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Worcester, Mass., Weighs Development of Up to 400,000 New Sq. Ft. of R&D Space

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A land-use consultancy hired by Worcester, Mass., has recommended nearly doubling the amount of downtown research-and-development space long-term by redeveloping the city’s existing police headquarters as well as the headquarters of a steel-industry supplier whose new owner has told city officials he wants it to remain where it is.
 
Vanasse Hangen Brustlin said the two properties could yield as much as an additional 400,000 square feet of new R&D space for life-sciences employers, in addition to the 500,000 square feet of life-sciences space in five buildings planned over the next five years by the public-private venture now developing the Gateway Park biocampus.
 
VHB made its recommendation within its final draft of the North Main Economic Development Strategy, which it released earlier this year with a public comment period ending July 31. A supplemental version that will incorporate and respond to the comments will be released later this year, followed by Worcester City Council hearings, then a vote on adopting the $300,000 report as a guideline for future land-use decisions.
 
Timothy McGourthy, Worcester’s director of economic development, told BioRegion News last week the study was intended as a long-range guide to “looking at those spaces in terms of their potential for higher and better uses.”
 
The strategic plan offered two redevelopment options for the city’s police HQ, a low-rise, modernist-style concrete fortress completed in the 1970s:
  • Two buildings containing 220,000 square feet of R&D space, plus 200,000 square feet of offices, 32,500 square feet of retail space, and 1,044 parking spaces; and
  • Three buildings containing 147,000 square feet of R&D space, plus 214,900 square feet of offices, 16,000 square feet of retail space, and 875 parking spaces.
The city could not advance either scenario without first acquiring a site for a new police home base, a process McGourthy acknowledged would likely take several years given its cost and the need to relocate all police functions somewhere else.
 
“Something like the police station building, we’re looking at 10 to 15 years [into the future], minimum,” McGourthy said.
 
The strategic plan also suggested creating an additional 180,000 square feet of future R&D space, plus 90,000 square feet of offices, 20,000 square feet of stores, and 625 parking spaces, by acquiring the headquarters property of Morgan Construction Co., a maker of rolling-mill equipment, at 15 Belmont St.
 
Yet that effort, McGourthy acknowledged, could take even longer than the 15 or more years envisioned for redeveloping the police headquarters site. Earlier this year, Morgan Construction was acquired by Siemens VAI Metal Technologies, a unit of the German-owned industrial conglomerate. When the sale was announced last year, Morgan was a $180 million-a-year, fifth-generation company with 1,100 employees in the US and overseas — including 460 in two facilities in Worcester.
 
Morgan executives said publicly last month they did not expect their company to be affected by parent Siemens AG’s plan, announced July 8, to cut $2 billion in costs, in part by eliminating 16,750 jobs, or 4.2 percent of its global workforce.
 
Siemens VIA has, instead, told Worcester officials it not only wants to remain in the city, but rebuild, and possibly expand within, its headquarters property as well.
 
“We did have initial discussions with [Siemens] as part of the planning effort, and they did indicate that at some point, they would consider either reconstruction of their buildings, or even a sale of their buildings. But there’s no immediate plans to do so,” McGourthy said.
 
He emphasized the redevelopment was not intended to drive Morgan out of Worcester, the company’s home since it was founded in 1888 by Charles Hill Morgan.
 
“This is not viewed as any effort to dispossess the existing operations. But as they look at their operations and look at what suits their needs as a growing company, are there opportunities for consolidating or relocating some of those uses here within Worcester, to allow for building on that biotech brand of the area?” McGourthy added. “We definitely anticipate that they will be part of the process, no matter how it develops going forward.”
 

“We’re open to just about anything. But we have our agenda pretty set for the next five years.”

Asked about the possibility of the city using eminent domain to force out Morgan Construction, McGourthy said it “has not been contemplated under the plan in any way. The plan is about visioning for the area, and then we’ll go back and work with the different landowners to determine what role they can play in accomplishing that vision.”
 
The Morgan and police properties were two of 11 downtown sites recommended for redevelopment by VHB. A key priority of the redevelopment is revitalizing the city’s Lincoln Square by improving how the properties draw people and vehicles there. The police HQ, for example, does not open onto Lincoln Square, but perhaps could incorporate an entrance or other street-level activity short term while details of a new facility are studied, McGourthy said.
 
Combined, the 11 sites could yield for the city between 327,000 and 405,000 additional square feet of R&D space, as well as 860,000 square feet of office space, a 45,000-square-foot convention center with 220-room hotel, 250,000 square feet of retail space, 50,000 square feet of cultural space, 300 new units of housing, and 5,400 parking spaces.
 
The recommendations reflect three themes VHB said should guide redevelopment of the area surrounding Lincoln Square: an “urban village” linking to downtown Worcester; more cultural/academic activity; and a “gateway to the new economy” anchored on Gateway Park, which the study said “has laid the foundation for a critical mass of biotech/life science R&D [and] office space that can draw more related investment to the North Main area.”
 
“As the biotech/life sciences industry expands, larger new spaces may be more in demand. This could warrant new, large-scale construction offering flex space usable by both research tenants and biotech/life sciences related office tenants,” VHB concluded in the North Main strategic plan.
 
“Development of mixed-use projects with ground floor retail and upper-level lab space offers diverse space that may also garner more demand in the interim, as well as developments that combine historic rehab elements with new, state-of-the-art lab space,” the study continued.
 
The strategic plan recommended initiating such projects late in the interim period of five to 15 years, transitioning into the long-term period of 15 and more years: “Larger, mixed-use projects require a critical mass of residents, businesses, and employees,” as well as a larger market area that extends outside of the study area,” said the study.
 
The study continues Worcester’s long-range redevelopment effort, which officials in the central Massachusetts city of 175,454 (2006 US Census Bureau estimate) have embraced in hopes of reversing a generation-long economic slide stemming from the loss of manufacturers and their jobs.
 
One key element of that redevelopment is Gateway Park, the 12-acre life-sciences campus taking shape in the downtown’s northeastern fringe. Worcester Polytechnic Institute joined with the city’s private, non-profit economic-development group Worcester Business Development Corp. last year in completing the biopark’s first building, a 125,000-square-foot space. [BRN, Sept. 10, 2007].
 
Over time, the Gateway Park mixed-use campus is planned to include 241,000 square feet of market-rate loft condominiums, some retail space, and the half-million square feet of life-sci space, to be developed in five buildings. Gateway Park has control over two additional city-owned parcels comprising the former Volk School, and eyed for residential use.
 
Executives for WPI and WBDC last week voiced support for the strategic plan’s recommendations in interviews with BRN, saying the additional space was unlikely to hinder activity at Gateway Park.
 
The reason: Redevelopment of the police-station and Morgan Construction sites is unlikely to happen before the end of the five-year timetable set for the development of Gateway Park. By the time Gateway Park could consider expanding, the city parcels could emerge as a possible option, David Forsberg, the WBDC’s president, told BRN last week.
 
“I don’t think you’d see anything developing there until you reached full build at Gateway [Park], at least on the life-sciences side. The whole area lends itself to a pretty-broad base mixed use strategy, and that is what has gotten us excited about the area,” Forsberg said.
 
Long-term, Forsberg said, the Morgan site “makes a great deal of sense for uses compatible with Gateway. We’ve always thought that the Morgan Construction site made a logical next phase for a Gateway-type project.”
 
As for Gateway itself expanding into the Morgan or police parcels, Forsberg said the WBDC considers itself in partnership with the city on development of the life-sci park, both now and if any future expansion plan emerge in the future: “If there were a role for us to play as the larger North Main Street strategy unfolds, we would certainly be open to that.”
 
Gateway Park is the newer and smaller of two existing campuses that house life-sciences companies in Worcester. The Massachusetts Biotechnology Research Park, developed by WBDC and opened in 1985, houses some 20 tenant employers within its 1 million square feet over 105 acres — including ViaCell, Advanced Cell Technology, and SelectX Pharmaceuticals. The research park is now owned by Alexandria Real Estate Equities, the Pasadena, Calif., real estate investment trust specializing in life sciences properties.
 
City officials hope to repeat at Gateway Park the success enjoyed by the larger research park — more than 2,000 jobs, some $3 million a year in city taxes, and an ability to draw other life-sci companies; Abbott Laboratories operates a 370,000-square-foot Bioresearch Center nearby.
 
A third life-sciences venue is expected to emerge in Worcester over the next year, within the campus of the state-funded University of Massachusetts Medical School.
 
UMass Medical School plans to construct a $449 million Advanced Therapeutics Cluster — a series of projects that will include a gene therapy center; an RNAi Therapeutics Institute to continue the work of Nobel laureate and UMass Professor Craig Mello; and a Center for Stem Cell Biology and Regenerative Medicine.
 
The ATC, set to open in 2012, will employ more than 100 faculty members, and is being funded in part through a $90 million earmark within the $1 billion life sciences initiative signed into law by Gov. Deval Patrick in June [BRN, June 16].
 
If UMass Medical School or any of the ATC’s institutes needed additional space, the city would consider providing it at the parcels slated for redevelopment, McGourthy said. Likewise, he added, the city would consider making that space available to Gateway Park or other users.
 
“UMass is a large player within the city. How they would look to expand even further is something we would keep our eyes on to try to see where we can assist, and where is it appropriate for that expansion,” McGourthy said. “It may be that as the activities in Gateway [Park] take off, then there is a push for an expansion of that as well.”
 
D’Anne Hurd, WPI’s vice president for business development at Gateway Park, told BRN Gateway Park and her college support the North Main recommendations: “I can’t think of anything better than to, basically, spread the good start that has been initiated at Gateway [Park] into the city.”
 
Gateway Park, she said, has not ruled out redeveloping the city-owned parcels eyed for new R&D space — but has no plans to do so soon.
“We’re open to just about anything. But we have our agenda pretty set for the next five years” — namely finding tenants for, then developing the rest of Gateway Park.
 
As for the park’s current building, it is fully leased, with the last remaining space rented to the Mello-founded company RXi Pharmaceuticals and Blue Sky Biotech, a contract research organization called a “company to watch” by the non-profit Massachusetts Alliance for Economic Development.
 
Gateway Park is in talks, Hurd said, with a “very solid, prospective anchor tenant” seeking to lease 40,000 square feet in the second building. That tenant, which she will not identify, would join RXi and Blue Sky — which have committed to taking 15,000 square feet each in the second building — and any future tenants that sign leases there.
 
Despite that leasing activity, Gateway Park is looking to break ground on its second building “18 to 20 to 24 months at the outside,” Hurd said, in order to wrap up a lease deal with the anchor tenant, as well as ride out the current economic slump and nail down financing as well.
 
The pace of leasing, Hurd said, will determine whether Gateway Park will break ground not only on the second building, but how large it will be — 80,000 or 100,000 square feet — as well as whether to break ground on the park’s third building as well. The third building, she said, may be developed on-spec.
 
When Gateway Park is ready to expand, it could take advantage of economic incentives made available by Massachusetts earlier this year, when Patrick designated the life-sci park as the state’s first “Growth District,” allowing the state to join with local officials and property owners to coordinate local permitting, state permitting, site preparation, infrastructure improvements, and marketing [BRN, March 3].
 
The designation has fueled interest in Gateway Park among prospective tenants, Hurd said.
 
Last week, Patrick visited the Massachusetts College of Pharmacy and Health Sciences in Worcester with Lt. Gov. Timothy Murray and their cabinet to announce the state will also allow coordinated state and local permitting, and other development assistance within an 11-acre industrial campus in the city whose tenants include a life sciences company.
 
The city-owned South Worcester Industrial Park will receive aid through the state’s “Brownfields Support Team,” formed to coordinate activities of the state Department of Environmental Protection, the Executive Office of Housing and Economic Development and the Massachusetts Development Finance Agency. The industrial park announced its first lease in February with Pharmasphere, a Boston grower of plants for pharmaceutical development [BRN, Feb. 11].

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