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Pfizer site to aid search for space

Thursday, December 22, 2005
By Mark Sanchez
Michigan Business Review

Western Michigan University's planned acquisition of a Pfizer Inc. research facility will provide much-needed space for fledgling life-sciences companies in Kalamazoo. The university plans to use about half the 160,000-square-foot facility for faculty and student research, leaving the remaining space to house young companies that have outgrown their original homes. The timing of the acquisition couldn't have been better for the economic development agency Southwest Michigan First. The organization's existing business incubator in Kalamazoo -- the two-year-old Southwest Michigan Innovation Center in WMU's Business and Technology Research Park -- is virtually full, and many of its 15 tenants, as well as research companies located elsewhere in the area, eventually will need to move to larger quarters that are fitted with research labs. As several start-up research companies, many of them launched by former Pfizer scientists, begin to mature, a so-called graduate center is becoming an increasingly critical need, Southwest Michigan First CEO Ron Kitchens said. The Pfizer facility, located in East Lovell Street downtown, would provide low-cost but unsubsidized space for young life-sciences companies that are ready to move to the "next level," Kitchens said. "We believe there is a huge demand in the immediate future and long-term future for life-science space in Kalamazoo. We very much have got to have that space," he said. "With this kind of resource, we ought to do great things." Southwest Michigan First projects the space need is so large that the new facility could reach capacity as soon as it opens in about a year. "I would be absolutely shocked if it wasn't fully leased by opening day," Kitchens said. "I can't imagine a world where that space doesn't fill." The Western Michigan University Foundation this month announced a deal to acquire the three-story research facility, known as Building 126, from Pfizer [NYSE: PFE] for just $3.8 million. Built in 1964 and vacant for two and a half years, Building 126 underwent a $35 million renovation in 2002 to upgrade its chemistry labs and systems. WMU, Southwest Michigan First and Pfizer had talked about the transaction for about six months. (See Business Review's Oct. 20-26 edition.) Pfizer and WMU "share a vision as champions of innovation and biomedical research. This agreement solidifies that partnership," said Antoon Brusselmans, vice president for Pfizer Global Manufacturing in the Midwest and chairman of the company's Kalamazoo site leadership group. The acquisition represents "the perfect next step" in WMU's efforts to expand key research areas and promote growth in innovation and life sciences in Kalamazoo, WMU President Judith Bailey said. "This is an agreement that will pay dividends to the university and the community for years to come," Bailey said. "Building 126 has been newly renovated specifically for the most sophisticated levels of biomedical research, and it is rare for any university's researchers to have use of laboratory space of this caliber. We would not be able to construct even a fraction of the space at the price for which Pfizer has generously agreed to transfer this to the WMU Foundation." That generosity will make the second-generation business center much more affordable for life-sciences companies. Because Pfizer agreed to sell the building for so far below its $80 million to $100 million value, WMU can offer rental rates that young companies can afford, Kitchens said. "Rents can be really low and companies can get great value and invest in their companies and not in brick and mortar," he said.