In its infancy now, nanotechnology will play a large role in redefining how real estate is used and developed

By Steve Bergsman

If someone was to rewrite the script for the movie, "The Graduate," the one word of advice that Mr. Robinson gives the Dustin Hoffman character would be updated from "plastics" to "nanotechnology."

Mr. Robinson could probably give the same advice to the real estate investment trust industry even though the relationship between burgeoning nanotechnology and real estate—at this moment in time—appears indirect. But, Mr. Robinson being a futurist, could easily rattle off two distinct ways nanotechnology already is affecting the real estate industry.

Nano Bytes To learn more about nanotechnology, its applications or the implications of the technology here are several Web links for further information. www.zyvex.com/nano is the home page for Dr. Ralph C. Merkle, a noted nanotechnology expert who is a professor of computing at Georgia Tech University and vice president of technology assessment at the Foresight Institute. Merkle's site is loaded with information and contains numerous links to all things nano related. www.iop.org/EJ/journal/Nano is the home page for the Foresight Institute, a non-profit educational organization formed to help society prepare for advanced technologies. www.iop.org/EJ/journal/Nano is the federal government's site for the National Nanotechnology Initiative, a multi-agency effort to promote the United State's leadership in nanotechnology. www.iop.org/EJ/journal/Nano is the site for the journal Nanotechnology, published by the Institute of Physics. Archives and the current issue are available providing a thorough scientific discussion of nanotechnology issues. www.crnano.org focuses on the policy-related impacts of nanotechnology. The site is home to the Center for Responsible Nanotechnology and explores the implications of the new technology.

First, those REITs that deal with building, owning and managing technology, bioscience, and lab space already have to take into consideration the particular construction techniques necessary for nanotechnology research. And second, nanotechnology will eventually improve a wide range of materials that are used in the construction and operation of all buildings, whether it be a hotel, office or storage facility.

While it has been around for many years, nanotechnology has been receiving more notoriety of late as it has begun to move from the theoretical to the practical. According to the experts in the field, nanotechnology can be defined as: 1) the fabrication of devices with atomic or molecular scale precision; 2) the research and development that uses matter existing at the "nanoscale;" and/or 3) the engineering of materials in nanoscale (1-100 nanometers in length). A nanometer is a unit of spatial measurement that is 10-9 meter, or one billionth of a meter.

However, if there was a book called, "Nanotechnology for Dummies," the working definition of the word might be: research, development and fabrication in regard to some very teeny-tiny materials. When utilized, these tiny particles behave in more efficient and useful ways than their larger counterparts. No matter how you explain it, however, the future is already upon us.

A Home for Nanotech Firms

A number of industrial REITs, especially those on the West Coast that target the high technology and bioscience markets, have not only dabbled in the construction of facilities for nanotechnology, but staked out a claim with certain institutions through venture capital investments.

Mission West Properties Inc. (AMEX: MSW), a Cupertino, Calif. REIT that specializes in R&D properties, for the past couple of years has been involved with the San Jose (California) Bioscience Incubator and Innovation Center, which provides well-equipped space for scientists and start-up companies to create new technologies and explore innovations in numerous fields including nanotechnology.

Mission West is not just involved on the real estate end, where it is leasing and upgrading an existing building, but has been very proactive in regard to the creation of the incubator. Two years ago, Mission West teamed up with the city of San Jose to provide funding for the $6.5 million center. Asked why his company got involved in the project, Carl Berg, president and chief executive officer of Mission West, said at the time of the incubator commencement, "the bioscience industry will be one of the top-growth areas in the next decade."

That's good news for another California-based REIT, Alexandria Real Estate Equities, Inc. (NYSE: ARE), which focuses solely on the development and management of what it calls life science properties. It, too, has been very proactive. Two years ago, Alexandria was one of the companies involved in capitalizing Nanosys Inc., a Palo Alto, Calif.-based creator of nanotechnology-enabled systems.

Like Mission West, Alexandria probably was involved in housing the nanotech start-up, which is not an easy task. Buildings that shelter nanotechnology research are very specialized, which is one reason why mass builders or even general industrial REITs haven't done any spec building in that regard.

Currently, most of the nanotech research structures are built, owned and managed by the federal government or academia.

"There are several federal agencies sponsoring the construction of nanotech centers," notes Ahmad Soueid, principal and senior vice president of HDR Architecture Inc. "The Department of Energy has five nanocenters around the country under construction." Soueid's firm recently worked with the National Institute of Standards in Technology on an $80 million project with a nanotech lab.

"I have not seen many real estate developers get into this market yet," Soueid says. "You cannot just build it and have people come in. It has to be custom designed for the research. They are expensive to build, and trying to make a buck really quick on them will be hard."

One place where real estate companies can get involved is in incubator-type facilities such as the one in San Jose, says David Janes, an associate professor in electrical and computer engineering and the technical director of the Institute for Nanoelectronics and Computing at Purdue University.

"Those incubators would have to be near a major university; otherwise, the developer would have to come up with enough funding to put together a stand-alone lab," Janes says.

Janes adds that the federal government is investing approximately $1 billion a year in nano-R&D. He expects to see a couple of dozen nanocenters developed over the next five years even though they tend to cost from $30 million to $80 million.

Unique Building Specifications

Clean room structures have been around for decades and nanotechnology takes the concept a couple of steps further. So when one considers that it takes about $1,000 a square foot to build a decent clean room, it is easy to understand why private companies are not out there building these things on spec.

The key feature of any nanotech center is low vibration.

Not only does the building have to have solid concrete flooring, but that flooring needs to be, in a sense, isolated from the surrounding building structure, explains Janes. "The slab is separated from pedestrian hallways and actually suspended on air bearings. The structures end up looking like a big swimming pool cut into the lowest floor level and then back-filled with a large concrete mass and air bearing springs," Janes says.

The allowable vibration criteria is a lot less than your normal building, adds Brett Helm, project manager for DPR Construction Inc., which is building phase one and two of an Arizona State University research facility that will have the capability of handling nanoresearch technology.

"What that entails is, the mass of building is a lot heavier, the concrete a lot thicker and making sure the air handlers and systems are isolated so vibration doesn't carry throughout the building," Helm says.

In addition, Helm says, mechanical and electrical systems have to be upgraded. Some nanotech buildings also include rooms with very accurately controlled temperature and very low electromagnetic interference space.

Soueid says his firm has been approached by developers to build facilities that would support nanotech work being done on campuses.

Major corporations also are doing their own nanotechnology research that would include technology and computer companies as well as standard manufacturers to determine the feasibility of nanotechnology improving everyday products from computers to tennis rackets. Car tires, as an example, already use carbon black which is a nano-structured material, Janes says.

Soueid concurs, "while the main thrust of nanotechnology is research and development, some industries are actually making products for nanotechnology, although we have not really gotten to the phase of a big boom in nanotech-based products."

Real Estate Applications

A significant amount of nanotech product research is underway in the construction building materials industry. The Institute for Research in Construction (IRC), part of Canada's National Research Council, as far back as 2002 initiated a multi-research project to develop new technologies and products for the construction industry based on nanotechnology, with an emphasis on cements, admixtures and concrete.

Most of the work in construction products using nanotechnology has been in regard to cement and concrete. According to Construction Innovation, the IRC got involved in such research because it believes the addition of nanoscale particles to concrete would improve the control of the microstructure beyond what is possible with existing technologies. The result would be stronger and more durable concrete.

Surendra Shah holds the dual titles of the Walter P. Murphy Professor and director for the Center for Advanced Cement-Based Materials Department of Civil Engineering at Northwestern University. Obviously any new technology that can improve the durability of cement would be of interest to him and, in fact, he has been working with nanotechnologies.

The perennial problem of concrete is cracking and how it can be avoided, Shah says. "We know how to do that at the mid-level: by using rebar. We know how to do that at the micro-level: by using fibers. Now we have to figure out how to do that at the nano-level," he adds.

Besides durability, current research into cement involves adding nanomaterials such as a dioxide combination that would keep the concrete white. Organic pollutants would wash away in the rain instead of making the concrete dim and grey. The current research in this area involves photocatalytic converters such as zinc oxide that use the sunlight to affect cleaning.

Portland cement is made from sand, rock and a fine-grained additive, which is close to and often of the nanoscale, adds Jorn Larsen-Basse, the program director for Infrastructure Materials at the National Science Foundation. "If you can improve the control of the particle size, make them smaller, you can possibly get to a much more fine grain," he says. "That would help get to a faster reaction rate and the cement would set more rapidly. Fine grain also shows a certain amount of ductility which means it can form without cracking."

That's the problem with cement. It cracks, and when that happens water enters and the sealants corrode. "If you can eliminate that cracking by having a substance that is more paste-like you could improve the life of concrete structures against damage from frost, water penetration and rust," Larsen-Basse says.

Over at Rutgers University in New Jersey, P.N. Balaguru, a professor of civil engineering, is looking at coatings for cement using nanomaterials.

The problem with current coatings is that they still don't bond well with the cement, Balaguru says. "Coatings don't last, but with nanosize materials there is much more reaction area and this should improve the staying power," he says.

One of the coatings Balaguru is working on uses a silica fume which operates at a nanoscale. It's already been used to make a more durable concrete. However, according to other research, if one uses too much silica fume it actually makes the concrete more brittle.

"What I am trying to do," Balaguru adds, "is find something that works, is economical and self-cleaning."

Millennium Chemicals, a wholly owned subsidiary of Houston-based Lyondell Chemical Company, claims the title as the world's second-largest producer of titanium dioxide, the largest merchant seller of titanium tetrachloride and a major producer of silica gel and cadmium-based pigments. The company's been using its expertise in those chemicals, especially in regards to nanotechnology, to introduce new products.

Last year, Millennium Chemicals introduced a product called Ecopaint, which can soak up nitrogen oxide gases produced by car exhaust emissions, manufacturing operations and pollutant sources that lead to smog as well as respiratory problems.

The paint contains spherical nanoparticles of titanium dioxide and calcium carbonate in a silicon-based polysiloxane polymer. The nanoparticles are 30 nanometers in diameter and the resultant paint clear, so pigments can be added to give it color.

In effect the paint soaks up the nitrogen oxide and then self-cleans. What happens is that exposure to ultraviolet radiation from sunlight converts the nitrogen oxide to nitric acid, which is neutralized by the calcium carbonate. This interaction produces carbon dioxide, water and calcium nitrate which are harmlessly washed away.

The concept of self-cleaning materials using nanotechnology has crossed over to other articles of construction as well. A British company, Pilkington plc, reports it developed a self-cleaning glass for windows.

The Pilkington Activ glass uses a special nanoscale coating of microcrystalline titanium oxide that reacts to daylight. The reaction breaks down filth on the glass, with, as the company reports, no need for detergents. When water hits the glass, a hydrophilic effect is created so water and dirt slide off.

While Pilkington Activ glass is close to hitting the market, self-cleaning cement, indeed, a more durable cement still seems to be a long way off.

The cement industry is still too focused on cost reduction to invest so much time and money into a future product, Larsen-Basse says. "Although I'm beginning to see some new conferences addressing this area."

HDR's Soueid adds, "there are tons of conferences and places where you can meet venture capital interests. They hear what your ideas are and will sponsor the research (usually a three- to five-year time frame before research turns into reality)."

Hopefully, some of those small firms are attracting venture capital to more practical projects such as more durable, self-cleaning cement, he says.