Technology Infrastructure-New Strategies for Development

Technology Infrastructure

Innovation is linked to the development and maintenance of state-of-the-art technology facilities that enable the progression of highly skilled professionals, ensuring competitive advantage and the overall success of industries within national and international economies. Choosing the right strategy for the construction and marketing of these facilities can determine their success or failure, since several determining factors influence whether firms will decide to lease a property. The FIZ Frankfurt Biotechnology Innovation Center is a technology cluster built using a market oriented strategy that integrates a facility's marketability into the construction process.

Technology Clusters: Shared Infrastructure

Numerous large and medium sized firms are now convinced that, in the future, there will be more business associations and that the competition for suitable partners will become more intense. Due to higher capital costs and fewer resources, firms are increasingly turning to cooperation to maintain their ability to innovate.

Fuelled by innovation, a cluster is a dynamic location where networking, investment and technology transfer occur. More then ever before, firms are beginning to operate in specialized clusters, with shared infrastructure and the support of surrounding institutions such as universities. The infrastructure available to firms in these clusters provides office space, labs and conference rooms, and other facilities.

These specialized clusters enable worldwide business representation and co-operation, while ensuring the concentration of scientific know-how and expertise at specific locations around the world. This in turn makes it easier for companies to locate needed resources.

Clusters also serve as a means of creating competitive advantage to attract and maintain corporations and increase economic development and growth of their regions.

New Benchmark for the Development of Technology Infrastructure

In Germany, there are about 300 technology and startup centers. Amongst them are technology centers, startup oriented centers, and technology parks. These clusters specialize in various areas including chemicals, biotechnology and pharmaceuticals. In addition to these traditional cluster models, a new concept has been developed. This involves a technology center, which provides infrastructure, management and consulting services, and supports the development of other specialized clusters facilities in Europe.

The FIZ Frankfurt Biotechnology Innovation Center provides infrastructure for companies in the Life Sciences industry. The architectural concept with its campus character underscores the visibility of the companies and purposefully promotes communication and focused work. The aim of this special facility is to create necessary conditions for small and medium-sized research companies, which are otherwise only achievable for large pharmaceutical companies. FIZ provides 15,000 square meters of laboratory and office space to realize this aim. The modular construction ensures a high degree of individual utilization concepts and flexible layouts. Laboratories can be converted to clean rooms or S3 labs very quickly.

Role and Importance of Shared Infrastructure

High technology industries such as pharmaceuticals and biotechnologies are intensive users of Research and Development (R&D) that leads to innovation resulting in gains in market share, the creation of new markets, and the efficient use of resources. A technology cluster in this regard is the fuel that drives innovation, since they consistently generate new ideas and transform them into commercially successful products.

Knowledge spillovers in technology clusters contribute to an increased rate of innovation leading to creation and growth of new businesses. Companies moving to new clusters contribute to and benefit from these spillovers. Firms also have, as a result, access to a pool of highly-skilled labor and specialized suppliers that agglomerate in such regions.

Because these clusters and their surrounding institutions are made up of individuals and organizations from both industry and academia, a more diversified approach to dealing with issues which affect an industry emerges. In research for instance, when companies within a cluster plan to develop new medicines and medical equipment, input and results from nearby research institutions are easily accessible.

Innovation dynamics of companies in clusters are further stimulated by the presence of local competition and peer pressure among companies, since the existence of other competing firms in the near vicinity prompts them to increase the efficiency of their operations. In addition, the exchange of processes involving suppliers, customers and providers of professional services leads to a reduction in research and development costs.

Technology Infrastructure

Case Study: Concept for the Planning and Construction of a Technology Cluster

The key requirement in the planning and set up of FIZ was a tailored technical concept in which the potential of the companies to be accommodated was identified. The infrastructural requirements were then analyzed in detail.

Moreover, highly specialized consulting knowledge was gathered with the implementation of the technical concept, which includes expertise in the analysis of potential and feasibility studies in research-intensive sectors, project development and the operation of special purpose facilities.

In the initial stages of planning, 220 companies were contacted. The data collection, the review of the local scientific activities, and the expert interviews with the economic and scientific advisory board of FIZ resulted, for example, in the selection of inflammatory diseases, diseases of the Central Nervous System and proteomics as areas of focus.

Architectural and Marketing Concept

A well throughout architectural concept and an effective marketing concept are both key to ensuring the success of a cluster facility. The size, building modules and rental agreements of a facility must all be adapted to the current market environment, since firms will decide whether or not to lease office space and labs based on one or more of these criteria.

From a town planning and architectural standpoint, the buildings at FIZ support three important factors in modern research activities: informal communication, concentrated work and a creative environment.

The division into several interconnected building modules makes flexible rental units possible and building-use adapted to the current market position. Built in two construction phases, FIZ has about 15,000 square meters of rental and usable floor space available.

Rental Concept

The combination of the regional location advantages, the architectural concept, and the internationally oriented research cluster are factors that have led to successful renting of the property in the defined research areas. However, the key to success is the flexible planning and building strategy which involves the signing of leasing contracts before construction of offices and labs begins.

Aimed at satisfying emerging market demand, the second construction phase of the technology cluster started after several companies had committed to using the facilities upon completion. To ensure the success of the expansion and return on investment, construction began only after 60% of lab and office space had been leased out. Furthermore, the tenancy contracts with mature firms are oriented towards the long-term, and were signed with solidly financed tenants.

Owing to this approach, FIZ reached maximum rental capacity only eight months after the opening of the second construction complex. The rents achieved are at market average, which shows that the market is prepared to reward the effectiveness of such a platform.

This rental structure also supports the future of young and established firms. Due to the sustainable success of the technology center and a persistent demand for flexible laboratory and office space, the cluster is consistently being expanded by private investors on neighboring plots.

Strategic Location

Deciding where to build a technology infrastructure facility will determine the number and kind of firms wanting to lease the property. Since the geographic location of a technology cluster contributes to its success, careful research must be done to determine the most adequate region and location to build in. Once a particular region has been selected, a location in close proximity to universities, research institutions, and other related enterprises should be pinpointed.

Located within a scientific hub, FIZ is not only in close proximity of key research institutes but is also surrounded by additional infrastructure services such as shopping centers, hotels, and daycare centers. Companies also benefit from the easy connections with international transport routes and the proximity to important suppliers, and financial markets.

Conclusion

More and more firms are beginning to see the importance of operation in shared infrastructure facilities. These specialized clusters become hubs of innovation and promote the competitive advantage of firms and boost regional economies.

In order to ensure the success of these commercial real estate facilities, careful planning and preparation is required before construction begins. A concept with a market oriented approach creates initial awareness on market conditions, provides better insight on the type of firms that will be renting or leasing the facility, and establishes contact with potential tenants. In this light, the marketing of the facility must begin before the construction phase in order to create awareness and demand.

Such a concept facilitates the construction of an infrastructure that directly meets the needs of companies, which will be residing in it, as well as ensures the inflow of funds once the facility is completed.

NBMCW October 2010

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