18 May Creating thousands of jobs, Chicago’s biotech space to triple
In 1996, Hillary Clinton authored a book entitled “It Takes a Village” in which she posited the view that the towns and villages of our country surrounding our children were in essence extended families that helped rear children.
While the primary responsibility of child rearing was that of a mother and father, the extended family (friends, neighbors, teachers and other family) in the village also took an interest in the development of the children.
Clinton fast forwards this concept to today where she argues from a societal perspective that the extended family found in the villages and towns of America need to be replaced by other institutions (particularly in urban environments) to take a vested interest in developing and raising today’s American children.
Was Clinton’s “village concept” formed by her own experience growing up in the Chicago suburb of Park Ridge, Ill.? While I don’t know much about her childhood as most of the focus on her has been her married and political life with Bill Clinton, she and her two younger brothers seemed to be an integral part of Park Ridge life.
She was a Girl Scout there. She was a member of the local Methodist youth group. She was involved in sports and, as you would guess, politics.
The objective of today’s column is not to profile Clinton or her background. However, I would like to borrow from her concept, which is an important one whether or not you agree with her politics, as it relates to the formation of young biotech companies in young Chicago.
Now you’re probably wondering how Rosen makes this leap of faith from the rearing of children to the rearing of biotech companies. If you wander the streets of Cambridge, Mass., which probably has the highest concentration of biotech companies found anywhere and is a real biotech cluster, you will note that Cambridge really does feel like a village.
What’s in this biotech village? To start off, there’s certainly a great concentration of universities. Three of them anchor the area: Harvard/Radcliffe, Boston University and MIT. There are also a plethora of nearby universities within a 30-minute radius.
In addition, there are medical institutions abound: Mass General Hospital, the Dana Farber Cancer Institute, the Brigham and Women’s Hospital, Children’s Hospital, Beth Israel and the New England Deaconess.
There are venture capitalists abound, too: Atlas Ventures, Polaris Ventures, Techno-Venture Management, Pequot Ventures, Highland Capital Partners, Charles River Ventures and many others.
Of course, the presence of “older brother” biotech companies, which have thrown off numerous millionaires, helps. These companies include Genzyme, Biogen Idec, the Genetics Institute and Millenium Pharmaceuticals.
Add in all kinds of other services including lawyers, accounting firms and insurance firms and you have the whole enchilada (or to keep with the theme, you have a biotech village). The amazing thing is that all of this is in a very concentrated geographic area (start with Kendall Square to get an idea).
So why doesn’t this exist in Chicago and the Midwest? The answer is that a lot of it does exist but it’s not clustered. Instead, it’s spread all over. There are some key pieces that are missing. The Chicago Technology Park certainly houses enough young companies and is close to a major hospital cluster.
Only one early stage VC group that invests in life sciences (IllinoisVENTURES) is ensconced in this cluster and even they have shifted headquarters back to Wacker Drive in downtown Chicago. The main company incubator is old and hardly attractive.
Move north to another incubator in Evanston, Ill. that is part of Northwestern University and you find a spate of other young companies next to major a university. Still, no VCs are in sight. Though well-located in the heart of Evanston, the Evanston Research Park incubator isn’t particularly attractive and it’s hardly state of the art.
If you move further north into the Chicago suburbs and around Highway 294, you have clustered a whole flock of large companies starting in Deerfield, Ill. and running up to Abbott Park. These include Takeda Pharmaceuticals, Astellas Pharmaceuticals, Walgreens, Dade-Behring, Ovation Pharmaceuticals, Nanosphere, TAP Pharmaceuticals, Hospira and Abbott.
A few relevant VCs sprinkle the terrain. Still, it’s clear that Chicago is missing a biotech mall. So what makes a successful mall? There are two kinds of malls that dot the Chicago landscape today:
• The covered mall that protects its customers and shopkeepers rain or shine and heat or snow.
• The uncovered mall that is more like a village with narrow streets and open to the elements (Old Orchard in Skokie, Ill. would be an example of this second type).
In either case, what makes a mall work is the presence of key anchor stores that will not only attract the multitude of shoppers but help defray a good part of the costs of operating the mall. Most successful malls have a food court with a variety of fast foods and some upscale restaurants.
There is also the presence of a number of national specialty stores (clothing, shoes, sporting goods, books, records/CDs, pictures, hobbies, furniture, beauty salons and cosmetics) along with a number of local shops. Some malls also have movie theatres to round out the experience.
What’s the attraction of going to a mall? Though you often go there with the intent of making a single purchase, the close proximity of other businesses catches your eye and you often end up making multiple purchases. You could also go there with the intent to kill two birds with one stone and fulfill several needs.
Forest city enterprises: the village constructor
Enter Forest City Enterprises, which is one of the nation’s top public real estate operating and investment companies. It started in 1921 as a family lumber business. Forest City’s market valuation is currently $3.1 billion. Headquartered in Cleveland, Forest City is a Midwest success story.
Its University Park Project in Cambridge amasses 2.3 million square feet on 27 acres amid the heart of MIT. This creates what’s known in the industry as “mixed-use space” (not only biotech research facilities, offices and residential housing but also restaurants, a high-tech hotel and easy access to a variety of public transportation linking to downtown Boston and other parts of Cambridge).
University Park was a former blighted urban area that was transformed into a research park with residential amenities. It was designed with a live, work and play philosophy over a 20-year period, which started in 1985 and is now reaching its final stage.
Forest City is doing something similar in Baltimore just adjacent to Johns Hopkins University. The Hopkins Project is planned for a 10-year period with an investment of $500 million.
Forest City’s involvement in creating a Midwest biotech mall has just ramped up in 2005 with its recent acquisition from Pfizer of the former Searle/Pharmacia R&D; campus in Skokie. Forest City’s purchase for $43 million of nine buildings in the 23-acre complex totals 1 million square feet of research and office buildings.
The new name for the former Searle Parkway facility is the Illinois Science and Technology Innovation Campus. The campus is currently empty as Pfizer cut back all the employees working there over a two-year period.
But make no mistake: Forest City is making plans for up to 3,000 new jobs to be created by companies that will inhabit this biotech mall. That’s only the start, too! It is estimated that an additional 11,000 jobs will be created by this biotech mall from both construction jobs (1,000 jobs) to “ripple-effect jobs” in the area (10,000 jobs).
Forest City believes that this new campus will generate $1.8 billion in statewide economic activity. Its premise is that Chicago is far behind other biotech clusters in a key ingredient needed to generate biotech companies: wet lab space.
According to a study done by Applied Real Estate Analysis, Chicago is far behind the leading biotech cluster cities of Boston and San Francisco and even lags behind Madison, Wis.
The making of a biotech village
With a somewhat jaundiced view, I recently met with Gayle Farris, president of Forest City’s University, Bioscience and Technology Group, to physically view the campus and hear about the renovation plans.
As a Searle alum who has visited the Searle Parkway facility many times, I thought I knew this facility well. Of course, my perspective was from that of the Searle headquarters on the other side of Skokie in the Old Orchard Towers, which has been sold to a different group.
My memory of the Searle Parkway facility was a typical, old pharmaceutical research complex in a dumpy part of Skokie.
My arrival back to this site after at least 10 years of not visiting it showed me some change. Still, it’s wasn’t anything spectacular. This part of Skokie hasn’t changed much, and other than a huge new multi-level parking lot and some additional half-hidden new buildings, it still looked the same to me.
As I entered the main entrance from the street, a lot of good memories of people I knew when working there came flooding back. As we wandered around the main building, I could see that some superficial modernizing already took place. As we exited the main building on the side, a new and architecturally striking building confronted me: the infamous “Q” building.
Directly in front of this stunning building was an ugly array of buildings that looked more suitable at a chemical company as opposed to a pharmaceutical company. Farris quickly explained to me that this part of the complex will disappear and a beautiful park will frame the land in front of the new building.
We then made our entrance into the “Q” building.
I felt as if I stepped into the Gleacher Center at the University of Chicago or even Northwestern University’s Allen Center at the Kellogg School of Business. A large atrium is surrounded by multi-level, state-of-the-art wet labs, offices and two auditoriums (one seating 200 people and another seating about 80 people).
While this may be empty, it is no ghost town.
According to Farris, Pharmacia spent close to $80 billion to build the “Q” building in 2000 (before Pfizer acquired Pharmacia). The building alone has 107,000 square feet. Forest City will renovate another four buildings totaling 674,000 square feet (of which about two-thirds are designed for lab operations with the remaining one-third as offices).
Initially, Forest City will spend about $155 million in this renovation activity.
While they got an incredible bargain with the “Q” building, the rest of the complex needs some serious renovation. Forest City will also create new facilities totaling another 326,000 square feet. All in all, there will be about 1 million square feet of new biotech space in the city, which triples the existing level.
To be fair, Forest City has received some city and state help including an initial $4 million subsidy from the state with an additional subsidy planned for 2007, which is expected to be in the $4 million to $6 million range. Like Cambridge, access to public transportation will be added and Skokie is helping with a planned stop near the campus.
Believe it or not, all of this is only the first stage of Forest City’s plan to create a biotech mall surrounded by a biotech village, which will in the future include residential and commercial upgrades to the area.
Forest City’s vision of a biotech mall is impressive.
Still, in discussing its potential success with Farris, I emphasized that it will need some well-known anchor tenants and lots of specialty companies. My recommendation is to include on site a couple well-known, early stage VCs as well as other key service providers (patent firms, law firms, accounting firms and other key service providers to the biotech industry).
Even some on-site banking branches from an aggressive bank interested in helping grow this sector would be helpful. The complex already houses at least three activities that will be critical for biotech drug development:
• A state-of-the-art animal facility (both large and small animals) for pre-clinical testing.
• A pharmaceutical pilot plant.
• A state-of-the-art nuclear magnetic resonance (NMR) facility.
Strategically, this site couldn’t be better located. It is about 10 or 15 minutes from downtown Evanston, 20 minutes (non-rush hour) from downtown Chicago and about 20 minutes from most of the North Shore communities and companies.
I look with great interest at the development of this biotech mall and then a village in our community. I hope we will finally engender our first major cluster activity for the city with a center that rivals both the east and west coast biotech communities.
In the end, I agree with Clinton (I never thought I would be saying this) in that it does take a village in this case to raise and nurture a whole community of young biotech companies. Forest City is building that village in Chicago.
This article has been syndicated on the Wisconsin Technology Network courtesy of ePrairie, a user-driven business and technology news community distributed via the Web, the wireless Web and free daily e-mail newsletters.
The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of The Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.