Billions Flowing To University Life Sciences Centers Seeding Startups, Real Estate Ventures
This fall, when the University of California Berkeley opens the new 40K SF Bakar BioEnginuity Hub, the startup incubator will arguably be one of the more visually striking places that life sciences research is conducted.
The former campus library, a brutalist design that’s both landmarked and listed on the National Register, has already received a high level of interest, especially from young companies focused on therapeutics, bioremediation, synthetic biology and CRISPR technology, Bakar Labs Managing Director Gino Segre said.
“There is a pipeline, and it starts at the source,” Segre said. “The spring could be any University of California campus, or anywhere in the world. Bakar is yet another portal that will get the world to beat a path to the Berkeley campus.”
Segre said the development cost for the project is private, and rent would be “fair market price." Bakar won’t just help the university conduct and promote top-tier research. It will become the starting point for startups and ideas that will seed the larger Bay Area life sciences industry — any business or startup, not just those with Berkeley ties, can apply to the program, which is designed to help grow the firms that will eventually become tenants of future lab space and office developments.
“Incubator space in the Bay Area is at an all-time low,” Segre said. “Though the university isn’t in the business of real estate, something like Bakar does become a very good driver.”
Across the nation, a number of notable new university life sciences projects are under development, either on campus or in adjacent neighborhoods. In the top-tier San Diego market, San Diego State University is developing the 80-acre Mission Valley complex, which will include life sciences facilities. In Houston, the 37-acre, $1.5B TMC3 project, a massive mixed-use development with a signature green helix park running down the middle, will seek to funnel ideas and innovations from the city’s Medical Center into full-fledged companies. And in Pittsburgh, a vacant 1915 Ford Motor plant will be renovated and reborn as The Assembly, a $330M biomedical research hub anchored by the University of Pittsburgh.
The design of such spaces should focus on giving new companies a leg up and speeding up the path to commercialization. Segre said that means common areas with shared equipment — fridges, freezers, centrifuges and tissue culture space — that makes sure companies don’t waste capital and time to meet commercial and professional milestones. The centers need the flexibility to accommodate companies of all sizes; ventures can lease a single lab bench or half a freezer shelf. Proximity to the university’s legal and technological communities, as well as nearby restaurants, bars and social spaces, also helps.
“They may not share IP, but they can share an IPA at the pub across the street,” Segre said.
Along with increased venture capital funding and federal research dollars, these projects can be market signals for developers looking to see where future life sciences tenants will emerge.
Gensler Senior Associate and Sciences Leader Erik Lustgarten said there was already enormous energy and growth potential in life sciences before the coronavirus pandemic hit, and now the demand for an educated workforce and the research facilities needed to turn basic research into bigger ideas and therapies is pushing numerous universities to invest significant money into new life sciences hubs, either dedicated campus facilities or partnerships with developers. These are the first rungs in the ladder to commercialization.
“There’s a continuum in the development of a promising therapy, and it starts with the idea that comes out of a university or academic medical center,” said Lustgarten, who has designed numerous life sciences facilities, including the upcoming 3151 Market St. project in Philadelphia’s Schuylkill Yards. “The ability to start and rent just enough space to do your work, potentially through an incubator or lab coworking company, gives you the space to grow into a grad lab when you’re too big for an incubator but too small for a whole lease."
3151 Market in Schuylkill Yards, a 14-acre development and collaboration between Drexel University and Brandywine Realty Trust, is set to open in Q3 2023, and will feature lab space with 15-foot floors, no columns and a series of outdoor porches on every other floor meant to recall the porches found throughout the surrounding West Philadelphia neighborhood.
Lustgarten said the development was designed with flexibility in mind, so floors and equipment could easily be arranged to meet the needs of an academic client or biotech startup. Projects like 3151 Market showcase how the larger ecosystem, and real estate investments, grow out of university buildings and research centers.
Lustgarten pointed to examples in New York City, including the BioLabs facility at 180 Varick near the NYC Langone Medical Center, or JLabs, located at the nonprofit NY Genome Center, as well as LabCentral 610 in Cambridge, Massachusetts, a stepping stone for firms at MIT’s LabCentral. Alexandria Real Estate Equities is a market leader in this kind of development, aiming to keep portfolio companies in their properties. The right incubation spaces create opportunities for startups and builders alike.
“A savvy developer is thinking about giving tenants the next stage of space, to have the ability for a company to grow within the family, so to speak,” Lustgarten said.