Of all the amenities in Miami’s newest office building, the mortuary in the back might be the biggest advantage for Lawrence Binder.
The 33-year-old owner of a small Boca Raton company selling transplant material, Binder does considerable business with the University of Miami’s tissue bank. Next month, the bank is moving into an $11.5 million facility inside a new six-story building with extensive lab space, executive suites and a surgical facility for dissecting corpses.
That’s part of the reason why Binder finds himself shopping for 1,500 square feet of office space there for his four-person company, too.
“It would be good to be close by,’’ the owner of Binder BioMedical said during a tour of the building, the first of five planned for the University of Miami Life Science and Technology Park. “You get collaboration in a space like this.’’
That sort of thinking will be key if UM’s new venture can grow from a lone office building to a sprawling cluster of research companies, medical start-ups, drug makers and other companies that could put Miami on the map as a bio-tech destination.
The idea behind the eight-acre park is to create a commercial center that can feed off the more than $200 million in research conducted each year by the nearby University of Miami Miller School of Medicine on the Jackson hospital campus.
The university and its various arms are seen as magnets for entrepreneurs like Binder. Supporters see the transformation of a site on NW 7th Avenue once pocked by rail lines and auto yards as a milestone moment for Miami. They predict the new building, awash in green glass and high-tech flourishes like the digital mural in the lobby, will be the nucleus for a wave of hot ventures and high-paying careers.
“If the project does get built, it will make Miami the bio-tech center of the Western Hemisphere,’’ said Tony Ojeda, head of Miami-Dade’s economic development office. “Whether or not they ever build five buildings, that’s another story.’’
While the highly celebrated launch of a research park could fuel a new industry in a city best known for condo canyons and tourists, momentum remains in the start-up phase. Developers are going slower than planned on expanding research space, and UM has fended off pressure from county officials to pledge larger amounts of well-paying jobs there.
The 252,000-square-foot first building is less than two-thirds leased, slightly behind the original timetable laid out in loan documents. At next month’s grand opening, the biggest tenant will be UM itself as it moves various organ and tissue banks into the new facility. Government documents show UM forecasts the park will create a minimum of about 50 new jobs a year outside of construction crews, less than half what Miami-Dade wants in order to fund parking garages there.
The university had planned to start another research building after the first one opened, according to county documents, but UM has changed gears and now plans a hotel to meet demand for medical conferences and patient lodging near Jackson, including foreigners seeking surgery at Jackson, said Michael Katz, head of UM’s real estate arm.
A smaller portion of the hotel building may include doctor offices and lab space, and the school is in talks to build a third building dedicated to bio-tech firms and research, Katz said.
Despite growing interest in the bio-tech investments, financing future buildings could be a challenge. About $8 million of the $107 million development tab for the first building came from federal subsidies, a program that will be under pressure as Washington launches its deficit-reduction plan. A one-time stimulus program also let the Maryland developer of the building secure a low-interest loan, and getting a similar deal will be harder the second time around.
Government aid is crucial to keep rents low enough to attract start-ups, said developer Joseph Reagan, since they need an affordable launching pad to move from promising research into profitable enterprises.
“One of the reasons we’re so successful is we’re able to work these subsidies to the benefit of the building,’’ said Reagan, vice president of Baltimore-based Wexford Equities, which leases the land from UM and developed the first building. “The subsidies we receive are what help make the building more accessible to young companies. Lab space is expensive.’’
South Florida remains an emerging market in the bio-tech industry, an umbrella term for biological and medical development that can span everything from vitamin production to cancer research. Ivax, the Miami generic drug maker founded by Phillip Frost, helped give the region standing in the last two decades, and Frost continues using his fortune to form start-ups and spin-offs that are players in the region.
At the Miramar Park of Commerce, home to a cluster of bio-tech firms, Opko Health works to create a molecular compound that will halt an incurable form of seizures.
A Frost investment, Opko’s story ricochets through South Florida’s bio-tech industry. The molecular technology got its start at the Scripps research center in Jupiter, and UM hired away the star scientist behind it, Claes Wahlestedt. Headquartered in Miami, Opko added the Miramar location after the previous tenant, a drug developer, went bankrupt.
Jane Hsiao, vice chairman and a major shareholder in the publicly traded company, sounds exuberant about the research underway, but staffing can be a challenge. South Florida lacks the pool of scientists skilled in transforming medical research into medicine that could turn Opko’s $11 million loss this year into billions of dollars in sales.
“Drug development experience really is the key,’’ said Hsiao. She said scientists in the country’s main pharmaceutical hub in the Northeast prefer to stay there, since they can take better-paying jobs at rival companies without having to relocate their families.
“A lot of people don’t want to move to Florida,’’ she added. “For people reaching retirement age, it’s fine.’’
With an aging population, ample federal dollars for drug purchases and research and billions at stake for breakthrough treatments, state and local leaders see bio-tech as a smart hedge against Florida’s reliance on vacationers and construction.
In 2003, then-Gov. Jeb Bush secured $310 million in state money for the Scripps Research Institute, a renowned nonprofit in California focused on medical breakthroughs. Scripps wanted an East Coast research facility and picked Jupiter, near Florida Atlantic University. Palm Beach County contributed $187 million.
The institute says about 400 people work in the 350,000-square-foot complex: that would be roughly $1.4 million in government aid for each square foot of space and about $1.2 million for each job.
But supporters point to the ripple effect of having a global research player set up shop on the Treasure Coast.
Since Scripps arrived, the Torrey Pines Institute for Molecular Studies opened in Port St. Lucie in 2006, and the Vaccine and Gene Therapy Institute opened there two years later. In 2008, the Max Planck Florida Institute for brain research opened in 2008 in Jupiter, next to Scripps. And in 2007, UM recruited a genomics institute from North Carolina. All received tens of millions in state and local subsidies, including $80 million from Florida for the UM genomic center.
The latest report from a University of Florida center promoting bio-tech said start-ups have grown 28 percent in the Sunshine State since 2008. It maintains a database of 165 bio-tech companies statewide, with about a third in Southeast Florida. Among them: Avada, where about 245 people in the Miramar park make pharmaceutical patches, and BioHeart, a Sunrise company with seven employees pursuing new treatments for heart disease.
“I’m seeing Florida evolve more quickly than other locations,’’ said David Pierson, an owner of Intersouth Partners, a bio-tech venture capital firm in Durham, N.C. that specializes in the Southeast. “There are lot of people down there in positions of authority who realize the long-term potential’’ of bio-tech.
Though Scripps Florida gets a large share of attention, its research muscle pales when compared to UM. Since 2009, Scripps has received about $59 million in federal National Institutes of Health grants for Florida projects. During the same time period, UM won $387 million worth of NIH grants, according to statistics on usaspending.gov, a federal site that tracks Washington dollars.
In fact, UM ranks first on the NIH’s list of top Florida recipients for 2010 at $104 million, ahead of the University of Florida ($102 million) and the Moffitt Cancer Center in Tampa ($39 million). Nationwide, UM finished 55th last year on NIH’s top list of recipients, with about $115 million in research money. In 2004, the earliest year available on the NIH website, UM finished 59th on the list with $100 million in grants to the medical school and main campus. (Ranked only against medical schools, UM finished 40th on the list last year.)
Administrators credit UM President Donna Shalala for the school’s rising presence as a research center since she took over in 2001. The former secretary of health under President Bill Clinton, Shalala’s department included NIH and she once ran a Top 20 research school, the University of Wisconsin.
The NIH figures don’t capture all research dollars, but they do show why UM should act as a strong magnet for companies hoping to get rich on medical discoveries. Schools like UM regularly license their research to private entities, collecting a share of the profits as a drug or treatment enters the market.
One class of tenants Wexford hopes to capture are UM researchers themselves looking for office or lab space for spin-off companies that develop projects from their research. The Life Science building has hallways of tiny offices and shared lab space for academic entrepreneurs.
“We need the vehicles to transform our new knowledge and discoveries into practical use,’’ said William Donelan, chief strategy officer at UM’s Miller School of Medicine. “You’ll see companies develop. You’ll see business enterprises develop. As companies are built up, they’ll be bought by others.”
But with biotech a target of economic development agencies across the country, competition for established firms is tough. There is hope that as large pharmaceutical companies outsource more research work, the small firms targeted by UM will get more business. But even advocates of Miami as a new bio-tech hub say not to expect much to happen soon.
“There are some misguided perceptions in the business community that ‘if you build it, they will come,’’ said Bob Bloder, vice president of business development for Avada, the patch-maker in Miramar.
Kevin Levy, a Miami technology lawyer and head of the Greater Miami Chamber of Commerce’s bio-tech committee, sees the UM park as slowly evolving into a big player in the economy.
“Are we going to see a ton of [biotech] jobs flying all over the place? Not yet,’’ he said. “But momentum? Absolutely.”
Wexford has done similar projects for universities across the country. It cites a Baltimore complex as the most successful of its new ventures: two buildings erected within six years around the University of Maryland hospital, with a third set to start construction this fall.
The developer also points to a start-up by a University of Pennsylvania researcher who rented 800 square feet in a Wexford park near the Penn medical school in Philadelphia.
As the researchers pursued an Alzheimer’s treatment, they twice moved to larger office space. In November, drug giant Eli Lilly bought the company, Avid Radiopharmaceuticals, for $800 million.
“It’s a perfect story of what is supposed to happen,’’ Reagan said. “They started in our incubator.”
Wexford says it sees Miami’s Health District around Jackson as a safe bet for bio-tech, since only Houston has a larger concentration of medical facilities at one place. Still, in a depressed development industry, Wexford’s UM deal represents a coup even before the tenants pick up their office keys.
Bond documents show the $107 million project includes standard but lucrative payouts for the people who put the deal together: a $4 million developer’s fee for Wexford, plus about $2 million for the lawyers and financial advisors that sold the tax-free bonds allowed under the federal stimulus program.
Those bonds qualified for a program designed to create new jobs, and Wexford said more than 500 people will be put to work by the complex in the first year, according to financing documents.
Neighborhood activists and some UM students criticized the subsidized project for creating jobs for professionals living far from the depressed Overtown neighborhood that surrounds Jackson.
Wexford and UM are launching a job-training program with Miami-Dade College designed to funnel more local residents into entry-level positions in the medical field. Wexford has also proposed about $5 million in tax rebates from Miami on the project. Wexford would keep $4 million, and use $1 million for scholarships and a jobs program, including a training center that would rent space in the facility.
The park’s ability to create jobs is a sticking point as UM pursues $25 million from Miami-Dade for parking facilities on the site. While Miami-Dade negotiators want a pledge of 735 new jobs outside of the construction industry with an average salary of $56,000, UM would only commit to 400 new positions making $45,000, according to county documents. And while Miami-Dade wants the jobs added by 2017, UM proposed a deadline of 2019.
The lead tenant will be the UM tissue bank, as well as UM centers that deal with human brains and organs. Those operations are currently scattered throughout the Health District and a nearby Miami location, so they will be moving existing jobs to the new building. The tissue bank hopes to add another 40 positions once it moves into the larger quarters, a UM spokeswoman said.
It’s the smaller tenants that spark the imagination of those pitching the park as an incubator for the kind of thriving bio-tech industry that drives economies in North Carolina, Boston and the West Coast. A Spanish tech firm, Andago, will have its first U.S. office there, and Emunamedica, which is pursuing novel wound treatments, will be moving in, too.
Daya Medical signed on early to the Life Sciences Park’s first building. The Palm Beach company invented a high-tech pill box that dispenses drugs at prescribed times, but also lets doctors and researchers track a patient’s ingestion of the medicine through a built-in cell phone transmitter and even a camera.
Justin Daya, the 27-year-old chief operating officer, sees the device as a gold mine for insurance companies with a stake in patients getting well, along with drug companies interested in avoiding poor testing results because of ignored dosage instructions. Daya employs five people now, including its CEO and Justin’s father, Dr. Kanti Daya. But the company eventually expects to hire as many as 120 once it moves into the $2.2 million pharmacy built for the company at the Life Science building.
Among his potential clients: 10 departments at the University of Miami medical school, including cardiology, psychology and ophthalmology.
“We can collaborate with these researchers in almost real time,’’ Justin Daya said. “It makes a lot of sense for us to be there.’’