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CLSA in the San Mateo Daily Journal: Biotech blooms in San Carlos
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New incubator, office acquisition in industrial area signal shift toward science

By Anna Schuessler, Daily Journal staff | Link
Jan 15, 2018

After more than 1 million square feet in San Carlos office space was acquired by a real estate group known for leasing space to biotech companies last year and a 25,000-square-foot biotech incubator at Brittan Avenue was approved last month, San Carlos officials are exploring what growth in interest from biotech companies might mean for the city.

Flanked largely by Highway 101 and the Caltrain tracks, the city’s eastern industrial zone has long been home to a variety of industrial businesses such as auto repair shops, metal-working studios and a growing number of wineries and breweries in recent years.

But the Alexandria Real Estate Equities group’s acquisition of the Meridian 25 project — expected to make two six-story buildings and approximately 528,520 square feet of office space available at 887 Industrial Road — and a building previously owned by L-3 Communications at 960 Industrial Road with up to 500,000 square feet of office space in the last year may set a new tone for the city’s east side, said Community Development Director Al Savay.

“San Carlos has quietly been gaining momentum in the area of biotechnology growth,” he said. “It’s sort of a new market opening up in San Carlos.”

Savay said San Carlos has already attracted a concentration of some 12 to 14 businesses related to biotech with companies like Natera, which provides genetic testing and diagnostics, NuGEN Technologies, which creates products used in genetic testing, and Novartis, a pharmaceuticals and medical device company putting down roots in the city in the last several years. But he said the Alexandria acquisitions marked a significant jump in office space slated for biotech in the city.

Together with a 26,561-square-foot life sciences incubator approved for 930 Brittan Ave. in December, the shift in interest and types of biotech uses imagined has officials getting up to speed on the role San Carlos could play as a biotech hub, said Savay. He added the Economic Development Advisory Committee has met with industry experts in recent months to learn more about how these uses could play out in the city.

When QB-3 Biolabs and the Dewey Land Company presented plans to expand two single-story buildings with a three-story addition to the Planning Commission, Dewey Land Company representative Ryan Guibara said creating space for small groups of scientists to test ideas could prove pivotal in accelerating scientific innovations. He said the two groups have already collaborated to create an incubator in San Francisco some four years ago, and have seen success in providing scientists with the opportunity to lease one bench or office at a time.

“What it does is it gives access to these scientists that otherwise wouldn’t have access to do the work that they do,” he said, according to a video of the Dec. 18 meeting. “You can come in here with one or two people on a credit card and try out your idea and see if there’s some legs to it.”

Guibara said the incubator concept could make way for small groups to test ideas in a space designed for scientific research in an industry known for high start-up costs, adding that small groups or companies working in close proximity to each other could allow them to collaborate on group purchases on items like pipettes, which are often ordered in bulk to keep costs down.

For Councilman Mark Olbert, the uptick in interest from biotech companies is a testament to the San Carlos community, which he expected to benefit from the rising number of employment opportunities and new companies’ investment in the city infrastructure.

“It’s a very attractive place to live and work and play in,” he said. “People are recognizing that and they want to get in on the action.”

Sara Radcliffe, president and CEO of the California Life Sciences Association, said the Bay Area and San Diego have long been the poles of the state’s entrepreneurial life sciences culture, acknowledging growth in the biomedical fields shows no signs of slowing in cities surrounding San Francisco like San Carlos.

“The Bay Area continues to be the number one region in total life sciences employment in 2015 and 2016,” she said in an email. “This last year, Bay Area counties employed 72,663 people in life sciences — 24 percent of the state’s total life sciences employment. Established companies continue to grow and investments in building more life science companies have continued throughout the Bay Area.”

Radcliffe noted the Bay Area has been leading the way in attracting venture capital investment, high employment in the life science field and federal funding in its institutions. For Savay, the influx of biotech interest in San Carlos could signal a shift in the biotech real estate market toward smaller cities as lease costs in larger cities across and surrounding the Peninsula remain high.

Olbert noted the mix of uses forming on the city’s east side as well as interest from biotech companies of a variety of sizes proved promising as interest in big box retail stores and has faltered nationwide in recent years. But he acknowledged officials would have to consider how new employers and building projects might affect traffic patterns, the city’s housing stock and retail landscape, among other considerations.

“Great opportunities always come with great challenges,” he said. “It is going to bring challenges that have to get addressed in terms of traffic and construction.”

anna@smdailyjournal.com

(650) 344-5200 ext. 102