Biotech Boom

As Ann Arbor begins to fulfill its potential as a dynamic biotech hub, the broader impact could be profound.
Cameron McCausland
Cameron McCausland // Photograph by Austin Phillips

There are few circumstances that better illustrate the importance of biomedical innovation than what’s happening in society right now. Across the country and around the world, the potential for new ideas, new medicines, and new therapeutic options to, quite literally, change lives has perhaps never been more apparent.

Biotech breakthroughs require not only cutting-edge scientific and medical resources and expertise, but the necessary entrepreneurial energy to create and sustain them. It’s a rare and valuable combination.

Which is precisely why Ann Arbor is getting so much attention these days. Consider the University of Michigan is one of the most active academic research centers in the nation, with close to $1.6 billion in annual research investment.

Even more profound is the extent to which science is making the jump from classrooms and labs into boardrooms and manufacturing facilities. The scientific-to-commercial pipeline in Ann Arbor is robust and growing, with brainstorms and breakthroughs transforming companies and capital.

The result is that new testing, drugs, and therapeutic innovations are coming to market. A city that’s both a tech mecca (Bloomberg named Ann Arbor the nation’s No. 3 tech hub) and a commercial powerhouse, Ann Arbor is a place where startups are flourishing. U-M alone launched 22 companies in 2019 (half in the life sciences sector), and signed 232 license and options agreements. Those numbers have continued to grow in 2020 as 29 startups launched.

“The strong, stable, and dynamic local ecosystem we’re building — with more activity and more entrepreneurs — makes it easier for future innovators and innovations to find a home and make an impact,” says Kelly Sexton, associate vice president for research at U-M’s Office of Technology Transfer.

While the numbers are intriguing, as university startups raised $670 million in 2019, achieving the “critical mass” of mature companies, job growth, and broader economic impact that’s required to elevate a proven startup incubator to a sustainable, biotech-fueled economic engine will take both commitment and investment.

The goal is to keep startups in the region, and to take the next step on the way to establishing Ann Arbor as the new biotech hub.

Taking that next step means adding a critical new element to the structural assets already in place.

Taking that next step means adding a critical new element to the structural assets already in place (high quality of life, low cost of living, and a deep regional talent pool). The missing piece of the puzzle is space: specifically, the lab space and specialized facilities that are a prerequisite for meaningful biomedical startup growth.

Meeting the growing demand for quality biotech real estate requires real estate owners and managers who are willing and able to be flexible and serve as true partners in the sustained growth and success of promising startups. A few forward-thinking Michigan-based developers have recognized that reality, and have structured their portfolios to cater to life sciences users with premium research and technology space in the market.

Biotech startups need and are looking for partners who understand their specialized and dynamic need for space, and facilities that don’t drain the budget and can scale without disruption.

Finding the right real estate partners is just the beginning. There’s no single solution to addressing Ann Arbor’s growing need for biotech startup-friendly real estate. It will take a combination of both new construction and creative repurposing of warehouses and industrial spaces into state-of-the-art labs and tech-friendly facilities.

The good news is there’s real momentum behind the effort to transform Ann Arbor into a true startup hub. For example, nine buildings have been acquired since 2017, and an Ann Arbor site plan has been approved for a new $20 million life sciences and tech park project.

While contributions from the Michigan Biomedical Venture Fund, Tech Transfer Talent Network, and Deerfield Management Co. — which recently made a $130-million commitment in partnership with U-M to invest in biomedical research and commercialize therapeutic projects — help the cause, more investment is needed.

“Ultimately, you aren’t just investing in startups,” says Phil Santer, a senior vice president at Ann Arbor SPARK. “You’re investing in a vision of Ann Arbor populated with established companies achieving that lucrative next phase of growth, with the potential for dynamic, regionwide economic impact.”

Cameron McCausland is a partner at Portage Capital Partners, a real estate investment firm in Plymouth Township that owns and manages 450,000 square feet of high-tech space for the biotech industry.