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Tavistock to Build 100K-Sq-Ft On-Spec Wet-Lab in Planned Fla. ‘Medical City’

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A Florida developer last week made good on a four-month-old promise to quickly bring speculative laboratory space to market by announcing it would build a 100,000-square-foot wet-lab facility on-spec within its $2 billion, 600-acre Lake Nona science and technology park being developed in Orlando.
 
The Tavistock Group said it would build the project without a signed tenant because it saw enough potential demand from startup life-sciences companies to justify building it.
 
By proceeding with the wet-lab project, Travistock will help expand a life-science cluster that is home to some 150 companies employing 9,300 people and generates $2.6 billion in direct and indirect economic activity, according to the Orlando region’s top economic development official for attracting tech shops.
 
“We think it’s kind of an exciting time and a big deal for us to have a developer [build] spec wet-lab space,” John Fremstad, vice president for technology industry development with the Metro Orlando Economic Development Commission, told BRN last week. “Because of the momentum we’re having, there seems to be a need, and we’ve had people inquire about space and would like to put their operation here. But we haven’t had the large availability till now. We’ve had 5,000 [square feet] here and 10,000 [square feet] there currently, but we don’t have 100,000 square feet or the ability to do a 20,000 square-foot deal.”
 
In addition, the, projects like the wet-lab building will likely attract venture capitalists to invest in Orlando-area startups as Lake Nona tenants get developed, the head of a statewide VC group told BioRegion News.
 
“The spinoffs are starting to come, and they’ll continue to develop as time goes along,” Robin Kovaleski, executive director of the Florida Venture Forum, said in an interview.
 
Life-sciences companies, she said, are benefiting from a state venture-capital climate as warm as the 80-degree temperatures Orlando recorded last week. Kovaleski said Florida finished last year as the nation’s eighth-highest state measured by amount of venture capital generated in all industries, generating $680 million in 2007 compared with $320 million in 2006.
 
In a Feb. 18 press release, Tavistock said its project “will be designed to house research institutes and private businesses seeking to capitalize on the synergy taking form at Lake Nona,” which includes the Burnham Institute for Medical Research and the University of Central Florida’s College of Medicine.
 
“This specialized facility will act as a catalyst that continues the development of the bioscience cluster at Lake Nona,” Rasesh Thakkar, senior managing director of the Tavistock Group, said in the press release. “We are building a cutting-edge home for the next wave of research institutes and bioscience companies.”
 
Tavistock’s wet-lab building, which it expects will be open in the spring of 2009, is the first lab component of its life-science project not developed by a research institution to move past the drawing board. Speaking Oct. 16, 2007, in Weston, Fla., during the 10th annual conference of BioFlorida, the state’s life sciences industry group, Thakkar said Tavistock would build “no less than 75,000 square feet, and it may even go up to 150,000 square feet” of wet-lab space within multiple buildings, all to be built on-spec [BioRegion News, Oct. 22, 2007].
Addressing BioFlorida conferees, he said Tavistock would start constructing each planned building every time it committed one-third to one-half of a building to life-science tenants. Yet in last week’s release, the developer said it wouldn’t build the wet-lab facility until next year because it had yet to approve a design. It said it will select a “signature” design from among several architectural firms.
 
The deadline for those submissions was among questions left unanswered last week by Travistock. So were questions concerning the project’s mix of lab and office space; its need for additional government subsidies in a state that has shelled out more than $1 billion to various life sciences projects; its potential to withstand competition for startups from another master-planned community 90 minutes away; and the amount of space projected to be used by spinouts of Lake Nona anchors such as UCF and Burnham.
 
Thakkar told the Orlando Sentinel that building out Tavistock’s lab space would cost more than $400 a square foot — which would bring the total cost of the project to more than $40 million. That cost would also apply to a second Orlando wet-lab building Thakkar told the newspaper that Tavistock plans to build at Lake Nona once tenants sign leases for at least half of the first building’s space. He did not say how large that building is now envisioned to be.
 
Thakkar was not immediately available for comment. A Tavistock spokeswoman did not respond to written questions submitted by BRN.
 
A ‘City’ Emerges
 
Whatever wet-lab space Tavistock builds will be part of some 5 million square feet of R&D space envisioned for Lake Nona’s planned “medical city.” Construction is in progress on the campus’ two life-sciences anchors, for which ground was broken last year: The $80 million, 175,000-square-foot Burnham Institute, as well as $200 million worth of projects for UCF that include the $99 million UCF Burnett School of Biomedical Sciences and the $68 million College of Medicine.
 
Burnham received $350 million in state and local economic subsidies, part of the roughly $1 billion in economic incentives showered by Florida and its local governments on seven life sciences research institutes over the past five years — a key reason why developers like Tavistock have spent recent years pursuing new life sciences projects statewide.
 
Burnham expects to employ between 250 and 300 researchers over the next decade in the facility. A Burnham spokeswoman could not confirm an update on the project furnished by UCF, namely that the institute has begun work on the second half of its lab building after completing the first, with the structure set to reach its maximum height or “top out” on April 24.
 
In its latest Construction Update Newsletter, issued earlier this month and available on a web site devoted to its Lake Nona projects, UCF said it was ahead of schedule on the five-story, 198,000-square-foot Burnett biomedical building, which is set to top out by year’s end and be completed in the spring of 2010.
 

“This specialized facility will act as a catalyst that continues the development of the bioscience cluster at Lake Nona.”

Around 30,000 square feet on the fifth section of the Burnett building will be occupied by the MD Anderson Cancer Research Center Orlando, which is moving its Cancer Research Institute to Lake Nona from a downtown Orlando site near the Arnold Palmer Hospital for Children.
 
MD Anderson, part of the Orlando Regional Healthcare hospital system, will pay UCF $2.5 million to occupy the building for up to five years while Anderson plans and builds its own research facility at Lake Nona. During that time, the two institutions are expected to collaborate on research and share core lab equipment. MD Anderson’s team of 12 researchers could triple with the space at Burnett, CRI director Cheryl Baker has said publicly.
 
UCF broke ground last October on its four-story, 173,000-square-foot College of Medicine, and plans to begin early site foundation and utility work in April, the newsletter said,
 
In addition to the UCF and Burnham facilities, Lake Nona will include two hospitals: A US Department of Veterans Affairs hospital and a new 550,000-square-foot hospital with an outpatient clinic to be developed by Nemours, the nation’s largest pediatric healthcare provider.
 
Last month, Tavistock announced that Nemours would purchase, for an undisclosed price, 60 acres of Lake Nona’s medical campus for its Nemours Children’s Hospital project, slated for completion in 2012. The deal came just a month after Nemours said it would shift its planned hospital from 37 acres within Lake Nona, between the UCF medical school and Burnham, to a 118-acre site two miles west of the Lake Nona community. Reversing itself again, Nemours walked away from a purchase agreement for the 118-acre site that allowed for 90 days of due-diligence reviews without financial penalty.
 
Nemours also intends to build there a new Ronald McDonald House residence for families of ill children..Details of that project, including a timeline for construction, have not been finalized, Nemours spokeswoman Karen Breakell told BioRegion News.
 
Plans for Lake Nona also include 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. The project sits near Tavistock’s Lake Nona’s Golf and Country Club.
 
‘Onesies and Twosies’
 
According to Metro Orlando Fremstad’s, until now one of the few locations capable of housing early-stage life-science companies has been the UCF incubator system. It operates 66,000 square feet of space in four locations: the 12,000-square-foot main facility within Central Florida Research Park adjacent to UCF’s campus in East Orlando; the 40,000-square-foot Bennett Complex, also within Central Florida Research Park; a 4,000-square-foot space in downtown Orlando; and a new 10,000-square-foot facility 18 miles northeast of the airport in Seminole County.
 
Of the incubator system’s roughly 50 companies, only four are life sciences startups. Another handful comprises the more than 100 technology companies the university has nurtured since 1999, Tom O’Neal, director of UCF’s incubation program, told BioRegion News. Most of UCF’s incubator space is not built for life-sciences companies; only the Bennett complex, for example, has lab space.
 
As a result, when it comes to life-sciences companies, O’Neal acknowledged in an interview, “We’ve been doing little onesies and twosies,” as in accommodating startups needing 1,000 or 2,000 square feet of space.
 
“We need a wet-lab incubator” in metro Orlando, he added. “We don’t have, really, a wet-lab incubator right now. We need to build one.”
 
The closest incubator site devoted to life sciences companies, he noted, is a two-hour drive northwest from Orlando. The University of Florida’s Sid Martin Biotechnology Incubator in Alachua houses 12 tenant companies in its 40,000-square-foot facility, consisting of 22 wet labs. Last November, Sid Martin marked the completion of a 3,600-square-foot annex across from its facility, within Progress Corporate Park.
 
One UCF incubator spinout, Cognoscenti Health Institute, has grown to 80 employees and operates a 6,500-square-foot clinical-testing laboratory within Central Florida Research Park, adjacent to UCF’s East Orlando campus. Another spinout, orthopedic medical device maker AOI Medical, went public last August on the London stock exchange — the first UCF company to complete an overseas initial public offering.
 
Among life sciences companies now housed in UCF’s incubator space is BioTraits, a developer of biometric products like the I-Guard finger scanner. Another incubator company, Cardiovascular Science, won $1 million in initial funding from Seven Palm Investments in December.
 
At the venture forum’s Florida Venture Capital Conference last year, Kovaleski said, 18 of the 24 companies that gave presentations received funding totaling more than $160 million — a record high. And at this year’s conference, held earlier this month, three of the 23 presenting companies have already been funded.
 
According to Kovaleski, two reasons for Florida’s VC growth include the fact that investors have responded to the real-estate downturn by redeploying money into equity capital. And in the life sciences, investors are seeing better prospects for recouping their money through acquisitions by pharma giants like Pfizer and Merck, which Kovaleski said are taking more interest in the technologies developed by local startups.
 
Florida’s warm trend extends to the life sciences, according to the quarterly MoneyTree Report produced by PricewaterhouseCoopers and the National Venture Capital Association, with Thomson Financial data. Statewide, Florida recorded $39.6 million in five “biotechnology” VC deals in the fourth quarter, up from two deals for $2 million during the fourth quarter of 2006. The state’s medical-device companies fared even better, racking up $93.7 million in Q4 ’07 compared with $65.5 million in Q4 ’06, even though the number of deals fell from seven to five during that time.
 
Dow Jones VentureSource, formerly VentureOne, recorded $126.6 million in VC for life sciences startups in Florida last year — $90 million in biotechnology and $32.6 million in medical devices — up from $42 million in biotech and $28.9 million in medical device deals during 2006. The number of deals stayed flat between ’06 and ‘07, with Florida recording three biotech and two medical device deals statewide both years.
 
VentureSource recorded no life science deals for the “Central Florida” region that includes Orlando in 2006 or 2007, when only a single medical software deal came close. More localized VC data for Orlando is hard to come by. MoneyTree, for example, does not break out the region, or any other portion of Florida into separate reports, except for the state’s Congressional districts, two of which combine portions of metro Orlando with other communities.
 
Kovalesi said venture capitalists have not done as many deals in Orlando as other regions of Florida — but expects that to change as the region’s life-sciences cluster grows. By then, she added, those companies can expect to do business with local VCs rather than hop on planes: “(VCs) are not yet opening offices,” Kovalesi said. “We’re hoping that will be the next step.”
 
In addition to startups, the Orlando region is home to several advanced life-sciences companies, including:
  • CuraScript, which employs more than 2,500 people in a 78,449-square-foot headquarters building and a 63,000-square-foot customer call center, both within Lee Vista Business Center owned by developer Duke Realty;
  • CORD:USE, which operates an umbilical cord blood bank as a source of stem cells to transplant centers worldwide; and
  • Triad Isotopes, a maker and distributor of radiopharmaceuticals used in imaging procedures for cardiac and cancer diagnosis, grew last year through an acquisition binge in which it snapped up seven such companies, or “nuclear pharmacies.” The acquisitions brought the company to 23 nuclear pharmacies and six cyclotrons throughout the Southeast, up from 16 nuclear pharmacies and four cyclotrons at the start of 2007.
Two rural counties within driving distance of Orlando — Osceola County, 15 miles southwest of the airport, and Lake County, about 50 miles northwest of the airport — are home to a small but growing number of biodiesel and nutraceutical businesses that need land for greenhouse research.
 
No Threat Seen
 
Fremstad said Orlando’s biotech push is unlikely to be hampered by the development of other biotech clusters statewide. The Jupiter, Fla., campus of Florida Atlantic University will house Germany’s Max Planck Institute, a Scripps Florida research institute under construction, and a 46,000-square-foot incubator developed last year by Alexandria Real Estate Equities.
 
UF’s Gainesville campus will house a larger Alexandria incubator of 80,000 square feet [BioRegion News, Dec. 10, 2007], while St. Petersburg will soon be the home of SRI International.
 
The largest of the state’s life-sciences clusters outside Orlando is rising within Port St. Lucie. There, the master-planned community of Tradition includes a 120-acre Florida Center for Innovation, whose occupants will include the Torrey Pines Institute for Molecular Research, a 400,000-square-foot research complex to be built by a development entity of pioneer biomedical entrepreneur-philanthropist Alfred Mann, and Oregon Health and Science University’s Vaccine and Gene Therapy Institute.
 
“[UCF] has signed partnerships not only with the Burnham Institute, but with Scripps and with Torrey Pines, so there’s collaboration throughout,” Fremstad said.
 
One reason the Orlando region can attract that activity, he said, is because it has several large healthcare providers, including the nation’s largest hospital system, Avent Health System’s Florida Hospital, and the fifth-largest, Orlando Regional Healthcare. Because of its concentration of hospitals, the Orlando region’s life sciences industry has skewed toward medical device companies, Fremstad said.
 
Not all those companies have stayed. A medical device maker spawned in Orlando, Ortheon Medical, relocated to Columbus, Ohio, in 2006 following its acquisition by two inventors of the company’s tendon–repair technology.
 
But another device maker that remains, VaxDesign, won national recognition last fall when R&D Magazine gave it a 2007 R&D 100 award for its Model Immune In vitro Construct or “MIMIC” technology, designed to predict human immune response to vaccines and other products.
 
“I always used to say, ‘You don’t put technology, especially the life sciences, in the same sentence as Orlando, because of our strong tourism-hospitality brand.’ But if you start to look at the numbers, you see that we have the R&D and oncology piece, and in outlying areas there is opportunity for agri-tech,” Fremstad said in an interview.
 
Tavistock’s plans to develop science and tech space at Lake Nona are supported by metro Orlando’s business and political leaders. They are increasingly looking to the life sciences and other tech-based industries to diversify a regional economy now synonymous with tourism because of major theme parks like Walt Disney World, SeaWorld, and the East Coast outpost of Universal Studios.
 
One reminder of tourism’s ups and downs: The number of travelers to Orlando dipped 3.1 percent in 2006, the latest year for which figures from the Orlando/Orange County Convention and Visitors Bureau are available, paced by a 4.8-percent decline in domestic leisure travelers, to about 34.5 million people. However, the number of business and international travelers rose that year, by 1.9 percent and 0.5 percent, respectively. Click here for more details.
 
Eager to raise those numbers, the Orlando/Orange County CVB has more than tripled its budget for leisure and meetings/conventions marketing for the two-year 2007-2008 period, to $68 million from $20 million in 2005 and 2006.
 
Lake Nona’s location about 8 miles east of the Orlando airport — Florida’s busiest airport — should also draw startups to Tavistock’s wet-lab building, Fremstad said.
 
The economic-development commission intensified its longtime focus on building a regional life sciences cluster last summer, when it began championing the industry’s preferred policies and projects in central Florida, through the public-private group BioOrlando.
 
Last month, BioOrlando issued a 12-page strategic plan for 2008-2010 which recommended:
  • Creating a legislative platform that focuses on accelerating the growth of the life sciences through a public-policy committee;
  • Working with universities and other schools to develop and attract talent to the region; and
  • Marketing the Orlando region to healthcare, life science, biotechnology, and pharmaceutical companies, as well as their supporting industries.
Click here to read BioOrlando’s strategic plan.

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