Mayo seeks Discovery Square developer

Mayo Clinic is kicking off a process to select a developer to build out more than 1 million square feet of clinic-owned land in Rochester as “research, commercial and product development space.”

Construction on that campus-expansion plan could begin as soon as next year within the so-called Discovery Square bioresearch campus, a linchpin of Mayo’s $6 billion, 20-year Destination Medical Center economic development vision.

Mayo officials were scheduled to announce the plan Tuesday night at the 2016 BIO Conference in San Francisco. Mayo touted it as a key milestone for Discovery Square and the Destination Medical Center project as a whole.

Lisa Clarke, executive director of the Destination Medical Center Economic Development Agency, said Tuesday’s announcement is a “great example of progress” in realizing the vision for Destination Medical Center.

“It’s not just about land and the buildings,” she said. “It’s about being a catalyst for the economic engine for Destination Medical Center, which means jobs, business growth, and creating an environment that will support these jobs and this growth. I truly believe this can change the face of the Midwest as it’s related to life sciences.”

Discovery Square is one of six subdistricts in the Destination Medical Center development plan. It’s the “economic engine of the whole DMC plan,” said Mary Welder, communications and community relations director for the Destination Medical Center Economic Development Agency.

The Discovery Square district covers a six-block area adjacent to Mayo’s existing campus. The area is bordered by Fifth Avenue Southwest, Sixth Street Southwest, South Broadway, and Third Street Southwest.

Karl Oestreich, public affairs director for Mayo Clinic, said a request for proposals was sent out recently to “select developers.” He declined to identify the RFP recipients, but said the list includes both Minnesota-based and national developers.

Responses are expected by mid-June, “with the idea that the developer will be selected by probably fall or the end of the year and we will break ground” on the first building in 2017, Oestreich said.

The first building will “probably be between 60,000 and 100,000 square feet,” Oestreich added. “We will take a market-driven and phased approved in building out Discovery Square.”

Mayo Clinic will occupy part of the building and there will be additional tenants, Oestreich said. He said it hasn’t been determined how much of the space Mayo will occupy or where exactly the first new building will be located.

Herb Tousley, director of real estate programs at the University of St. Thomas, said Mayo is “probably going to throw out a fairly wide net” for a developer search on an initiative of that scale.

Overall plans within the district include both new construction and renovation.

An existing building within the district, the 116-year-old Conley-Maass building, a one-time camera factory at 14 Fourth St. SW, is being renovated to house a “health-tech business” and other tenants.

Beyond the buildings, the Destination Medical Center’s key role is to create the environment that would make different organizations want to relocate there, Welder said.

Lt. Gov. Tina Smith, who chairs the governing board responsible for public oversight of Destination Medical Center, said in an interview that making progress on Discovery Square was “at the top of the list” of the board’s priorities for 2016.

Smith said Mayo isn’t asking for public money to support the Discovery Square buildout. “It’s their own private investment,” she said.

With the expansion, Mayo Clinic will create a physical space where physicians, researchers, scientists and entrepreneurs can come together to develop health care innovations and create jobs, she said.

“This strategic investment that Mayo Clinic is making in Discovery Square is exactly the kind of project that we have hoped that the DMC would encourage and inspire,” Smith said.

Destination Medical Center is a 20-year plan to position Rochester as “the world’s premier destination for health and wellness,” with additional goals of “attracting people, investment opportunities, and jobs” to the city and “supporting the economic growth of Minnesota, its bioscience sector, and beyond,” according to its website.

Mayo’s announcement comes at a time when city staffers are working to streamline the process for approving and evaluating new developments. As previously reported, developers have complained that the review process is too cumbersome.

A board overseeing DMC-related development has praised the city’s effort to make things easier, but has questioned whether it goes far enough.

The Destination Medical Center has attracted $152.4 million in private investment since July 2013, mostly from the Mayo Clinic. Project planners expect to surpass the $200 million mark this year.

The Destination Medical Center is expected to bring $5.5 billion worth of investment to Rochester over the next 20 years. That includes $3.5 billion from the Mayo Clinic, $2.1 billion in other private investment, $424 million from the state, $128 million from the city, and $33 million from Olmsted County.