Proponents of the Health-Tech Corridor say HeartLab's move affirms their strategy: Keep promising start-ups and attract new tenants by transforming a gap-toothed swath of Cleveland into a 1,600-acre business park.
View full sizeAnastasia Boston works in a lab at Cleveland HeartLab's cramped building off Carnegie Avenue. The company is moving from 7,000 square feet on the Cleveland Clinic campus to 27,000 square feet at the nearby MidTown Tech Park, a new building meant to retain and attract fast-growing companies in the city of Cleveland's emerging Health-Tech Corridor.CLEVELAND, Ohio -- A fast-growing lab in Cleveland's Midtown neighborhood is leaving incubator space for a new building - traveling a path charted by backers of the city's health-and-technology corridor.
Without new construction on Euclid Avenue, Cleveland HeartLab likely would have left its namesake city for the suburbs, another region or another state.
The two-year-old company, a Cleveland Clinic spinoff, has grown from 8 to 80 employees and is approaching $20 million in annual revenues.
At HeartLab's current offices, about 7,000 square feet in an old Clinic urology building, workers are doubled up at desks, crammed into closets and taking customer-service calls in a hallway.
HeartLab plans to sign a 10-year lease Wednesday for 27,000 square feet at the MidTown Tech Park, a rare project built without tenants in hand. A niche lab focused on biological markers tied to heart disease and stroke, HeartLab rebuffed an offer from an East Coast buyer, chose to stay in Cleveland and recently secured a major investment - $18.4 million in funding led by two Boston-area investors.
Proponents of the Health-Tech Corridor, a 3-mile path between downtown Cleveland and University Circle, say HeartLab's move affirms their strategy: Keep promising start-ups and attract new tenants by transforming a gap-toothed swath of Cleveland into a 1,600-acre business park.
"HeartLab is a great example for a couple of reasons," said Baiju Shah, chief executive officer of BioEnterprise, a nonprofit group focused on expanding the region's biomedical economy. "It's a homegrown company, scaling rapidly, hiring a number of employees who want to have access to both downtown and University Circle. It's a vital industry and a vital location."
The state has approved a six-year, $422,810 job-creation tax credit for HeartLab and is evaluating the company's request for a $200,000 grant. The city of Cleveland is considering incentives for the company, but Economic Development Director Tracey Nichols declined to discuss details.
"This is the greatest way that job-creation occurs," she said of HeartLab's rapid growth.
HeartLab is on track to conduct more than 1 million tests annually and hopes to double its employment by 2015, with new hires making an average of $48,800.
The company focuses on its unique tests for cardiac inflammation, but HeartLab receives blood, plasma and urine from medical offices across the country and can run the samples through 70 common tests.
Jake Orville, the company's president and chief executive, said HeartLab is working on proprietary tests related to fatty-liver disease and HDL cholesterol, the "good" cholesterol that, when functioning properly, should lower a patient's "bad" cholesterol levels. All this work requires expensive equipment, refrigerators and freezers and - ideally - efficient lab space on a single floor of a new building.
"If you look at the building we're in now, it just really wasn't built for a clinical lab," Orville said while walking down a hallway crowded with styrofoam boxes, each holding samples from 30 to 40 patients from Florida, Colorado and other states.
Hemingway Development, a division of the Geis Cos. of Streetsboro, started construction on the 128,000-square-foot MidTown Tech Park last year. The project, at 6700 Euclid Ave., received loans and grants from the city of Cleveland and the state - allowing Hemingway to offer tenants suburban-style office space at a competitive price, $14 per square foot.
JumpStart Inc., a nonprofit group focused on entrepreneurs, signed the first lease. Several other deals are in the works.
"We think it will take us less than a year to have it fully occupied," said Terry Coyne, a Grubb & Ellis broker representing the property. Coyne's family also invested in the project.
View full sizeTubes of blood, plasma and urine are sorted at Cleveland HeartLab, which receives hundreds of samples each day from community physicians across the country. The two-year-old company has experienced explosive growth and recently closed an $18.4 million funding round, led by two Boston-area investors.MidTown Tech Park developer Fred Geis said he hopes to open one new project in the corridor each year.
Hemingway Development is renovating a building at 7000 Euclid Ave. and hopes to transform the old Warner & Swasey complex near East 55th Street into offices, labs and warehouse space.
Last week, the city of Cleveland won a $3 million federal grant - one of seven such awards nationwide - for environmental cleanup at the Warner & Swasey property.
"We view this, really, as proof of concept of what the mayor has started to establish in the Health-Tech Corridor," Nichols said of HeartLab's new lease.
The Health-Tech Corridor has seen few big announcements, but other deals are percolating.
Developer Dick Pace, whose nearby Baker Electric Building is filled with small tenants, is negotiating with the Greater Cleveland Regional Transit Authority to buy a dilapidated building at 6611 Euclid Ave. The building could become another option for growing companies that - like HeartLab - otherwise might leave.
"Only because of the success of the MidTown Tech Park did that confirm our ability to stay, not just in the region, but in the city," Orville said. "Cleveland HeartLab would have been successful anywhere. We wanted to stay here."