Obsolescence of Wallingford’s former BMS building reflects shift in big pharma

Obsolescence of Wallingford’s former BMS building reflects shift in big pharma



WALLINGFORD — Thirty-six years ago, the vice president of engineering for Bristol-Myers Squibb promised members of the Wallingford Rotary Club that the new world headquarters for pharmaceutical research and development would be a “signature building.”

A signature building stands alone and is not part of a group, has no adjacent structure and defines the business within. It becomes a landmark and advertises the business it contains by extension, according to architects.

Today, that signature building at 5 Research Parkway will most likely be demolished with redevelopment options uncertain. Bristol-Myers moved its research and administrative operation to Cambridge, Massachusetts, and New Jersey in November. And while new owner Calare Properties continues to pay about $3 million annually in taxes, that amount will significantly decrease once the building is razed.

Calare Properties of Massachusetts worked with town officials and Bristol-Myers’ real estate team for three years on parallel marketing plans that acknowledged a single user occupying all 196,000 square feet would be the highest and best use. But dramatic changes in the pharmaceutical industry have led to decreased need for large buildings with high fixed costs. The second-best option would be to divide the property into two pieces, about 100,000 feet each, for multiple users for an office park. The third option was an industrial or manufacturing use.

“It’s not going to be a research and development facility,” said Timothy Ryan, town economic development specialist, who consulted with Calare and Bristol-Myers to market the property. “They don’t want these high fixed costs. What can it be?”

Calare pitched a plan to demolish the building and construct two massive warehouse and distribution centers on the 180-acre site. The town’s Planning and Zoning Commission shot it down last month after neighbors protested over concerns about increased traffic and potential harm to area wetlands and the town’s water supply.

Calare has not yet presented another plan, but is moving forward with the demolition of the building because the list of what it can’t be is longer than what it can be. Bio-tech research and development companies don’t want a 915,000-square-foot building, and there aren’t enough start-ups to fill it, experts said.

A plan to bring in a school failed when the town agreed to eliminate both nonprofit and for-profit schools in the IX zone. The reasoning behind the decision was to prevent uses that were inappropriate in an industrial zone and to keep the property on the tax rolls. It can’t be leased as office space because there is currently a glut of class A office space in greater New Haven. And there aren’t enough manufacturing users looking to divvy up nearly a million square feet.

“We worked for three straight years trying to find someone to fill that spot,” Ryan said. “The business dynamic has changed. These buildings no longer have a viable use.”

Ryan and other town officials have recently started sounding alarm bells about how much the town stands to lose in revenue when the building is razed, coupled with decreased state aid. They are also worried that should the town not accept a warehouse and distribution use, businesses will look elsewhere. Real estate experts have called the parcel one of a remaining few in the I-91 corridor suited to accommodate the e-commerce boom.

“The risk we run as time goes on is we could easily miss the market,” Ryan said.

The signature building’s obsolescence reflects changes in the big pharma industry that began with massive investments in research and development, but as decades passed evolved into more nimble partnerships.

Bristol-Myers broke ground in the Med-Way business park in 1983 on a $160 million research and development facility to be built in phases. Former Mayor Rocco J. Vumbaco directed the Town Council to decide on a seven-year tax abatement agreement with the sewage treatment plant.

By the 1986 ribbon-cutting ceremony, the biology labs, chemistry labs, office space and a utility plant were up and running. The building was dedicated to researching and developing anti-cancer, anti-infective and central nervous system drugs.

“Bristol-Myers’ new pharmaceutical research center will not only have a tremendous impact on Wallingford and the entire state, but is symbolic of the bright future that lies ahead for Connecticut,” Gov. William O’Neil told a crowd on June 24, 1986.

During the 1980s, Connecticut had several research and development headquarters for drug makers. Pfizer was well established in Groton. Bayer had headquarters in West Haven. Boehringer Ingelheim Pharmaceuticals Inc. had opened its North American headquarters in Ridgefield in 1971. But the industry was overshadowed by defense and insurance when it came to state assistance.

“Those large corporate (drug) companies wanted to be off by themselves and have the space to innovate,” said Paul Pescatello, senior counsel and executive director of the Connecticut Bioscience Growth Council. “Those kind of companies have kind of gone out of fashion in bio-pharma.”

While Bristol-Myers was still under construction, New Haven and surrounding towns were working to attract new startups. Winstanley Associates bought the former Southern New England Telephone building at 300 George St. a block from a department of the Yale School of Medicine. The building, which now houses Achillion Pharmaceuticals, was a precursor to Science Park.

Branford also began attracting bioscience startups by the late 1980s, beginning with the opening of drug researcher Neurogen Corp., which was acquired for $11 million by San Diego-based Ligand. Later, 454 Life Sciences, CGI Pharmaceuticals and, in 2014, Icahn School of Medicine at Mount Sinai, all opened operations in Branford.

By the 1990s, Connecticut officials began to see biotech as an untapped industry, particularly in partnership with Yale University and the University of Connecticut.

Yale professor Leonard Bell founded Alexion Pharmaceuticals at Science Park in 1992, while Jackson Labs built a facility near UConn’s Health Center in Farmington.

But the industry also began shifting away from massive facilities around 2000, with many research companies downsizing or partnering with universities for space.

Alexion moved to Cheshire, then returned to New Haven in 2016, and has since left for Boston. Three hundred George Street is full, and Science Park has few vacancies but New Haven struggles to compete with the likes of Berkley, California, or Cambridge, Massachusetts.

Bayer closed its West Haven research facility, which employed about 1,000 people. Pfizer began relocating hundreds of research and development jobs from Groton to Cambridge in 2009. Boehringer Ingelheim reduced its U.S. presence in recent years and returned to its native Germany, which eliminated almost 1,000 jobs in Ridgefield. Bristol Myers-Squibb’s departure from its Wallingford operation cost another 900 jobs.

“If you’re familiar with bio-tech, the ebb and flow of companies coming and going is a natural flow of this industry,” said Dawn Hocevar, president of BioCT. “The state was developing programs to provide seed money to allow more startups to make breakthroughs.”

Universities have become more attractive in part because of their ability to access grants. Yale and UConn, for example, bring in around 93 percent of federal grant funding for all Connecticut schools.

The two schools have partnered on Pitch, the Program in Innovative Therapeutics for Connecticut’s Health, which makes it easier for faculty to spin out projects. UConn also started the Technology Incubation Program, or TIP, in 2003, and partner companies have raised more than $260 million in equity and debt, $70 million in grant funding and have approximately $60 million in revenue.

“We’re looking to build on the organization in the state,” Hocevar said. “We’re adding more incubators as well as more graduations in the New Haven and Branford areas.”

Bristol-Myers’ building became too big and isolated from research centers.

“In order for BMS to be viable, they needed that,” Hocevar said. A building that size is “not what the big pharma’s are looking for.”

The obsolescence is similar to what happened to General Electric in Fairfield, Pescatello said.

But even if there was a shift back, the building is impractical to retrofit, even to accommodate several startups, he said.

“It’s easier to start from scratch,” Pescatello said.

There could be a rebound and a probable shift back to the suburbs, but right now companies want to be in the middle of the field, near universities and venture capital. As cities such as Boston and San Francisco become too expensive, Connecticut could be poised to capitalize.

“Connecticut is very well positioned and this whole transportation and budget issue is so critical,” Pescatello said. “We would be well positioned to pick up companies from San Francisco and San Diego if our issues were fixed. Never before have the interests of the bio-pharma companies been so aligned with the interests of Connecticut. They look at budget and transportation. ‘Unless they change, why would I come here?’ ”

mgodin@record-journal.com

203-317-2255

Twitter: @Cconnbiz


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