St. Jude Plans Headquarters Expansion in Twin Cities Area

Jul. 9--Twin Cities area medical technology companies have become the latest sector of the economy to engage in a building boom, and there's no sign that their construction and expansion projects will slow down soon.

Last month's news that St. Jude Medical Inc. expects to begin work this fall on the first phase of a long-term expansion of its Little Canada headquarters continues a series of ambitious projects by major med-tech companies. Others include Medtronic Incorporated's new facilities in Mounds View for its cardiac rhythm management division, Boston Scientific Corporation's addition to its Maple Grove campus, and the expansion of some former Mentor Corp. facilities in Minneapolis acquired last year by Coloplast of Copenhagen, Denmark.

Smaller med-tech firms also have been expanding, in most cases by building out leased space. The list includes Micromedics Inc., an Eagan manufacturer of surgical and ear treatment products; Minnetronix Inc., a St. Paul designer and maker of cardiovascular and therapeutic devices, and Devicix, an Eden Prairie developer and manufacturer of medical instruments and software.

The expansion by medical manufacturers stands in contrast to the overall decline in manufacturing in Minnesota, including closures like the Ford Motor Co. plant in St. Paul and 3M Company's specialty tape facilities. Throughout the Twin Cities, the vast bulk of industrial space being built is for warehouses and distribution facilities, not manufacturing plants.

Figures compiled by the Minnesota Department of Employment and Economic Development show that statewide, manufacturing jobs declined by almost 13 percent from 2000 to 2006. During the same period the number of jobs connected to medical devices rose by almost 24 percent to 28,244.

The availability of a large, experienced workforce was a major reason Coloplast decided last year to move its U.S. headquarters to Minneapolis, according to Jan Fredericksen, president of the Danish company's North American operations. That year Coloplast acquired Mentor's urology division, which included the $5.8 million purchase of the Mentor campus on West River Road.

The campus consists of five buildings totaling 180,000 square feet. Fredericksen said Coloplast hopes to begin construction this fall on another 70,000 square feet with completion set for the end of 2008. The size of the site, 5 acres, limits future expansion, so the company is looking for another 100,000-square-foot building to lease elsewhere in the Twin Cities.

The added space at both sites will be used for operations that are being transferred from Marietta, Ga., and Santa Clara, Calif., as well as longer-term workforce expansions. Fredericksen said.

"Our base is so well-established here in medical devices. It makes all kinds of sense for companies to expand where there's a wealth of employees with technical expertise," said Gary Germundsen, a senior associate with the Minneapolis office of Colliers Turley Martin Tucker, a commercial real estate broker and property manager.

Germundsen, whose past med-tech clients include St. Jude and Plymouth-based EV3, said he is scouting area expansion sites for several other medical products firms. Longer-term, Germundsen said he expects future clients to come from some of the fledgling med-tech ventures now occupying relatively small facilities at University Enterprise Laboratories, the University of Minnesota's biotech incubator, he said.

Planning future space needs for smaller med-tech firms can be especially difficult, said Paula Anderson, whose brokerage firm, Square Feat, has worked extensively with start-ups making the transition to bona fide businesses.

"You can have a client that has a breakthrough, and very quickly needs to hire more people and has a need for more space," she said.

Anderson typically tries to find clients spots with adjacent vacant space where a lease with first rights to expand can be negotiated. In some cases, air-conditioned warehouse space can be built out to suit a client's needs, she said.

Anderson's clients include Micromedics, which makes surgical trays, devices used in ear and nose surgery, biomaterial applicators and over-the-counter products for treating ear problems.

President Curt Miller said the company, which has about 70 employees, has more than doubled its space to about 30,000 square feet in the past three years.

Miller said the company will likely be adding more space soon to accommodate its recent rapid growth. Revenue has increased at an average rate of 25 percent for the last six years and by 40 percent the last year and a half, he said.

In general, company requirements for sophisticated heating, cooling and air filtration systems make space for med-tech production considerably more expensive than other types of manufacturing space, Anderson said.

Twin Cities architect Roger Christensen agrees that building research and manufacturing space for med-tech companies poses unique challenges.

His firm is overseeing a 110,000-square-foot expansion of Boston Scientific's Weaver Lake campus in Maple Grove. The addition, which includes 20,000 square feet of lab space, is expected to be complete early next year.

"All the mechanical systems are much more intense," Christensen said. "There are issues like how tight certain rooms must sealed to prevent contamination, how exhaust systems will work in places where chemicals are mixed."

He estimates building costs of medical manufacturing facilities are 35 to 65 percent higher than standard nonmedical manufacturing plants.

In addition to technical considerations, medical manufacturers increasingly are asking for more informal meeting space, where scientists and engineers can discuss and work on projects, Christensen said.

"These companies know the value of collaboration, whether it be a meeting room or even a small lounge where employees can sit down and talk and work together," he said.

Susan Feyder -- 612-673-1723 -- sfeyder@startribune.com

Copyright (c) 2007, Star Tribune, Minneapolis Distributed by McClatchy-Tribune Information Services.


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