Two Discovery Square to open for next wave of biotech collaboration with Mayo Clinic

The footprint for Rochester's ambitious $5.6 billion Destination Medical Center is about to get bigger as Two Discovery Square is preparing to open its doors.

The building in downtown Rochester is tailored for the needs of biotech, life science and medtech companies, offering space for labs, offices, research and biomanufacturing. Structural reinforcement provides vibration mitigation and supports heavy specialized equipment. The 121,000-square-foot building is equipped to handle a greater demand for power and utilities than a standard office building. Some of the building's windows are removable so that large, unwieldy pieces of equipment can be moved in and out more easily.

For now the building is empty, but the project's developer and leasing broker aren't worried.

"We've had very strong interest in the property," said Louis Suarez, senior vice president of healthcare services for the local office of Toronto-based Colliers International, is the leasing broker for Two Discovery Square.

Next door, One Discovery Square is 100% leased — a number that most office and retail landlords can only dream about during the pandemic. The interest from potential tenants for the new building is strong enough that project developer Mortenson has already started doing drawings for a third building on the Discovery Square campus.

Discovery Square, which covers 16 square blocks, is one of six defined sub-districts in downtown Rochester that comprise the Destination Medical Center. According to Patrick Seeb, executive director with the Destination Medical Center Economic Development Agency, $1.1 billion had been invested through the end of 2020 by Mayo Clinic and private investors.

The guiding concept for the buildings is to create space where companies — large or small — could establish a presence in Rochester and collaborate with the Mayo Clinic researchers and doctors. Discovery Square is part of the larger Destination Medical Center vision, a 20-year plan of investment for Rochester.

"We pretty much have a relationship with every company that's in One Discovery Square. We anticipate that we'll have relationship with pretty much every company in Two Discovery Square," said Dr. Clark Otley, medical director of the Department of Business Development at Mayo Clinic.

"Those relationships are mostly focused on the science and innovation ... Mayo Clinic has a lot of great scientists and laboratories but we don't have all the technology in the world," Otley said.

The budget for Two Discovery Square was approximately $45 million, which included $7.3 million in tax increment financing from the city. It is linked to One Discovery Square, which was completed in 2019, through a ground-level glass atrium. The shell of the new building will be completed January 7.

Brent Webb, who is leading the development of Two Discovery Square for Mortenson, said that given market trends the company was not wary of starting a speculative building in the middle of a pandemic.

"I think nationally there's been a lot of interest in life science facilities and there's been tremendous life science growth. ... That really is due to Covid," said.

Boston Scientific Corp., the Massachusetts-based medtech giant that has a large presence in Minnesota, said the site has been an ideal venue to meet with Mayo staff and showcase new developments.

"When we moved into [One Discovery Square] we established an accelerator together so that we can create spinout companies from our technologies," said Doug Pennington, managing director of Motion Medical, Boston Scientific's collaboration with Mayo. "As part of the collaboration we rapidly prototype medical devices and then share those with physicians and have them help us drive the prototype ... and keep moving forward."

"The space has really facilitated the collaboration."

One industry insider said the projects are helping the state ramp up its biotech business. "We've always thought of Minnesota as a medtech state. [But] biotech is a part of the industry cluster here and Discovery Square is creating an asset that should grow that quite a bit," said Frank Jaskulke, vice president of intelligence for Medical Alley, a trade group for the state's medical and health care businesses.

Medical Alley currently counts about 130 biotech or pharmaceutical companies in the state.

The Economic Development Agency will spend $20 million to create Discovery Walk, a linear parkway that will connect the heart of the Mayo campus to Discovery Square. Construction is set to start in the spring.

Expanding its commitment to research, Mayo Clinic is planning to build the Anna-Maria and Stephen Kellen Building, an 11-story building with 176,000 square feet of "flexible lab space" one block from the Discovery Square buildings.

"We don't think about these as individual buildings. This is a campus," Suarez said. "It's a broader ecosystem within downtown Rochester."