Bright Spot Seen in Biotech Industry

With demand for traditional office space in the doldrums, many in Southern California’s commercial real estate community are pinning their hopes for future growth on the expanding biotechnology industry.

The gamble is far from a sure bet. Biotechnology firms, like other high-tech firms, must compete for a smaller supply of venture capital to grow. Developers across the nation have planned or built facilities to house biotechnology firms that never materialized, and many real estate executives remain leery of anything remotely high-tech in light of the millions of square feet left empty by the dot-com bust.

But the biotechnology industry and the much broader health-care sector are among the few industries that have continued to expand and whose long-term prospects look relatively promising, say real estate observers.

“It’s very fertile ground,” said Gray DeFevere, a real estate specialist at Colliers Seeley who works closely with regional venture capitalists and related companies.

Unlike many Internet firms, most start-ups in biotechnology and biomedicine have products to sell and long-term backers, said Craig Peters, a real estate broker who works with biotechnology clients in the Santa Clarita Valley.

“You are going to see them around for quite a while and showing some pretty explosive growth,” said Peters of CB Richard Ellis.

In San Diego County, which is home to the region’s biggest concentration of biotechnology firms, new and existing companies are expected to need as much as 3 million square feet of additional space in the near future, according to office building owner Arden Realty Inc.

“The biotech and life science industries are truly the main drivers of demand in San Diego,” Chief Operating Officer Victor Coleman said during a recent conference call with industry analysts.

Meanwhile, a rapidly growing cluster of biotechnology and other advanced biomedical businesses has set up shop in the north end of Los Angeles County in the new office and industrial parks of the Santa Clarita Valley. Nearly 20 biomedical companies--such as AlleCure and Advance Bionics Corp.--occupy nearly 2 million square feet of space in the massive Valencia Gateway office and industrial zone, according to brokerage CB Richard Ellis.

This year, biotechnology pioneer Alfred Mann purchased a 160-acre chunk of Rye Canyon, a former Lockheed aerospace facility in Valencia, and plans to build the Mann Biomedical Park.

Compared with other industry groups in the Santa Clarita Valley, “the biomed cluster is the fastest growing,” Peters said. “The expansion plans for various companies will more than double the size of the cluster.”

Real estate developers also see continued expansion of biotechnology facilities along the 101 Freeway corridor that runs across the west San Fernando Valley and Ventura County, where industry leader Amgen Corp. is on the verge of adding yet another building on its Thousand Oaks campus that already includes more than 40 structures.

In Agoura Hills, biotechnology firms and their suppliers have been among the potential tenants that have shown interest in a new 67,000-square-foot office complex by the Los Angeles real estate development firm Katell Properties.

“Biotech is a target for us,” said veteran developer Gerald L. Katell.