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Alexandria Real Estate carves out life sciences niche with 'mega campuses'

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Alexandria Real Estate Equities Executive Chairman and Founder Joel Marcus

Source: Alexandria Real Estate Equities

➤ Alexandria Real Estate Equities Inc., an urban office real estate investment trust, is an owner, operator and developer focused on collaborative life science, technology, and agtech campuses.

➤ Executive Chairman and Founder Joel Marcus spoke with S&P Global Market Intelligence about the company's life sciences focus and contribution to developing research hubs at campuses across the country.

The following interview has been condensed and edited for clarity.

S&P Global Market Intelligence: As a real estate company, how did you get involved in life sciences venture investment and why was it a direction you wanted to go?

Joel Marcus: We started this when we were a private company, and we felt venture investment goes hand in hand with working in our area. It gives us insight and knowledge into leading-edge science, leading-edge technologies, where the market is going. We've now got a robust team looking at all areas of the biotech landscape, and we're obviously an active investor. We want financial returns, but just as importantly, we're looking for strategic insight that we wouldn't get were we not involved with that, and that to me is a critical underpinning of what we do. We've done that over the last couple years in the gene and cell therapy areas, and we're always searching for very innovative technologies that can meet unmet medical needs.

Alexandria has built upon a growing life sciences sector. How did you establish that focus?

This past year, we passed $25 billion in total market cap, which is an amazing milestone for a company that started as a $19 million Series A garage startup 25 years ago. We really did create this unique niche in biomedical laboratory properties that never existed before we started. It's really become a niche that a number of big companies have an interest in, and a lot of institutional money has flowed into our sector, so it has become an accepted part of the real estate landscape for healthcare. Today we're focused on what's becoming important to most companies including Big Pharma, which is what we call the mega campuses, generally exceeding a million square feet. We're one of the largest owners in Cambridge next to MIT — we're building a new facility there, and companies including Big Tech, three Big Pharmas and a host of biotech companies already want to take the whole building before it's even been approved.

Can you talk about identifying and fostering these biotech hubs around the country?

There's about a 25-year life cycle, so if you look at San Francisco or Boston, they really started in the late '70s and became much more of a vibrant kind of cluster through the '80s and '90s, but it took about 25 years. New York is about through the first decade of the first 25 years; Seattle's well into that; San Diego's well into that. A lot of locations want to try to create these biotech clusters, and the reality is, you have to have four elements and it takes about a generation.

The four elements are you need a location that's really positive and viable — you wouldn't start it in the middle of the desert in Arizona — you need a wealth of great science and clinical expertise, you need management personnel on both the scientific and business side, and then you need risk capital. Many places want to catapult themselves into this, but it's not always there. For example, we thought Houston might be the next emerging cluster, but it's been a tough go.

What attracted you to your science-driven partnership with MIT, Harvard and others to build innovation centers in Boston?

There is both on the commercial side and the academic side a growing need to try to develop capacity for next-generation manufacturing and related technologies. Cell therapy and gene therapy are often too complex for one group to take on, so we felt that by forming a consortium and bringing in a series of outside experts, the consortium could do something dramatic for the academic group. We may have a great location for them, and we may in that same location build the same thing for small venture-backed companies that can't do this on their own. If you're just a series A company and you're involved in cell or gene therapy, it's not something you can totally take on, so we're thinking about doing a center both for academic use and early-stage venture use.