Category: san francisco biotech (2)

Bowling for biotech-or how real estate is changing to meet tight space, labor markets

Source: San Francisco Business Times:
By: Ron Leuty
Date Posted: February 4, 2016

Biotech real estate developers are rolling with the times, designing space for young, cash-flush companies desperate to hold on to talented employees who want more than a bench and a place to hang their lab coats.

Take HCP Inc., which is breaking ground on the second phase of its massive Cove at Oyster Point development in the sterile-and-scrubbed heart of the life sciences industry in South San Francisco. Along with two lab and office structures totaling 230,000 square feet, HCP’s next stage of the potential 884,000-square-foot project includes 20,000 square feet of retail, attempting to fill a desperate need among the thousands of biotech workers.

TheCove

The first two-building phase, which will open in the third quarter, includes a marketplace-like food area on the ground floor as well as pool tables, table tennis and a two-lane bowling alley.

Yes, a bowling alley.

“It’s really taking an urban-type downtown environment and bringing it to a suburban market,” said HCP Executive Vice President Jon Bergschneider. “It’s large space for people to break out and team build.”

In the tech industry, such “amenity space” is commonplace in the tug-of-war to keep and attract fresh, young talent. Yet despite occasional events at individual companies — South San Francisco-based biotech granddaddy Genentech Inc. is well known for its bi-monthly “Ho-Hos” get-togethers — biotech has mostly maintained a buttoned-down focus on its benches and beakers.

Yet biotech executives and the developers who build space for their companies say that is changing. Employees can be in their labs at any time of the day or night, and the east side of Highway 101 in South San Francisco is largely a food and entertainment desert, so they often jump in their cars at break time. But the growing millennial workforce is different, they say, wanting services within walking distance.

BioMed Realty Trust, recently bought by Blackstone Group LP (NYSE: BX), is building out amenity space at a potential 595,000-square-foot campus in Foster City for Illumina Inc. (NASDAQ: ILMN). Across Oyster Point Boulevard from The Cove, BioMed has drawn up plans for similar amenities space at its Gateway of Pacific towers, which is entitled for 1 million square feet.

Companies are paying up for the space, too, in a tight real estate market. The first two tenants in the 250,000-square-foot first phase of The Cove — newly public cancer drug developer CytomX Therapeutics Inc. (NASDAQ: CTMX) and Denali Therapeutics Inc., which scored the largest startup round of venture capital for its focus on neurodegenerative diseases — will pay in the mid- to upper-$50 range after they move in the third quarter.

And for the next couple of years, The Cove and Phase 3 Real Estate Partners Inc., which last year bought the Centennial Towers project on the west side of Highway 101 and rebranded it Genesis-South San Francisco, are the main new, multiple-tenant life sciences spaces on the market.

As a result, said Rick Friday, a senior vice president at real estate brokerage CBRE Inc., the biotech real estate market remains tight. The brokerage is tracking about 1.6 million square feet of demand along the Peninsula, said Chris Jacobs, executive vice president of life sciences at CBRE.

“Ten years ago, a lot of companies could think two, three years in advance,” Friday said. “Now when companies decide they need space, they need it in 12 months or less.”

One of the first two buildings in The Cove remains unleased; the two-building second phase includes retail and a four-story parking garage — another sign of the times as developments have become denser with less surface parking.

Instead of parking, when the entire project is built out, The Cove will include a 5.5-acre open area with bocce ball, basketball and volleyball courts and a picnic area, said Scott Bohn, an HCP vice president.

The demand for The Cove’s first phase gave HCP confidence to start the second stage on time. What’s more, it helped them shape the footplates of the second phase, making them slightly smaller and more flexible for a wider variety of potential tenants, Jacobs said.

“The amenities center has really resonated as well,” Jacobs said. “Everybody we sit and talk to says, ‘It’s about time.'”

Link to article: Cove-Amenity Space

New Owner of high-profile Peninsula Tower aims to take biotech to new heights

Source: San Francisco Business Times
By: Ron Leuty
Date Posted: November 19, 2015

Emerging biotech companies are fighting a losing battle for space against deep-pocketed, aggressive tech companies. But Neil Fox expects to deliver a new life sciences option by this time next year.

Fox’s Phase 3 Properties Inc. closed Tuesday on its acquisition of the high-profile Centennial Towers project, nestled between San Bruno Mountain and Highway 101 in South San Francisco.

The developer plans to immediately convert part of the existing 12-story tower for biotech companies by the third quarter of 2016, then start construction of a 21-story, 400,000-square-foot biotech-centric structure to the immediate north that would come online in the second half of 2017.

centennial tower

The overall 800,000-square-foot development’s sale price wasn’t disclosed.

In a tight market for biotech labs/offices, Fox believes Phase 3’s focus on ready-to-occupy highrise space will be a winner. The vacancy rate for new biotech space in South San Francisco is in the low single digits, not counting a half-million square feet of sublease space held by Amgen Inc. (NASDAQ: AMGN).

If nothing else, Phase 3’s timing is impeccable: Space in the two-building, 253,000-square-foot first phase of HCP Inc.’s (NYSE: HCP) The Cove at Oyster Point already is booked for its third-quarter 2016 opening.

By the time, Phase 3’s 150,000-square-foot south tower upgrades for biotech will be ready, Fox said, and construction will be under way on the north tower.

Two other South San Francisco biotech projects entitled for roughly 3 million square feet — BioMed Realty Trust’s (NYSE: BMR) Gateway of Pacific and Shorenstein/SKS Properties’ bayside project — haven’t yet broken ground.

Centennial Towers developer Jack Myers earlier this year considered building the planned north tower as condominiums. But Fox, whose San Diego company focuses exclusively on life sciences, said the future is in biotech.

“Our research says there’s a need across the board. That’s why QB3’s incubators (in San Francisco and Berkeley) are so full,” Fox said. “There’s no real second-generation space on the market right now.”

Indeed, a number of young and emerging life sciences companies — as well as larger, growing companies — are in a critical search for space.

Buoyed by a renewed interest by venture capital firms in early-stage drugs, those companies are bringing on more staff to push experimental treatments into studies in humans, but they often lose the space race to larger, established tech or drug-development companies that can lease floors at a time.

“We need the space last month, not a year from now,” said Ken Horne, CEO of Symic Biomedical Inc., a 17-person, two-year-old company with one potential treatment in an early-stage clinical treatment and another set to start in the first half of next year. “A year is hard for a high-growth, high-momentum startup.”

Symic is housed in the University of California-related [email protected] life sciences incubator in San Francisco’s Dogpatch neighborhood.

But Fox’s excitement about Centennial Towers isn’t based on timing alone: The development will offer biotech companies a high-rise option they don’t otherwise have in the Bay Area, he said, as well as space that needs a minimum of work for a quick move-in.

The Cove from HCP and the Gateway of Pacific project from BioMed, which is being acquired by Blackstone Group, have played up their tech-like campuses and amenities such as a bocce ball court and walking trails. But Fox said Phase 3’s differentiator with Centennial Towers is the high rise option that rarely is offered biotech companies outside of high-cost, high-density markets such as New York and Boston.

Working with San Diego’s McFarlane Architects, Phase 3 has floor plans that Fox said work for 95 percent of biotech companies. The space is a mix of 60 percent office and 40 percent general biology and chemistry labs — all with natural light.

Skidmore, Owings & Merrill LLP, the architect for Centennial Towers’ unique glass-facade south structure, also is designing the north tower.

“There’s no buried space in our buildings,” Fox said. “The quality of the project, the detail that went into it (by Myers), was something that was very attractive to us.”

Link to article: Peninsula Biotech