Biotechnology / Real estate / Science /

In Baltimore, a shortage of wet lab space poses an economic bottleneck

For all that works in the local life sciences industry's favor, those in the know — including the execs, property developers and accelerator leaders that spoke to — believe this scarcity is stifling much-needed growth.

A rendering of a planned building with wet lab space and other facliities for the University of Maryland BioPark in West Baltimore. (Image via Wexford Science + Technology, ZGF and the City of Baltimore's Urban Design & Architecture Advisory Panel)
Correction: An earlier version of this article featured several misspellings of Jane Shaab's last name. The typos have been corrected. (6/15/2022, 9:30 a.m.)
Shortly after the news dropped, Nick Fullenkamp began scouring for space to accommodate his team’s future.

Avidea Technologies, a Baltimore-born developer of immunotherapies, had been acquired in December in a splashy $40 million deal by high-profile UK biopharma firm Vaccitech. The 14-employee startup, since folded in as Vaccitech’s North American subsidiary, would be doubling in size and needed a true home base after the five years it spent growing in Johns Hopkins Tech Ventures’s (JHTV) FastForward 1812 incubator in East Baltimore.

Fullenkamp’s search led him up and down I-95. Staying in Baltimore was on the table in at least one space, but ultimately, a larger build-out allowance in Montgomery County and a landlord experienced with managing lab spaces were too enticing to pass up. While the exact location remains publicly unannounced until a lease is signed, Vaccitech US is set to move in early next year.

“There are hurdles with moving a company from Baltimore to Montgomery County, but we felt like it was worth the effort,” explained Fullenkamp, the former chief business officer for Avidea and Vaccitech’s current vice president of corporate development, to “There’s a lack of lab space everywhere, but there’s a lack of development and experienced landlords in Baltimore that are actively trying to convert offices to labs.”

For all of Baltimore’s economic challenges, life sciences have boomed here. That’s largely owed to its universities and a constant flow of investment in the industry — more than $700 million total in the last three years, according to the Economic Alliance of Greater Baltimore. The region holds three of the country’s top life science-focused universities in Hopkins; University of Maryland, Baltimore; and University of Maryland, Baltimore County, each with its own successful incubators.

But Baltimore’s spatial blind spot emerges after the startups’ incubation stage. It’s a problem that keeps it from leveling up to compete with the likes of Cambridge, the Bay Area or even the nearby I-270 corridor: incubators and university-developed lab spaces are constantly at capacity, and there’s often nowhere for scaling-up companies to go. Private developers have yet to take up the task — and the financial risk — of building spaces to house startups that often slip away down I-95 or beyond.

“We’ve reached this interesting tipping point where there’s an overabundance of companies coming out of Johns Hopkins and University of Maryland, and undersupply of physical space for those companies to occupy,” said Travis McCready­, executive director of US life sciences markets­ for brokerage firm JLL and a JHTV advisory board member. “As a result, effectively what we’ve done is transformed science and technology into an export product.”

A lack of wet lab space could stymie Baltimore’s life sciences growth and continue sending more companies to other parts of Maryland, like Rockville. (Photo by Flickr user Doug Kerr, used via a Creative Commons license)

Universities take the lead

So what kind of space are we talking about here? Christy Wyskiel, executive director of JHTV, which runs FastForward incubators in Remington and East Baltimore, says it’s a multi-tenant development with at least 10,000 square feet per company — up from the 2,000 or 3,000 square feet they often start with.

They also usually have a dedicated building manager familiar with companies’ diverse equipment and maintenance needs, including power sources, HVAC and sufficient water and sewer capacities. The individual spaces are physically large themselves, with 13-to-15-foot ceilings, McCready noted. All this can cost, on average, three times as much to build as an ordinary office building, he estimated.

For a private developer, it’s not the easiest pitch: higher expenses, infrequent pre-leasing arrangements (future occupants might not have even been founded when shovels hit the ground), tenants operating off startup capital instead of revenue and a need for experienced management staff. This also lacks a certain failsafe: the ability to quickly convert spaces for another use, if necessary.

“If you just build a big building that has a bunch of wet labs and you can’t fill it up with people who need it, you then can’t repurpose it for something else,” noted Jeffrey Cherry, executive director and founder of the Conscious Venture Lab accelerator. “The matching of the need to demand is really important.”

It’s the universities, then, that often jumpstart these biotech hubs and research parks. In Baltimore, it’s happened with ample financial support from the city (including tax-increment financing) and the State of Maryland. Hopkins-backed nonprofit East Baltimore Development Inc. (EBDI), which redeveloped the former Middle East neighborhood (displacing hundreds of mostly Black and Brown families in the process), added two buildings with about 450,000 total square feet to house growing life sciences firms at its Science + Technology Park. EBDI has issued a request for proposals for a private developer to build a third, 175,000-square-foot facility.

The UM BioPark has laid its own foundation on downtown’s west side. The BioPark, which operates as its own nonprofit, developed 340,000 square feet of research space in two buildings in partnership with private developer Wexford Science + Technology. “We’ve been fully leased for over two years,” said UM BioPark Executive Director Jane Shaab.

Plans are underway for two additional 250,000-square-foot properties. The first, Shaab said, will devote about one-eighth of its square footage to “flex lab” space and shared lab equipment. The rest of the tower would include a training center for future life sciences workers, “graduation space” for post-incubation startups and outside companies that could move in.

Even these projects are but temporary fixes, both Wyskiel and Shaab said. Local growth-stage companies are sitting and waiting while new buildings go up, and demand will have pent up when they do open.

A bigger plan

These nuclei are exactly the types of centers that cities need to grow their life sciences sectors, McCready said. But in Baltimore, they’re not yet large or dense enough to generate what he called “clusters,” or places with enough of their own orbit to cyclically draw in more talent, companies and development. “I think you’re just getting started,” the broker said.

He and other stakeholders say Maryland needs a more self-directed, long-term public-private partnership. A good example is Massachusetts, famous for self-perpetuating life sciences growth and innovation in Boston and neighboring elite university hub Cambridge. Worcester, located about an hour west in central Massachusetts, has also taken on its own scientific growth push.

Massachusetts made this its mission more than a decade ago. In 2008, Gov. Deval Patrick signed into law a 10-year, $1 billion plan that included $250 million apiece for workforce development and tax incentives for companies, as well as $500 million for capital expenses on research facilities. The state added a $623 million infusion that Gov. Charlie Baker signed into law in 2018.

“What I like to say is Massachusetts was not a happy accident. It was a strategy plan,” said Wyskiel.

In Baltimore, the state and the quasi-public Baltimore Development Corp. (BDC) have been financial partners in the Hopkins and BioPark communities. Maryland offers state-level incentives — if not real estate- or workforce-related — such as the Biotechnology Investment Incentive Tax Credit and the Maryland Innovation Investment Tax Credit. And the BDC is well aware of the importance of publicly securing greater life sciences growth. The agency’s five-year “Baltimore Together” plan, which it published last year, includes goals to grow wet lab space with leasing incentives, foster more workforce development and explore creating a new accelerator.

Wyskiel hopes to see more planful and concerted state action, however, with “the legislature and the governor coming together and coming up with a plan that is as good as what Massachusetts did.”

Meanwhile, the Maryland Tech Council (MTC) trade association is working on a hopeful proof of concept. It launched BioHub Maryland in 2021 an online job and resource portal, but has bigger plans: CEO Marty Rosendale said the Frederick-based group will use $5 million in federal and state funds to build out an in-person workforce development center and business dev offerings for life sciences startups. It will also collaborate with institutions to develop coworking and lab spaces, as well as manufacturing infrastructure.

Rosendale said the BioHub will eventually draw in life sciences companies as partners and become something the state will want to build upon and replicate. “We’re working to resolve these challenges as we speak,” he said. “If we build one and we make it work, then we expect we will be able to attract others and to build more.”

A rendering of Scheer Partners’s potential renovation to the City Garage space in Port Covington. (Courtesy photo by James Oesch Photo/City Garage)

On the waterfront

Down in Port Covington, Rockville-based South Duvall is the first private real estate developer to undertake a lab-space conversion or construction project in Baltimore not tied to a university. Working with construction and leasing manager Scheer Partners, South Duvall is converting part of City Garage from a general-purpose incubator into multi-tenant lab space. When Under Armour completes the lease for its 70,000-square-foot LightHouse space next month, Scheer Partners will renovate the amenities and add higher-power generator capacity to support lab equipment. Other tenants, including Betamore, will remain in place.

Scheer Partners has already pre-leased 10,000 square feet of Under Armour’s space to Longeveti, which creates brain implants for people with late-stage tumors. Partners Nate Crowe and Aaron Gambini say another yet-unnamed company has signed a letter of intent for 20,000 more square feet. Proposals are out for the other 50,000 becoming available. Renovations will start July 1.

It’s “not an easy process,” Crowe noted. “There are 1,000 technical details that go into a lab build” — water lines, higher floor loads, increased electrical capacity, for instance — “and unless you’ve done it before or you’ve got a strong team around you, you could be setting yourself up for failure.”

A life sciences landlord also must budget tenant improvement allowances — usually $120 to $200 per square foot, over double the norm for offices — if it wants to compete with other markets, according to Gambini.

“For your average developer or landlord, to put the kind of money into a lab deal to be in line with market when the company has no revenue, it’s not for everybody,” Gambini said.

Alexandria Real Estate Equities’s rendering of a potential research lab facility in Port Covington. (Courtesy image)

But builders are seeing the potential in Port Covington, even as it weathers a major transition. On the other side of Hanover Street, California-based Alexandria Real Estate Equities has shared plans for a six-story, 170,000-square-foot building with 15-to-18-foot ceiling heights and a design intended for “mission-critical lab, office or manufacturing use,” per a leasing brochure.

This stirs early hope among those who have laid a local foundation of incubators and small lab spaces.

“I think, increasingly, the private sector [development] is happening much more in a targeted fashion than it ever has,” Shaab said. “People are coming alive to this idea that this is the future of Baltimore.”

Companies: University of Maryland, Baltimore / Johns Hopkins University / University of Maryland / University of Maryland BioPark / 10Gen / State of Maryland

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