Joseph Maguire MIT real estate director

The Massachusetts Institute of Technology’s head of real estate gave members of New Haven’s commercial real estate market a lesson in bioscience last week.

The Connecticut chapter of Certified Commercial Investment Members held a meeting in downtown New Haven last Thursday to see what MIT has done in terms of biotechnology development, and how that example might be used to strengthen New Haven’s emerging biotech market.

There were roughly 30 area real estate developers, brokers, owners and economic development officials in attendance at the event at the Quinnipiac Club

Joseph Maguire, director of real estate at MIT, was the evening’s featured speaker.

Maguire was quick to point out that he is not well versed with either New Haven or Yale University, and was therefore hesitant to offer advice to the participants. Rather, he explained what his office had done in Cambridge, Mass., as an example of one way to strengthen relations between an academic institution and the commercial real estate sector.

“There are very few times in my life that I’ve actually been to Connecticut, so I don’t pretend to be an expert. I’m just going to tell you what we’ve done at MIT, and whether you use that information or not is up to you,” he said.

The Massachusetts Institute of Technology is an institution that has led the way in bioscience real estate developments. Maguire is responsible for the asset management of MIT’s investment properties as well as overseeing the development, leasing, management and disposition of over 5 million square feet of biotech, research and development, and office space for the institute – facilities worth roughly $700 million.

Maguire explained that, at MIT, real estate comprises roughly 15 percent of the institute’s endowment.

“We’re a little heavy with real estate at this point,” he said. Currently, MIT covers about 227 acres in Cambridge, where it first set down between 1912 and 1916.

“We have 11 million square feet of campus in the center of a very urban city,” he said. However, Maguire is not involved in academic buildings on the campus in any way. Rather, he deals with the planning outside of the campus and academia.

“MIT owns a lot of commercial real estate,” said Maguire. “We deal in taking technology development in the lab and getting out to useful ventures as quickly as possible.”

He added, “We don’t want to study it; we want to sell it. It’s very important that we move fast and move clean.”

‘A Good Move’

Maguire said that currently there are only two schools that are doing a good job of spinning off technology from academia to the private sector: MIT and Stanford University in California.

“Most schools aren’t doing this, and even Harvard [University in Cambridge] has a hard time getting it done,” he said.

Like any developer, MIT is looking for an adequate investment return on the commercial purchases, and Maguire said such returns have been slipping during the last couple of years.

Following his presentation, a brief question-and-answer period was held.

“Everyone walked away buzzing,” said Richard Guralnick, managing director of Insignia/ESG’s New Haven office. “It was a very positive meeting.”

After the meeting, Guralnick said that biotechnology does have a place in New Haven.

“MIT’s development is more advanced than New Haven’s. We have a lot of incubator space and we’re cultivating new incubation space, whereas MIT has more mature companies coming in and leasing,” said Guralnick.

Maguire explained that while MIT might be looking to lease 10,000-, 20,000- or 30,000-square-foot spaces, Yale is more in the area of 2,500- to 5,000-square-foot leases.

One concern voiced by developers in the audience was the state of the market. As some biotech research firms have their products green-lighted by the Food and Drug Administration, they move on to the manufacturing stage. Therefore, there will be a need for more manufacturing plants, which aren’t often located inside a city.

Guralnick explained that Yale is trying to cluster its biotech developments right around the campus. A few more mature companies have settled into surrounding areas such as Branford and Cheshire, but Guralnick believes that “the center of biotech in Connecticut is right here in New Haven and we’ll continue to push to have it stay close to home.”

He added that after speaking with Maguire, he believes that biotech developments will not spread beyond a 10-mile radius of the city. With the Science Park at Yale and 300 George St., there is enough space for young start-ups to settle in and mature, he said.

“The young fledgling biotech firms will stay within the [central business district] for at least the next five years,” said Guralnick.

With only a few buildings fitted for biotech, New Haven will need to expand its portfolio in the near future as the young companies mature and expand. Several developers in the audience, however, questioned the price of refitting a biotech building once the biotech companies fail or move.

At current prices, a biotech lab would cost approximately $300 per square foot, said Guralnick. During the meeting, Maguire remarked that refitting a biotech lab could cost 50 percent of the overall cost, or another $150 per square foot.

The reasons for that are the rapidly changing regulations and technology requirements. Maguire talked briefly about the emerging nanotechnology field, which most likely will have entirely different requirements than previous biotech labs.

Those in the audience were concerned that there may not be enough demand spinning off from Yale to support the development of new lab and research space in New Haven. Smaller developers remarked that the cost of refitting might outweigh the investment return and therefore a new development may not be worth the risk.

Guralnick disagreed, saying that while New Haven might be a few years behind MIT in terms of development, in five to seven years the city should reach a “critical mass where there are enough people demanding space out there that developers won’t be gun-shy about new projects.”

Bruce Alexander, Yale’s director of real estate was in attendance, as were representatives from Lyme Properties – a group that worked with Maguire on several MIT developments in Cambridge and now has a New Haven presence.

“Joe [Maguire] was positing some very good ideas,” said Guralnick, who was especially pleased with MIT’s $50,000 scholarship offered to students who come up with the best new ideas. “I think it’s a great idea; $50,000 is a drop in the bucket. It’s a good move to be able to say, ‘Come into our building, we’ll give you $50,000, we’ll help you get started,” said Guralnick.