The competition among cities is fierce
for bringing in vital industry. It’s even
more complicated when you throw intellectual property and extremely specific tenant needs into the equation. How can
you attract, and accommodate, the growing industries of biomedical and biotechnology that make up life sciences?
Smart Business spoke to Stephanie
Marino, first vice president of CB Richard
Ellis, about the challenges presented to
both the life science industry and its advocates in real estate.
How is finding building space different for
the life science industry?
The biggest obstacle for mid-tier biomedical companies is that they are typically in
the Phase One or Phase Two stages of the
FDA approval process when they’re looking for a new facility. The majority of these
companies are being financed through venture capitalists or angel investors. The
focus is not to spend money on bricks and
mortar. Rather, the primary goal and objective of the investor is to spend money on
the research and development and get the
product to the market, which on average
takes a billion dollars over a 10-year term
per product. The amount of capital and
time needed for medical device companies
is far less.
Given these facts, it’s understandable
why they are hesitant to spend money on
real estate. These companies, however, do
need to have the right space and the right
operational environment to make sure the
products they’re developing are approved
by the FDA at the end of the day. Various
factors can affect their product, such as
temperature, humidity, air quality or offsetting vibrations in the building.
How is it different from the agent’s end?
There are very few commercial real
estate brokers that understand life sciences and its intricate needs. It’s a whole
different world and a new language. Since
funds are limited, a lot of these start-up
companies will occupy a former lab space
that has some features they can use, but
that doesn’t really fit their needs. It is not
until they get further down the road, five,
six, seven years into their life cycle, that they can justify to their board and investors
the need to invest significant capital to
relocate and build out a new facility.
I get involved with these companies as
early in their life cycle as possible, usually
when they’ve been in existence for about
12 to 24 months. You must learn and understand not only the real estate needs, but
also what the company does and how they
operate. The relationship I build with my
clients is for the long term.
What is the status of the life science industry
Boston is the No. 1 market for life sciences today. This is predominantly due to
MIT. The university partnered with the
state early on and put the infrastructure
into build facilities to lease to life science
companies. They put a stake in the ground
and took a tremendous risk, but it’s paid
off. San Diego and San Francisco are the
next two cities where a lot of venture capitalists and angel investors are located.
Naturally, they want the companies they’re
funding to be nearby.
Atlanta ranks seventh in the tier of life
science cities nationally. Georgia Tech has
one of only three nanotechnology facilities
in the U.S. About four years ago, Georgia
was ranked No. 12, so we’re stepping up.
However, the state of Georgia has not committed the economic resources required to
compete with our neighboring states to
attract, retain and grow our life sciences
What kinds of incentives are there for life science companies moving into a new state or
There’s a separate pot of money in
Georgia, which the governor and state
Legislature have earmarked, called the Life
Sciences Facility Fund. The 2007 budget
has allocated $8 million that emerging life
sciences companies can apply for grants.
This is different (from tax incentives) in
that the funds can be applied toward furniture, fixtures and equipment. The Facilities
Fund helps mid-tier life science companies
get into a new building because the cost of
their real estate is extremely high. For
example, a basic build-out for a 50/50 open
partition plan for an office runs about $30 a
square foot for just base building finishes.
The price to actually build out a lab space
for a life sciences entity can be, on average,
anywhere from $150 to $450 a square foot.
What do you see in the future of Atlanta’s life
Our two greatest challenges in Atlanta
are that we don’t have a large number of
life sciences venture capitalists and angel
investors, and we don’t have the work
force talent needed to run all aspects of a
life sciences company. One of the initiatives the state has adopted, along with a
few other cities, is developing programs at
the high school level to give students an
introduction to the life sciences. Universities in Georgia are beginning to offer
life science programs to further grow the
But life sciences in Atlanta are growing.
The Bio 2009 Convention which is the
major global life sciences convention
will be here in Atlanta. I think that might
shed a little more light.
STEPHANIE MARINO is first vice president at CB Richard
Ellis in Atlanta. Reach her at (404) 504-5950 or stephanie.