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Old Posted Mar 26, 2007, 4:46 AM
BTinSF BTinSF is offline
Join Date: Jun 2006
Location: San Francisco & Tucson
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New timetable for Mission Bay biotech. These buildings are part of the development of the area colored red and labeled "Commercial Industrial" in the diagram of Mission Bay above:

Alexandria accelerates Mission Bay
Demand for biotech space pushes up completion to 2011
San Francisco Business Times - March 23, 2007
by J.K. Dineen

Alexandria Real Estate Equities is speeding up its construction schedule and plans to build 2.2 million square feet of its life science complex at Mission Bay by 2011.

The move comes as a response to robust demand for biotech space that even the most rosy-eyed Mission Bay boosters did not anticipate.

Under a new schedule outlined in a city economic development report, Alexandria would deliver a single 165,000-square-foot building in 2008. Construction would then kick into high gear with 700,000 square feet built by 2009, another 1 million square feet completed in 2010, and a final 330,000-square-foot building ready for occupancy in 2011, according to a city report.

If the life science campus is built out by 2011, Alexandria would be at least two years ahead of the schedule anticipated when it bought the last of its parcels in 2005.

But after a surprisingly strong surge of leasing activity at its first completed Mission Bay building -- 1700 Owens St. -- Alexandria is now completing final construction drawings on no fewer than four more. The company has indicated that it is prepared to break ground on all four buildings without anchor tenants firmly in hand, according to several sources familiar with the plans. Jesse Blout, director of economic and workforce development for Mayor Gavin Newsom, said interest in Mission Bay has been heavy, with several large drug companies testing the waters.

"The fact that Alexandria is moving forward on four parallel buildings suggests they think there is a healthy market," said Blout.

Mission Bay is coming off an impressive series of leasing deals, including four medium-sized biotechs and three venture capital firms. While conventional wisdom says Mission Bay's improved prospects stem largely from a biotech space crunch due to aggressive growth of Amgen and Biogen in South San Francisco, Blout said San Francisco's accessibility for scientists living in the East Bay is also a big draw.

"People have woken up to Mission Bay, not just from the amenities there, but from a labor-access perspective," said Blout. "Talent is 99 percent of the deal in this industry."

The tight-lipped Alexandria has not said which building would be first. But on March 15, it was issued permits to start pile testing at 1500 Owens St., the site of a 165,000-square-foot building designed by SMWM. In addition, pile testing has also been done on Parcel 26 along the Third Street light rail, slated to eventually accommodate a trio of buildings -- two 100,000-square-foot structures and a 200,000-square-foot, 10-story tower.

Hot commodity

Three years ago, the plan for a life science cluster at Mission Bay was regarded by many in the real estate community as a pipe dream, after several failed attempts to lure biotechnology companies to the area. Today, it's a hot commodity with scant vacancy. Four major biotechs have now signed deals there, including FibroGen, which has committed to taking the 450,000 square feet at 409-499 Illinois St. that Shorenstein Properties is building, and Sirna Therapeutics, which was recently acquired by Merck and has leased nearly 70,000 square feet at 1700 Owens. The biggest venture capitalists in biotech have also flocked to the neighborhood, with three -- Versant Ventures, Novo Ventures and Arch Venture Partners -- grabbing space on Owens Street.

While Alexandria has been adept at attracting tenants to 1700 Owens, some Mission Bay observers say the pace of success has caught the developer a bit flat-footed. One broker active in the market said, "If we had more space up now, we'd be filling it."

Blout said the campus is "perilously close" to running out of space, but stressed that Alexandria and Mission Bay would be well-positioned to capitalize on growing biotech demand in 2008 and 2009.

"We have a little disconnect between what the market is ready to deliver and demand for that space," he said.

Alexandria Senior Vice President Stephen Richardson didn't return a call seeking comment on his firm's construction schedule. But he recently called the success at 1700 Owens "exciting and rewarding."

"Ultimately we've delivered, and the market has delivered, on the promise of a vibrant fully-integrated life science cluster," said Richardson. "Now the private sector is a full-fledged partner in Mission Bay."

Daniel Oshiro, vice president for administrative affairs for the Gladstone Institutes, said the whole campus is creating a fertile ground for collaboration and serendipitous encounters between researchers from the commercial drug development companies and scientists at Gladstone and UCSF. He said he has also heard complaints that there is not enough lab space to meet demand.

"Clearly, the venture capital interest and research interest have put us in a temporary position where there is not enough space," Oshiro said. "I think it is because South San Francisco is full and Mission Bay is the only developable area for biotechs and biotechs like to go where other biotechs are."

In total, Mission Bay is slated to include nearly 4 million square feet of office and lab space, as well the 2.6-million-square-foot UCSF campus and the 2.5-million-square-foot UCSF hospital. Blout said he is optimistic enough that Mission Bay will be fully built out and occupied that the city should start thinking about other parts of the city where life science development makes sense. Hunters Point Shipyard and Pier 70 are both possibilities, he said.

"Based on current interest from major players and regional demand," said Blout, "we will need to start thinking beyond Mission Bay, where else this industry can go."


Last edited by BTinSF; Mar 26, 2007 at 5:28 AM.
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