The seed of a potentially good business opportunity lies in much of the biomedical research going on at the Johns Hopkins University and the University of Maryland, Baltimore.
Both schools have developed technology transfer protocols, incubators and lab space in research parks to help professors, students and would-be entrepreneurs cultivate those seeds into startups. But as those life science, pharmaceutical, medical technology and biotechnology firms grow, they’re finding that Baltimore doesn’t have enough of the kind of real estate they need.
They need laboratory space — specifically, “wet lab” space, where drugs, chemicals and biological matter can be safely handled. When you think wet labs, think testing and analyzing the effect of drugs and chemicals on biological specimens. The opposite — a dry lab — uses computers to run models and simulations.
What wet lab space Baltimore has fills quickly, and university and city economic development officials worry the shortage pushes promising local companies to relocate elsewhere. Meanwhile, outside companies looking for new locations won’t even consider Baltimore, despite a low cost of living, temperate climate and a central East Coast location with access to an educated workforce and many federal agencies.
Baltimore’s wet lab space is nearly 100% leased, and building more is an “urgent need,” said Colin Tarbert, president and CEO of the Baltimore Development Corp., the city’s quasi-public economic development arm.
Failing to fix the shortage now may limit the city’s ability to retain, let alone develop, its burgeoning life sciences ecosystem, he said, with companies potentially leaving Baltimore for other cities with more space.
Both Johns Hopkins and the University of Maryland offer leasable wet labs at sites around the city, including their affiliated business incubators, to assist in the commercialization of ideas coming out of those institutions. But both are at capacity, and university and city development officials said they’re struggling to persuade developers to take on new life sciences real estate projects, which are expensive and complex to build out.
“A developer wants fail-safe leasing, and to then carry that leasing package to [the] bank and say, ‘This is a project you can’t resist. Open the fund flow, and let’s get going,’” said Jane Shaab, executive director of the University of Maryland BioPark, which operates as a nonprofit on the university’s campus. “How do you encourage developers to be more flexible, more risk-affectionate as opposed to risk-averse?”
Research parks are relatively new ventures in Baltimore, where the concept began taking off less than 20 years ago as similar developments on the West Coast gained traction among investors and venture capitalists. The few Baltimore sites are making good on their investments already: Companies have raised billions of dollars and created several thousand jobs out of the BioPark and Hopkins incubators alone.
Recognizing that impact, the BDC emphasized developing more lab space as a priority in its newly published five-year plan.
“Getting new bioresearch and bio-manufacturing companies to locate within Baltimore City requires direct action,” reads the report, which recommends working to reduce leasing costs and encouraging flexible lease terms, in addition to getting new space developed.
Christy Wyskiel, executive director of Johns Hopkins Technology Ventures, said leasing costs don’t pose as much of a threat to Baltimore’s life sciences community as the lack of square footage. Baltimore costs far less than cities such as Philadelphia, Boston and Cambridge, Massachusetts, she said, and that includes real estate prices.
But wet labs remain expensive to run and maintain, Wyskiel said, and there aren’t many firms that specialize in their development. Also, science and technology companies tend to expand quickly, she said, and many grow out of their leases after just a few months.
Still, the conditions in Baltimore are ripe for investment, she said.
“You can’t do lab experiments from your remote workspace. It has to be in a lab,” Wyskiel said. “When it comes to the future of work, three-quarters of work at Hopkins Technology Ventures is life sciences, so we’re well positioned compared to other ecosystems.”
Both the BioPark and the Hopkins Technology Ventures have expansion plans, with the former hoping to add two buildings with some 280,000 square feet of lab space each on 2 acres at West Baltimore Street and Martin Luther King Boulevard. The first could open as soon as 2024, BioPark officials said. The timing of the second will be “market driven.”
Hopkins, meanwhile, is leasing more space at two new buildings in Eager Park, where East Baltimore Development Inc. is redeveloping some 88 acres near the institution’s medical campus. Hopkins is leasing about 50% of the space in both buildings, 278,000 square feet and 175,000 square feet in size, Wyskiel said. Cheryl Washington, EBDI’s CEO and president, said a third building, about 175,000 square feet, is in the planning phase.
The developers of Port Covington in South Baltimore recognized the need for lab space and have entered into a partnership with Alexandria Real Estate Equities, one of the leading U.S. life sciences developers and investors, as it shifts its brand identity away from a potential cybersecurity hub.
Alexandria is “actively pursuing” tenants for a planned 170,000-square-foot building to complement the mixed-use development, said Marc Weller, president and founding partner of Weller Development Co., Port Covington’s lead developer, earlier this year.
Matthew Brown, director of acquisitions at South Duvall, a Rockville-based commercial real estate company, said his firm has formed a partnership with Sagamore Ventures, a partner in the Port Covington development team, to convert part of City Garage into leasable lab space, as well.
It will be relatively small: About 67,000 square feet will be added to an existing 10,000 square feet of wet lab space, Brown said, and the company is looking for tenants to fit 10,000 to 30,000 square feet at a time.
South Duvall hopes to support science and technology firms that graduate from the regional universities but have nowhere to land after getting off the ground, Brown said.
He acknowledged the risk: Lab spaces are more expensive to deliver than other real estate, and the companies that want them “don’t always have the strongest balance sheets.” But Brown hopes his company’s investment will inspire others to take the plunge.
“This isn’t a long-term solution to Baltimore’s need, but allows a few more companies to stay and grow in Baltimore,” Brown said. “The rest of Port Covington could be an exciting solution, same with more development over at Hopkins and the University of Maryland BioPark.”
Others in the real estate industry said the problem could be mitigated with more investment from the affiliated academic institutions, which could agree to pre-lease some or all of the facility space before it gets built.
“Universities are the ones who need to do the work,” said Matthew Seward, a senior director at the Cushman & Wakefield commercial real estate company who specializes in leasing office and lab space. “They need to commit to helping those new buildings get built.”
Wyskiel said Hopkins has pre-leased space in the past and provided subsidized rates to new companies to help them get started. But having institutions pre-lease such facilities isn’t consistent with the national models for creating research parks, she said.
“It’s not our bread-and-butter,” Wyskiel said. “When you look at other ecosystems, the universities haven’t had to step up and do that, and because this is a unique ecosystem, we did do a fair amount of that in the beginning.
“Our strong preference is that this should be private-sector driven, and our companies are loudly voicing the need for more space.”
The problem also could be solved with more investment from governments, which could treat the matter as a public works issue that contributes to the public good, like cable lines or electricity, said Dr. David Block, chairman and CEO of Gliknik, a Baltimore-based biopharmaceutical company that creates drugs for people with autoimmune disease.
Block and his team lease a couple of thousand square feet of lab and office space in the BioPark and he formerly leased labs from Hopkins, as well. The two research parks have grown fast in the past two decades, he said, but Baltimore lags behind some other “destination” cities for innovators.
“I know the people at Hopkins and Maryland could have established many companies in town if there was enough wet lab space, but there simply has not been government money to back that up, and developers haven’t been willing to pull the trigger,” said Block, who has leased at the BioPark since 2008. “That’s a good place for the government to step in and mitigate that risk with programs that make it thrive, and maybe the government keeps a piece of the upside.”
The answer also is straightforward for the BioPark’s Shaab, who has confidence the Baltimore life sciences community can fill any new lab space.
“How do you get buy-in from those entities that are really providing the infrastructure and that meet the needs of emerging life sciences here?” she said. “Why hold back?”