Monday, August 07, 2006

Genentech Maps Massive Expansion

Genentech Maps Massive Expansion
Doubled Headquarters Could Employ 16,000 People in 10 Years
San Francisco Business Times - August 4, 2006
by J.K. Dineen

Genentech plans to nearly double its South San Francisco footprint and workforce over the next decade, adding 2.5 million square feet of building space that could accommodate an astonishing 16,000 workers, according to a draft of the company's 10-year master plan.

The blueprint of Genentech's ambitious expansion plan, which will be unveiled publicly for the first time at an Aug. 17 South San Francisco Planning Commission workshop, envisions a 6-million-square-foot network of walkable campuses with as many as 16 new buildings spread across the properties.

The company, the Bay Area's largest biotech firm, employs about 8,000 in South San Francisco and owns 2.8 million square feet of space on 160 acres. It also leases 780,000 square feet from Slough Estates at the Britannia East Grand Business Park, an eight building complex under construction.

The bulk of the new development would be office and laboratory space, which would respectively account for 50 percent and 33 percent of new construction. Only 11 percent of the expanded campus would be dedicated to warehouse and manufacturing, and 6 percent to amenities.

Much of the new development would occur on a new six-building West Campus, bordered by Allerton Avenue, East Grand Avenue and Grandview Drive. The West campus would include 530,000 square feet of office space, 200,000 square feet of manufacturing, and 104,000 square feet of amenities, according to the plan. Much of the land where the new campus would be constructed was purchased in 2004 and 2005.

Genentech is South San Francisco's top property owner by a long shot, owning 36 parcels with a combined value of more than $1 billion, 12.2 percent of total property value in the city. The second biggest player, United Airlines, has properties assessed at $278 million. Genentech shelled out about $4.8 million in property taxes during fiscal year 2004-2005, according to San Mateo County Assessor's office.

Company spokeswoman Colleen Wilson said having the majority of clinical and research scientists in close proximity to marketing, manufacturing, and finance is "a unique part of our culture."

"This allows us to more easily bring the best thinking across disciplines to bear on the most challenging problems we're working through," she said.

The Genentech spokeswoman said the company would continue to place a strong emphasis on public transportation with car pools, van pools, and free commuter shuttle service from the South San Francisco BART and CalTrain. In addition to on-campus shuttles, campus bikes, known as GenenClunkers, are available.

South San Francisco Mayor Joe Fernekes said he has not had a chance to review the plan, but is thrilled the company, which started in a South San Francisco warehouse in 1976, plans to expand its campus.

"I am very thankful that Genentech wants to continue to grow within our city," said Fernekes. "They have always been very upfront that they want to do business here and I've never seen the company waver on that point."

South San Francisco Council member Karyl Matsumoto, who has raised concerns that the company might be growing too fast for the South San Francisco infrastructure, said she also has not seen the plan yet. She cautioned that the city's $70 million sewer improvements, currently under construction, may be strained by the Genentech expansion, which would increase the company's sewer flow by 45 percent.

"I love having Genentech in South San Francisco, but I have other things I need to balance," she said. "We have to look at the jobs-to-housing balance and make sure the infrastructure is there."

Matsumoto's apprehension is unusual among South San Francisco elected officials. When Matsumoto voted last year against a temporary, pre-fabricated modular building that Genentech proposed to meet unexpected growth, it was the first time a South City politician had opposed any of the company's expansion plans. The council approved the modular with a 4-1 vote. She said she opposed the request for a temporary building because it came as a surprise.

"It doesn't do us, or the biotech industry, any good if we're not prepared," she said.

Deberah Bringelson, president of Samceda, a San Mateo County business advocacy group, applauded Genentech's growth, but said the region has to be careful not to put all its economic eggs in one basket.

"In terms of the overall county, we need to continue to look at making sure we have a diverse economy and don't rely too heavily on one economic engine," she said.

The relatively small amount of manufacturing space in the new plan is not surprising. The company is developing the second phase of a 92-acre manufacturing campus in Vacaville and has 20 or 30 acres left to build on, according to Mike Palumbo, manager of the town's economic development department. The company also has a plant in Spain and recently announced plans to build a manufacturing plant in Oregon.

In the second quarter, Genentech reported product sales of $1.8 billion, a 42 percent increase over the second quarter of 2005, and operating revenue of $2.1 billion, a 44 percent increase over last year.

J.K. Dineen covers real estate for the San Francisco Business Times. Senior Editor Emily Fancher contributed to this report.

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