Institutions' venture into profit-making enters '93 searching for direction


January 10, 1993|By Liz Bowie | Liz Bowie,Staff Writer

When the Johns Hopkins institutions plunged into the world of profit-making in 1984, grand visions abounded. Their new Dome Corp., Hopkins officials said, would direct the development of a $500 million East Baltimore research park, create a string of moneymaking subsidiaries and help commercialize university research.

Its businesses varied from the mundane to the cutting edge -- from managing the Johns Hopkins Inn on Broadway to backing a venture called Cartermill Inc., which sold companies a data base of university researchers and scientists.

Today, most of Dome's subsidiaries have been sold off or dissolved, though the company still manages a linen, parking and security services business. Chief Executive James D. M. McComas is gone. The company is trying to recover from poor real estate development moves. And in 1992, for the second straight year, Dome lost money.

Its corporate parents -- the nonprofit Johns Hopkins University and the Johns Hopkins Health System -- are searching for a new mission for Dome. James A. Flick, chairman of Dome's board, says the board and Hopkins officials are reviewing a range of options, although it appears that the real estate arm and the linen, parking and security business will remain.

Meanwhile, Dome, which was designed to financially strengthen the Hopkins institutions, is shrinking as rapidly as it expanded in the 1980s.

And its problems have had a broader impact. They may have slowed development at the Bayview Research Campus, which was supposed to be a cornerstone in rebuilding Baltimore's economy around the life sciences. For example, one landmark building designed to attract corporate biotech scientists is filled instead with office workers.

Bayview, Dome's most ambitious project, symbolizes the company's problems.

Early plans called for a hotel, conference center, research buildings and manufacturing space for private companies, all on 130 acres adjoining the Francis Scott Key Hospital. Total cost: an estimated $500 million, about as much as the greater Inner Harbor project.

Dome officials wanted to give an upscale focus to a rather forlorn campus. "At the time biotech was a very big word, and we were pioneering in Baltimore," recalls Mr. McComas, who left Dome last June.

More importantly, Bayview was touted as a way to boost Baltimore's biotech industry, by providing lab and office space for fledgling companies and land for larger companies to build on.

So far, $200 million has been invested at Bayview, but most development has been for research institutions, not companies. For instance, the Asthma and Allergy Center was built for the Hopkins Health System, and a $10.7 million Behavioral Biology Research Center was built for the National Institute of Drug Abuse.

And with at least one major building, the $16 million Triad Technology Center at Bayview, Dome officials miscalculated seriously.

They didn't realize that young biotech companies, without profits and products, put precious dollars into research and development -- not bricks and mortar. While developers in Montgomery County were offering lab space for less than $20 per square foot, Dome charged about $30 a square foot to recoup the costs of the Triad building, with its glitzy atrium and first-class lab space.

Too-high hopes

Dome officials also overestimated the impact of Nova Pharmaceutical Co., one of Baltimore's biotech companies. Nova was expected to rent a substantial amount of the space at Triad, Mr. McComas says.

But Nova didn't grow as quickly as projected, and for at least two years the building was not fully leased. Last fall, Nova merged with Scios Inc. of California, and with the headquarters of Scios Nova Inc. moving to the West Coast, the company has decided to move out of Triad.

From fiscal year 1990 through 1992, Dome lost $2.8 million on the Triad building. But because of depreciation costs and $650,000 that Dome borrowed as a cushion in case the building wasn't leased, the corporation's only out-of-pocket expense was $500,000, says Dome's chief financial officer.

Still, Dome was forced to plow profits from subsidiaries back into the 110,000-square-foot Triad building. Today the building is fully leased

by medical and research institutions, such as the finance department of Francis Scott Key Medical Center.

Because of Dome's miscalculations, companies that want to locate in Baltimore have had trouble finding affordable space.

The area has a shortage of mid-priced laboratory space, says David Gillece, the former director of the Baltimore Economic Development Corp. and now a consultant for the Greater Baltimore Committee. "I can certainly think of at least five 10,000-square-foot users who had immediate needs and [Baltimore] couldn't fill them."

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