Navy Yard Finds New Life With Biotech as Key Industry [ By John Gattuso and Joy De Jesus ] The first development at the Navy Yard Research Park is a $20 million, 75,200-square-foot facility built for AppTec Laboratory Services, a Minnesota-based biotech company. There has been a Navy Yard in Philadelphia longer than there has been an America - more than 250 years. At its peak, during World War II, more than 40,000 people were employed by the Navy in a wide range of jobs relating to the construction and servicing of the U.S. fleet. However, by the early 1990s, as a result of the Base Realignment and Closure Act, operations at the Philadelphia Naval Shipyard came to an end. Today, the area is poised for a rebirth. It is presently host to approximately 6,000 workers employed by more than 60 companies located in some four million square feet of space, which represents the proverbial tip of the iceberg. The Navy Yard currently comprises about 1,200 acres - an area larger than Center City Philadelphia itself. Located at the southernmost tip of the City of Philadelphia, between the downtown area and the airport, the Navy Yard represents an enormous opportunity to a city that has a long history of seeking out innovative ways to stretch and grow. Liberty Property Trust, with its partner Synterra Partners, is working with the Philadelphia Industrial Development Corporation (PIDC), the City of Philadelphia and the Commonwealth of Pennsylvania to create what may be the most significant mixed-use property the city has ever developed. Together they are taking into account such fundamental principles as sustainable development, urban and brownfield development, historic preservation, improved mass transit and expanded public access to the water. With Liberty's help, PIDC has transformed these principles into a master plan that will guide the development of the more than 1,000 acres into a dynamic waterfront community that will include office buildings, retail establishments, waterfront amenities, research and development facilities, great public spaces and more. The essential challenge presented by the Navy Yard project is to create a mixed-use environment that would be unique to the Philadelphia area - one that would play off the waterfront locale and its location in relation to regional transportation - to form a permanent, self-sustainable environment. This plan focuses primarily on about 425 acres of the Navy Yard, largely encompassing the non-industrial portions of the site. Another challenge is to plan the site as a cohesive unit so that it works not only today but in 20 years. Biotech Finds a Home Some work has already begun, most notably the development of two Liberty projects - a new R&D facility within the Navy Yard Research Park and the Navy Yard Corporate Center. The first development at the Navy Yard Research Park is a 75,200-square-foot facility under construction for AppTec Laboratory Services, Inc., a Minnesota-based biotech company. In early 2003, Liberty, AppTec, PIDC and the Governor of the Commonwealth's office broke ground on AppTec's new, state-of-the-art, single-story laboratory and biopharmaceutical manufacturing facility. This $20 million building, which will contain extensive "clean room" facilities for research, as well as offices, production space and "wet" labs, has come about with financial support from Liberty, which has invested $8.25 million, and from PIDC, in the form of grants and low-interest loans. Support has also come from the Commonwealth of Pennsylvania, which designated the Navy Yard a Keystone Opportunity Improvement Zone (KOIZ), which provided a grant and loan package. PIDC also provided a package of aggressive financing and grants directly to AppleTec as incentive to locate and grow its company and its high-value jobs in Philadelphia. KOIZ's are defined, parcel-specific areas with greatly reduced or no tax burden for qualified property owners, residents and businesses. KOIZ's have been designated by local communities and approved by the state. They are meant to be a true partnership between each community and region among state and local taxing bodies, school districts, economic development agencies and community-based organizations. The AppTec building is nearly complete. Liberty finished the shell of the building in December 2003 and tenant improvements are nearing final touches. The building is owned by Liberty and leased to AppTec. The building has been designed to be completely flexible, with large floor plates, high-clearance ceilings, conveniently placed loading docks and a well-finished exterior. It could offer all office space, all warehouse space, or anything in between. Currently, it will provide AppTec with a 25,000-square-foot clean room, as well as all the other elements it needs, such as wet labs, office and warehouse. Yet the front of the building has a glass storefront system that creates a higher level of finish and provides flexibility for accommodating alternative uses in the distant future. The AppTec building has 24-foot clear heights to allow for the extensive layers of mechanical systems needed for the clean room and wet labs. It includes high pressure gas service, which supplies boilers and other mechanical equipment; 6000 amp electrical service - a level 10 times greater than regular service -- in order to manage all the specialized HVAC requirements; and a fiber optic network from Verizon. There is no doubt that this significant project provides a glimpse into Philadelphia and the Navy Yard's future. When AppTec moves in during the second quarter of this year, its 200 employees, 75 percent of whom are of a Ph.D. or equivalent level, will join the more than 6,000 employees of 60 companies located in other areas of the Navy Yard - yet they will be the first to work in the Navy Yard Research Park. This is the first of two planned buildings on the 15-acre site. In fact, the Navy Yard Research Park plans include five or six additional single and two-story buildings to be developed during the next decade, making the Navy Yard the place to be for biotech and pharmaceutical companies seeking to locate and grow within one of the nation's leading regions for such work. "The essential challenge presented by the Navy Yard project is to create a mixed-use environment that would be unique to the Philadelphia area - one that would play off the waterfront locale and its location in relation to regional transportation - to form a permanent, self-sustainable environment." years of industrial contamination from 138 acres of soil, $150 million in public and private investment was needed to bring infrastructure up to 21st century standards. The Gateway: Navy Yard Corporate Center Marketing of the park is a joint effort between Liberty, Synterra and PIDC. Together, the entities have established a master-planned campus that will be the welcoming gateway to the Navy Yard. The objective is to create a very specific and enduring brand for the Navy Yard as a whole that can over-arch, without compromising the marketing efforts of each individual project. It is an ongoing, coordinated effort - one that in theory will impact the complete development of the Navy Yard. Liberty, in partnership with Synterra, is planning to develop 1.4 million square feet of office space in roughly a dozen buildings. Each will range from four to six stories and offer both surface and structured free parking. It is expected that more than 5,600 people will work in this park alone. Ground is being cleared at the Navy Yard for the Navy Yard Corporate Center. When complete, this 72-acre park will feature Class-A office buildings targeted to companies seeking facilities with larger floor plates and convenient free parking in a master planned, urban setting. Organized along a new diagonal boulevard stretching from Broad Street southeast to the Delaware River, and highlighted by significant new public open spaces, the Navy Yard Corporate Center is situated immediately at the Broad Street entrance to the Navy Yard. It is expected that the Navy Yard Corporate Center will be one of the first areas developed during implementation of the master plan, a plan with an anticipated 20-year build-out. Upon completion, the Navy Yard Corporate Center will offer the various attributes that have come to define the best practices of new urbanism: retail that will help generate interest off Broad Street and serve those coming and going to work in the park; well-placed parking lots that offer free parking and do not interrupt the line of sight to the water; generously planted trees and landscaping to create a "Main Street" feel in the park; and wide open spaces to facilitate open-air activities, including picnicking, sports and relaxation. Five Ways to Make Public/Private Partnerships Work More Effectively Make an effort to walk in the other person's shoes. When you understand the issues that the other person faces, you can offer better solutions (and sometimes compromises) that fit the needs of all parties involved. Insist on quality. Projects built over the long term have a greater chance of success if quality standards are established at the start. While you can always moderate the level of quality during the process, it is almost impossible to push the project to a higher standard once it is underway. Have patience. By nature, processes that involve a larger number of principals and stakeholders are more democratic - and therefore not easily rushed to conclusion. Build up constituencies, to establish a broad base of support.This will benefit the project in the long term and result in the creation of a more enduring vision. Always remember that the project must be profitably executed to ensure long-term success. Projects of this dramatic size and scope are ultimately brought to fruition through the assemblage of an outstanding team of planning, real estate and economic development professionals. The master planning of the Philadelphia Navy Yard has been, and we all hope will continue to be, a lesson in how public and private partnership can come together to achieve something better than if each entity was working alone. Development of the AppTec facility provides one example of how the whole of a project can be greater than the sum of its parts. The Navy Yard includes large areas of land lying below the 100-year flood plain and also lacking in sufficient load-bearing capabilities. Much of the land being considered for the project lies below the 100-year flood plain. The AppTec site faced these challenges. Working with the Delaware River Port Authority (DRPA), the Navy Yard partners were able to raise the AppTec site out of the flood plain using fill material available from the DRPA. This had a number of benefits: It relieved the DRPA of excess fill material; provided needed fill material for the project; and provided a possible prototype for the use of future DRPA dredge material. Had the developer been working on the individual project, without public partnership, this step would have been more difficult to take. However, because the developer was already working with the City and Commonwealth, the ability to work closely with the DRPA was greatly enhanced. Similarly, PIDC helped address the fact that the poor load-bearing capacity of the project site created a delta between the costs of developing on a brownfield, versus a greenfield. Through creative financing, PIDC mitigated the additional expense associated with foundation premiums, making the idea of re-development - which is a priority not only to Philadelphia but also for most major cities - a reality. In planning a site of the Navy Yard's proportion, the ideal approach is to develop the site one section at a time. However, that is hardly realistic. In the planning stages, one must consider how the infrastructure - such as utilities, roads and public transportation - will work not only at the opening of the first phase, but throughout the entire 20-year development period. The challenge is to forecast future needs without extending (or expending) too much, too soon. No individual project in a total project of this size can be developed in a vacuum. By developing a close working relationship, PIDC, the City, the Commonwealth and the developers are better able to coordinate and integrate the many components of a very complex multi-year project. The results of this closely coordinated effort will be an extraordinary 1,200 acre waterfront mixed-use development in the heart of one of the country's largest metropolitan areas. John Gattuso is senior vice president, urban and national development, for Liberty Property Trust. Joy De Jesus is the company's marketing/development specialist. For more information Liberty Property Trust www.libertyproperty.com Philadelphia Industrial Development Corp. www.pidc-pa.org