CREVE COEUR, Mo. – A Maryland developer is weeks away from breaking ground on a $45 million speculative lab-office building in this St. Louis suburb that will be co-anchored by the Nidus Center for Scientific Enterprise, one of Missouri’s key biotech incubators.
The 153,000-square-foot building, one of three the developer hopes to build over the next several years in the city’s “BioBelt” biotech cluster, will occupy 8 acres of the 40-acre Donald Danforth Plant Science Center, itself an anchor of the St. Louis region’s life sciences cluster.
According to the developer, Wexford Science + Technology of Hanover, Md., Nidus will occupy half of an approximately 30,000-square-foot floor in the building. Wexford said it will seek tenants growing out of Nidus and two other St. Louis area incubators: the Center of Research, Technology and Entrepreneurial Exchange, and the Center for Emerging Technologies.
“We are probably close to … break[ing] ground in the next couple of weeks or month,” said Louis Kiang, vice president with Wexford, which is leasing the 8-acre site from the Danforth center for 65 years.
“Our focus is to capture those companies that graduate from Nidus, from Cortex, from the CET,” Kiang added. “They’re on their second or third round of funding. They’re real companies. They have an idea that works [even though] it may not be commercially viable. Those are the tenants we’re trying to attract. They’re going to be 5,000 to 7,000 to 10,000 square feet, typically.
Kiang spoke Oct. 24 during a presentation on the Danforth expansion made at the center to attendees of the Association of University Research Parks’ 2007 annual conference.
Kiang said Nidus is one of at least three occupants or prospective tenants for the new building, which will rise on the site of a parking lot north of the Danforth center’s existing building, at 975 N. Warson Road. He said that Wexford has had lease talks with Monsanto “on some of their needs,” such as swing space; as well as with “a local community college.”
Kiang said it will cost $30 million to build just the core and shell of the building based on a $200-per-square-foot cost average. Tenant improvements on the building’s 52,000 square feet of lab and lab-support space, together with 21,000 square feet of administrative lab space, will add another $200 per square foot to the final lease price.
The four-level building – three visible stories plus an underground level — will include 12 lab modules per floor; 42,000 square feet of mechanical space; 24,000 square feet of amenities that include a cafeteria, a fitness center, and conference rooms; and 14,000 square feet of greenhouse space.
If Wexford builds the on-spec project as planned, it will have succeeded where two previous developers, Desco Group and Alexandria Real Estate Equities, have failed. With plans to undertake the project since 2001, the groups failed to follow through despite the fact that BioBelt leaders for several years have said that developing the Danforth campus was a pressing need.
Wexford, a subsidiary of Wexford Equities, has either completed, is currently constructing, or plans to build a variety of projects nationwide. One project nearing completion is a 155,000-square-foot building for the Science Center in Philadelphia, set to be completed in the first quarter of 2008 and part of a $600 million plan to more than double the campus’ leasable area from 1.7 to 3.5 million square feet.
At University of Maryland, Baltimore, Wexford over the summer completed a 215,000 square feet at BioPark, the second building on the life sciences campus planned for 1.2 million square feet. In May, Wexford completed the $22 million, 100,000-square-foot first building at Innovation Research Park @ ODU, as in Old Dominion University, in Norfolk, Va. And in 2002, Wexford completed a 268,000-square foot, build-to-suit R&D and testing facility for Tyco Telecommunications, a business unit of Tyco Electronics.
Wexford is familiar with St. Louis, having completed last year a 200,000-square-foot medical faculty office building for Washington University School of Medicine at 4990 Children’s Place.
Plans for the new building do not include additional lab or office space for the Danforth center, which plans to construct another building west of its current facility. However, it won’t move to develop that site until its workforce expands to at least 250 researchers and support staffers, said Sam Fiorello, Danforth’s chief operating officer.
At present 220 employees from 28 countries work at the Danforth center, a $75 million, 150,000-square-foot facility focused on plant biotechnology opened in November 2001. Danforth – which will celebrate the 10th anniversary of its establishment next year — is “in the final stages” of building new labs and recruiting its first director for its year-old Enterprise Rent-A-Car Institute for Renewable Fuels, Fiorello said. The institute was launched after Enterprise founder Jack Taylor and his wife, Susan, gave the Danforth center $10 million in 2005 and $25 million the following year, which was matched by the Danforth Foundation.
The Danforth center is a $20-million-a-year research institution named for the father of founder William Danforth, the one-time CEO of pet food manufacturer Purina and chancellor of Washington University in St. Louis. Over the past decade, the center has sought to coalesce St. Louis’ academic, agricultural, and research institutions into a single top-tier cluster focused on plant biotech.
One of Danforth’s partners is the Missouri Botanical Garden, the world’s second-largest after London’s Royal Botanic Gardens.
The Nidus incubator, which will co-anchor Wexford’s new building, occupies 41,000 square feet across the street from the Danforth center on the Monsanto Company world headquarters campus. Nidus will vacate that space and return it to Monsanto when Wexford completes the new building, which is projected to take place in the first quarter of 2009.
Monsanto helped create the Danforth center, including the campus, a decade ago through $150 million in donations and $25 million in state tax credits.
Room to Grow
Robert Calcaterra, president and CEO of the Nidus center, told the AURP audience last week that the new space will allow the center to solve two of its most vexing problems: Accommodating its growing roster of tenants, and finding space for successful startups that outgrow Nidus.
Nidus anticipates such a scenario. The center was designed to accommodate 14 or 15 companies, which it calls clients, and currently houses 10 early-stage businesses. “We’re going to have serious problems because they’re all growing, and we’re full,” said Calcaterra. “What we found was that companies tend to get big a lot faster than we anticipated.”
Nidus also miscalculated how much office space it needed, he said. As growing companies take on executives who need offices, Calcaterra said, the incubator needs a a tighter ratio of lab-to-office space than its current 70:30 ratio.
Even worse for Nidus, three of its 10 tenants occupy 60 percent of its space, and Nidus has formally run out of room.
“(The three) should be out of Nidus. They should be graduated,” Calcaterra said. “In fact, they are space-limited when they need to grow. So we’re really looking forward to the new building that’s going to be here.”
Until then, he said, he will locate future tenants at a new lab building recently completed at the nearby University of Missouri-St. Louis.
“We have not had space to move these companies out of the Nidus center where they could graduate,” Calcaterra said. “We just think there’s a need to move them on and move them out and have them a little bit more independent when they get to that state.”
“We’re going to see much smaller companies in our space in the new building, but we’re going to move them out faster,” he added.
Established in 2000, Nidus had a $1.7 million operating budget this year. Tenants pay most of the center’s expenses – including market-rate rents of $50 per square foot for lab space and $35 per square foot for office space. That leaves the center’s sole corporate sponsor Monsanto with only $190,000 in costs to subsidize – essentially, part of the salary of Calcaterra and a handful of staffers – compared with the full operating budget during Nidus’ first year of operation in 2000.
Calcaterra is a former Monsanto employee who managed incubators in Boulder, Colo., and Scottsdale, Ariz., before running Nidus. He recently accepted a buyout from the company – Monsanto is searching for a successor – and has begun working to launch his own venture-capital firm to assist the incubator companies emerging from area universities.
Nidus’ roster of startups includes bioenergy company Akermin; protein-based drug-discovery company APT Therapeutics; hepatitis C and respiratory syncytial virus drug-developer Apath; premature pregnancy test maker Cervimark; and Alzheimer’s disease drug-discovery company Edunn Biotechnology.
Other tenants include agricultural biotech firm Divergence; web-based medical software company Graphic Surgery; skin-treatment maker ISW Group; molecular diagnostic company Mogene; and BioGenerator, a not-for-profit that funds startups with proof-of-concept technologies deemed to have commercial potential.
Six potential new tenants will be admitted, Calcaterra said, but not until they raise money to pay Nidus’ rent, with help from the incubator.
Nidus is highly selective, Calcaterra said: Only eight CEOs have been allowed to run its companies temporarily, and two of the 200 chief executives seeking to join its CEO-in-residence program and lead the incubator companies have been approved. And only 20 of the 600 companies that have approached the incubator have been allowed to move in, six of them from outside the St. Louis region.
Of the 20 incubator tenants, six companies have graduated to space of their own elsewhere: Advanced ICU, Efficas, HumanZyme, Proteoplex, Quick Study Radiology, and TSV Industries.
“We ought to be at nine graduates,” Calcaterra said.
To date the 20 companies have collectively raised $140 million in financing and expect to increase that total to $200 million this year, he said: “Some of these companies are now raising $15 million, $20 million, $30 million at a clip.”
Tenants at Nidus need not have a connection to Monsanto to be considered for space at the incubator.
“Our mission, basically, is to create a critical mass of companies here in the region,” Calcaterra said. “When I came here nine years ago, I bet I could count on … two hands the number of companies that we’ve had here in the project area here in St. Louis.”
Since then, he said, that number has risen to “around 60 to 65 companies” – including companies nurtured at Nidus as well as in CET. That’s about one-sixth of the 369 life sciences and medical technology companies based in the St. Louis region, according to 2005 findings by the US Bureau of Labor Statistics’ Quarterly Census of Employment and Wages.
“There’s just many of them hitting the stage where they’re going to grow rapidly from 25 to 30 employees to 100 employees, and where they’re raising significant amounts of money, $28 million to $30 million at a time,” Calcaterra said.
One sign of life sciences growth in the St. Louis area appears in venture capital statistics: During the first three quarters of 2007, life sciences companies have raised a combined $27.9 million in venture capital, according to figures released earlier this month by Ernst & Young. That’s a 43 percent jump from the $19.45 million awarded during the same nine months in 2006.