Plans are in place for 3 million square feet of Biotech space

San Francisco Business Times
From the May 30, 2005 print edition
Ryan Tate

The Bay Area is poised for a biotech building boom in the wake of its successful bid to house California's stem cell institute.

Already in the formative stages at the start of this year, the construction spree is expected to accelerate in the wake of the stem cell decision, particularly at San Francisco's Mission Bay.

From Wareham Development's 305,000-square-foot biotech project in Emeryville and Berkeley to Genentech's plans for a 780,000-square-foot complex on the Peninsula, plans are already in place for the Bay Area to gain nearly 3 million square feet of new biotech space, with the vast majority coming online in the next seven years.

The selection May 6 of San Francisco as the home for the headquarters of the California Institute for Regenerative Medicine is already drawing scientists and scientific groups to San Francisco, said Joel Marcus, CEO of Alexandria Real Estate Equities, the real estate investment trust with plans for 2.1 million square feet of space at Mission Bay.

"It will be a boost," Marcus said. "You have to think of it a little bit like the NIH (National Institutes of Health). People tend to cluster around the NIH because it is much easier to submit and work on grants when you're near NIH."

Marcus should know, since Alexandria has substantial holdings around the NIH headquarters in Bethesda, Md. Unlike the NIH, the stem cell institute will not do research of its own, but Marcus said the institute's funding role should be enough to draw tenants.

It remains to be seen whether the stem cell headquarters will vault San Francisco real estate ahead of more established lab locations on the Peninsula and potentially cheaper space in the East Bay.

In addition to the Wareham project, Simeon Commercial Properties holds 100,000 square feet of existing lab space and entitlements for 180,000 square feet more at its Campus Bay business park in Richmond.

On the Peninsula, Slough Estates has plans for two buildings totaling 130,000 square feet, in addition to the Genentech complex. At 185 Berry St. in Mission Bay, McCarthy Cook & Co. plans to add two stories, or 140,000 square feet, to an existing office building.

Jay Leslie, a vice president at Cornish & Carey who is active in the life science market south of San Francisco, acknowledged that the stem cell decision is "a tremendous boost to an area at Mission Bay that has a lot of momentum." But he added that the move will have positive affects throughout the Bay Area. "It's not going to draw attention from one area to another," since competing locations are so close, at least on the Peninsula, he said.

"It's going to be a lot of smaller start-up types of operations," Leslie said of the companies likely to be drawn by the institute headquarters.

Although Alexandria is expected to develop 2.1 million square feet at Mission Bay, the only development now under way and known publicly is a 165,000-square-foot building at 1700 Owens St., with Alexandria hoping for final city approval before the end of the quarter.

Marcus said the remaining building at Mission Bay will be a combination of speculative and build-to-suit, meaning it should be workable for everything from incubator-stage startups -- space Leslie said will be essential for luring other firms -- to large, established biotech firms.

"People are going to want to be within walking distance," Marcus said.

Ryan Tate is a reporter for the San Francisco Business Times.