MIDDLE MARKET HIGHLIGHT, NOVEMBER 2007

Rochester
Dan Marcec

Though things have slowed somewhat in the Rochester, Minnesota, market — as they have in commercial sectors across the country — a significant amount of growth is on the horizon. This year, the Minnesota Partnership for Biotechnology and Medical Genomics opened a 100,000-square-foot facility, in addition to being awarded $25 million from the state for research and development.

The University of Minnesota (UM) has converted 50,000 square feet of former retail space into a downtown campus with classroom and office space, which opened in September. UM’s growth in the area will be key to expansion in Rochester in the future, as it is planning to develop an entirely new campus in the downtown market. Projected to include new programs such as computational biology, genomics and molecular biology, the university is currently undertaking a long-term look at what its needs are going to be. Wrapping up that study by 2008, Rochester will know then what kind of growth it can expect to see spurred from the new university campus.

Due in part to these developments, the biotech and life sciences industries are set to boom in Rochester, while at the same time, one of the city’s traditionally largest employers continues to expand. Mayo Medical Ventures will anchor a new mid-rise BioBusiness center in downtown Rochester, which will stand between seven and nine stories, with Mayo taking five of those. Each floor will encompass approximately 15,000 square feet, with ground-floor retail and speculative bio-business space rounding out the project. Additionally, Mayo recently opened a 100,000-square-foot, state-of-the-art healthy living center for its employees and their families. With a fitness facility, dieticians and other lifestyle support on hand, this project has added to the quality of life to the region for one of its most significant companies.

“Downtown has been a major focus for our efforts, as we want to make it the center of our activities,” says Gary Smith, president of Rochester Area Economic Development. “We want to create an urban village and a physical environment downtown that will maintain all the services, industry and living requirements as we move forward.”

In that light, three projects currently are proposed for downtown, all of which include a mix of office, retail and housing space, and each is expected to encompass between 100,000 and 150,000 square feet. Though these haven’t yet made it to planning stages, Smith expects at least two of these to come online. “These projects go hand in hand with the long-term revision of downtown,” he says. “Besides the clinic and research activities that we’re growing in the area, we want living and entertainment there as a center core, so we’ve focused on massive redevelopment of the area to spur that vision.”

Elsewhere in the city, the Shoppes on Maine, a retail development in south Rochester, has opened several large big box stores such as Lowe’s Home Improvement Warehouse and Target.

Looking toward the future, IBM continues to develop the world’s largest and fastest computer, BlueGene, in Rochester. With its life sciences research and development lab located here, Mayo, and the new UM campus, Rochester could be a hotbed for growth in industries that support those companies. As these existing businesses continue to grow, Smith and his organization are actively seeking complementary companies to come in and strengthen the market.

“Our goal is to take the basic research we’re doing here and move it out of the lab and into commercialization,” Smith says. “There’s only one place in the world that people can be close to IBM, Mayo and the University of Minnesota, all of which are world-class research institutions; this makes Rochester a unique place to be, and a convergence of these industries is where our opportunity lies.”

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