokerage to market the space, Flagler Real Estate of Flagler Beach, Fla.
“Tenants will love the transportation convenience,” since the Deerfield beach park sits off Interstate 95, on the site of a former rest stop visible along the highway, Ellington said. “We’ve talked to one of the University of Miami facilities that would like to get out of Miami and build in Deerfield.”
One factor behind FAU’s interest in expanding the campus: Developing another source of revenue, since the university and other public universities and colleges have been forced to freeze the enrollment of freshmen students entering the school next September at this year’s levels.
Scouting for Opportunities
Florida’s potential for life sciences growth has a San Diego builder of research space scouting the state for opportunities.
Phase 3 Properties will explore development opportunities through a new Dania Beach, Fla., office being overseen by Tom Lewis, a principal partner with a local builder, Bay City Properties: “What we’re trying to do is just understand the market in Florida, and hopefully we’ll get a small project that we can work on, and start to build a business in South Florida,” Lewis told BioRegion News.
Warner Bonner, principal with Phase 3, told BRN it would not build without first signing one or more tenants to leases. One prospective tenant with which it has had talks, he said, was a Florida therapeutic company whose name he would not disclose: “It’s very real, and we’ve already had meetings.
“We have prospective recruits that we’re thinking about bringing to this market. We’re talking to institutions about central and southern Florida about such. But in an emerging market like Florida, there is no way we can take the risk of bringing up a spec building at this point,” Bonner said in an interview minutes after a presentation during another panel talk during the conference, “State Funding & Incentives.”
Phase 3’s portfolio includes the $300 million, 400,000-square-foot Asia Pacific Research Center, a campus developed for the private K-12 Kamehameha Schools in Honolulu’s Kakaako district, as well as the $300 million, 486,000-square-foot BioBAT R&D park being developed within part of the old Brooklyn Army Terminal in New York City.
To build the first $100 million, 150,000-square-foot phase of the Hawaii project, Phase 3 worked with HiSciTech, formerly the Hawai Science & Technology Council, and four startup tenants willing to sublease between 10,000 and 50,000 square feet from the state in return for a guarantee that the state would be the primary tenant of the developers, a venture of Phase 3 and Kajima Urban Development International, a Santa Monica, Calif., unit of Tokyo-based Kajima.
The developers also secured a $28 million federal New Market Tax Credit, from which they extracted $8 million in equity passed through to tenant businesses in the form of below-market rent. The deal was needed, Bonner said, because the tenants were unable as startups to secure private financing.
BioBAT is a collaboration between the New York City Economic Development Corporation and SUNY Downstate Medical Center through the SUNY Research Foundation. The project received $54 million in city and state grants, plus $45 million in financing from Bank of America that helped Phase 3 secure historic and new market tax credits. BioBat’s first tenant, the International AIDS Vaccine Initiative, made news over the summer when it agreed to lease 36,000 square feet there [BioRegion News, June 25].
Bonner said Phase 3 would use its experience in Hawaii and New York to link governments, public-private economic development groups, and startups to jumpstart Florida projects.
“We’ll need every incentive available to us to launch these projects,” Bonner said.