When private investment firm Tavistock Group wanted to expand Lake Nona, a 7,000-acre (833-ha) master-planned community in central Florida several years ago, it sought an unusual anchor: a Medical City.

Today, Orlando’s Lake Nona Medical City is home to a thriving health and life sciences cluster that includes hospitals, universities, research institutions, and life science companies. According to a study by Arduin, Laffer & Moore Econometrics, the college of medicine alone is expected to create more than 30,000 local jobs and have a ten-year economic impact of $7.6 billion.

“Lake Nona Medical City should provide major benefits to the community with thousands of new jobs, and billions of dollars in construction,” says Jim Zboril, president of Lake Nona. “The financial strength of the Tavistock Group, combined with the strong support of the city of Orlando, has led to [the creation of] hundreds of construction jobs during the economic downturn as the hospitals, research facilities, university campuses, and schools have been built. In the long run, the Medical City will provide thousands of diverse jobs for Orlando, with people coming into the area from all over the country. Beyond the jobs, Lake Nona Medical City will bring state-of-the-art clinical care, biotech research, and educational facilities.”

Lake Nona highlights how important medical and educational economic components are today, explains Tom Murphy, senior resident fellow, ULI/Klingbeil Family Chair for urban development, and a former mayor of Pittsburgh, Pennsylvania. “Las Vegas gave the Cleveland Clinic over $100 million to locate a facility there. New Orleans is spending $2.2 billion for facilities at Tulane and LSU [Louisiana State University]. Doha in Qatar has given hundreds of millions of dollars to attract universities from around the world to locate campuses there, including Carnegie Mellon University from Pittsburgh.”

Of the 100 largest cities in the country, medical facilities and universities are major employers in two-thirds of them, continues Murphy. “Over the last 20 years, we’ve watched a real turnaround in cities that historically were manufacturing-based and over the years, it’s all changed. Medicine and education have become economic generators in cities including Baltimore, Boston, and a number of others. It speaks [volumes] about the loss of manufacturing jobs and also about the increasing impact of medical facilities, which are not only providing care and education, but also becoming major research centers with a major economic impact.”

Today, Murphy notes, the nation’s major competitive advantage is innovation. “We spend $400 billion a year in research—more than any other country in the world—and much of that goes to research institutes, universities, and hospitals that are important for education and individual care, but also are places that commercialize that research, leading to startup companies and new businesses that, in turn, grow and hire more people.”

Thus, communities must now build new infrastructure that supports startup companies and helps universities and research and development companies work closely with them to commercialize cutting-edge technologies. “It speaks to the partnership that needs to exist between public and private leaders in a community,” says Murphy. “Contrary to government getting out of the way, we need government to attract the best and brightest, to help universities and hospitals raise capital for the research they are doing.”

In addition, unlike other industries, which tend to work in secret from one another, the life science nonprofits share information and equipment. And scientists prefer clusters where they can discuss new ideas with colleagues.

Lake Nona is one example with its University of Central Florida (UCF) health science campus. Capitalizing on UCF’s strengths in biomedical sciences, modeling, simulation, optics, and photonics, Lake Nona’s Medical City campus is expanding to include the 100,000-square-foot (9,290-sq-m) University of Florida’s College of Medicine’s research facility—projected to open this summer—as well as the Burnett School of Biomedical Sciences. Nemours, one of the nation’s largest pediatric health care systems, is building a pediatric health care campus anchored by a state-of-the-art children’s hospital and outpatient clinic in Lake Nona scheduled to open later this year. In addition, the Florida Department of Veterans Affairs (VA) is building a new $665 million, state-of-the-art facility that is billed as the first VA hospital to be built in the United States since 1995.

“We see Lake Nona Medical City growing in diverse and meaningful ways,” says Zboril. “We see the health and life science cluster continuing to blossom and attract institutions that see the synergistic benefit of being so physically close to so many top-tier facilities and talent. And all this sits adjacent to Orlando International Airport—the third busiest in the U.S. As the major hospitals and educational facilities are completed, the thousands of employees and visitors will drive demand for additional commercial, office, retail, and residential projects at Lake Nona.”

Medical clusters are becoming major anchors for communities around the state and the country. Consider The Scripps Research Institute (TSRI) in Jupiter, Florida. When the Sunshine State was seeking to attract Scripps to south Florida, then-Governor Jeb Bush used the code name “Project Air Conditioning” to describe the impact TSRI could have on the area’s future employment base—referring to the impact that air conditioning had on Florida’s growth in the 20th century.

Larry Pelton, president of the Economic Development Council of St. Lucie County, who helped recruit Scripps while serving as the president of the Business Development Board of Palm Beach County, noted that Bush offered a sizable incentive package to the institute while Palm Beach County agreed to construct a 350,000-square-foot (32,516-sq-m) lab facility to house the institute. The state worked in partnership with the institute to find funding for the “startup,” which allowed Scripps to absorb startup costs while transitioning into a self-funded operation over several years.

“Since Scripps made its move, Max Planck, Torrey Pines Institute for Molecular Studies, the Vaccine and Gene Therapy Institute, Al Mann Institute, and Martin Memorial Hospital [a clinical hospital with clinical trial partnerships with the Moffett Institute and Merck] have all established a presence in the region,” Pelton, a member of ULI South Florida, notes. “These organizations represent over 500,000 square feet [46,451 sq m] of new space, 1,300 employees, more than $200 million in construction, partnerships with the state university system, significant research discoveries in diabetes, multiple cancers, immune disorders, Alzheimer’s, etc., that will lead to next-generation therapies and multiple new spin-off companies and opportunities.”

The impacts on real estate are still being measured as the institutes ramp up to peak employment levels, Pelton adds. “The depth of Florida’s real estate downturn has produced only a minor impact compared to what it will bring to the area economy over the next decade,” he says. “The importance of life sciences will become much more obvious as the institutes complete construction and begin to fully staff their facilities. The volume of patentable discoveries will increase substantially, which will generate the spin-off activities we have anticipated from the beginning. Another impact is the transitioning of regional and state economies into innovation economies that search for and reward intellectual property. Florida is on a path to diversify our economic base and to add sustainable industrial activities that are less vulnerable to seasonal and structural swings.”

Those communities—and developers—seeking to attract medical clusters should be patient and listen to others who have been through the process, says Pelton. He adds:

  • Build infrastructure that is attractive to scientists and to the institutes, including housing, education, recreation, a vibrant vendor-supplier network, and a leadership team that is 100 percent committed to success.
  • Be creative with financing and funding tools.
  • As successes begin to come, don’t ignore the companies or institutes that were the pioneers of your cluster. “They are the best source of leads for new occupants and they are the magnets for future development,” he adds.

ULI–the Urban Land Institute