Alexandria’s client tenant has signed a 10-year lease at 499 Illinois Street for approximately 97,700 rentable square feet (RSF), or 45%, of the 219,600 RSF facility, consistent with the Company’s current “initial yield” projections. The client tenant will open a state-of-the-art RD center in Mission Bay focused on the development of next generation products and services, as well as a customer demonstration and training center.

Alexandria’s Mission Bay life science cluster is renowned for its significant talent base – a dense concentration of Nobel Prize winners, scientists, doctoral students, entrepreneurs, venture capitalists, and technologists from first-class client tenants including the University of California, San Francisco (UCSF), California Institute for Quantitative Biosciences (QB3), Bayer AG, Celgene Corporation, Fibrogen, Inc., Nektar Therapeutics, Inc., and blue chip venture capital firms such as Novo Ventures, OrbiMed Advisors, Third Rock Ventures, venBio, and Versant Ventures.

At the heart of Mission Bay, UCSF is leading the Precision Medicine revolution, which aims to integrate genomic, clinical and environmental data into routine clinical practice and improve patient diagnosis and treatments. In recent weeks, Mission Bay has garnered international acclaim with the announcement that two major drug developers – Roche and Bayer AG – have initiated strategic partnerships with QB3. In addition to Roche and Bayer AG, Novartis AG and Pfizer Inc. have also joined the QB3 program. With innovative collaborations pioneered by QB3 as well as UCSF’s intensifying intellectual and capital investment in translational medicine, Mission Bay has become the epicenter of life science innovation, collaboration and translation in the San Francisco Bay Area. The current market demand is very strong for 499 Illinois Street particularly, and Mission Bay more broadly, from multiple market segments including life science, translational clinical uses and the rapidly expanding technology sector.

“We are honored to welcome this exceptional client tenant to the Mission Bay life science ecosystem and 499 Illinois Street for the creation of an iconic RD center,” said Stephen A. Richardson, Chief Operating Officer and Regional Market Director of Alexandria’s San Francisco Bay Area Cluster. “This Company is a world-class organization, and we look forward to integrating its team into the highly innovative and collaborative Mission Bay life science community.”

The client tenant’s Mission Bay RD center will feature unique and creative amenity spaces, including a high-quality cafe, an activated bay front plaza with distinct recreational areas, and a cutting-edge fitness center. This iconic campus environment, ideally situated within the highly innovative and urban Mission Bay life science ecosystem, will provide the Company with a unique advantage in recruitment and retention, as well as driving productivity for this world-class organization.

About Alexandria Real Estate Equities, Inc.    
Alexandria Real Estate Equities, Inc. (NYSE: ARE), a self-administered and self-managed real estate investment trust (REIT), is the leading and largest investment-grade REIT focused principally on owning, operating, redeveloping, developing, and acquiring high-quality, sustainable real estate for the broad and diverse life science industry. Founded in 1994, Alexandria was the first REIT to identify and pursue a primary focus on the laboratory niche and has since had the first-mover advantage in every core life science cluster location including Greater Boston, the San Francisco Bay Area, San Diego, New York City, Seattle, Suburban Washington, D.C., and Research Triangle Park. Alexandria’s high-credit client tenants span the life science industry, including renowned academic medical research centers, multinational pharmaceutical companies, public and private biotechnology entities, U.S. government research agencies, medical device companies, industrial biotechnology companies, venture capitalists, and life science product and service companies. Forty-six percent of Alexandria’s total annualized base rent is generated from investment-grade client tenants. As the recognized real estate partner of the life science industry, Alexandria has a superior track record in driving client tenant productivity, collaboration, and innovation through its CBD locations adjacent to leading academic medical research centers, best-in-class laboratory/office space, unparalleled life science real estate expertise and services, and longstanding and expansive network in the life science community, which we believe result in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. For more information, please visit www.are.com.

This press release contains forward-looking statements within the meaning of the federal securities laws.  Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our Annual Report on Form 10-K and our other periodic reports filed with the Securities and Exchange Commission.

SOURCE Alexandria Real Estate Equities, Inc.

Article source: http://www.fiercebiotech.com/press-releases/alexandrias-499-illinois-street-mission-bay-san-francisco-signs-anchor-9770-0

“Onyx represents a significant new second generation of biotechnology companies that are commercializing breakthrough, high-impact products that will save lives, manage disease, and reduce the economic burden of disease on society,” said Joel S. Marcus, Chairman, Chief Executive Officer and Founder of Alexandria. “We are honored that Onyx and its world-class team have chosen a long-term partnership with Alexandria, and we look forward to their continued growth and success in the years to come.”

The ground-up development of this facility is consistent with Alexandria’s strategy to transform non-income-producing land into income-producing assets with significant pre-leasing from high-quality client tenants. As an investment-grade REIT, Alexandria also intends to fund this development on a leverage-neutral basis. Alexandria expects to deliver the 269 East Grand Avenue in the fourth quarter of 2014 and is currently negotiating a secured construction loan to provide funding for this project.

Alexandria is the dominant life science owner and operator in the San Francisco Bay Area cluster with approximately 2.9 million rentable square feet (including development and redevelopment assets) in the Mission Bay, South San Francisco, and Peninsula submarkets. In Alexandria’s South San Francisco submarket, from the first quarter of 2008 through the third quarter of 2012, Alexandria captured approximately 844,000 rentable square feet of new leases –approximately 724,000 rentable square feet more than the next highest laboratory landlord. Alexandria currently serves approximately 25 client tenants in the South San Francisco submarket including Roche, Onyx Pharmaceuticals, Inc., Theravance, Inc., Crescendo Bioscience, Inc., Exelixis, Inc., Global Blood Therapeutics, Inc., and Stem CentRx, Inc.

About Alexandria Real Estate Equities, Inc.

Alexandria Real Estate Equities, Inc. (NYSE:ARE), a self-administered and self-managed real estate investment trust (REIT), is the largest and leading investment-grade REIT focused principally on owning, operating, redeveloping, developing, and acquiring high-quality, sustainable real estate for the broad and diverse life science industry. Founded in 1994, Alexandria was the first REIT to identify and pursue a primary focus on the laboratory niche and has since had the first-mover advantage in every core life science cluster location including Greater Boston, the San Francisco Bay Area, San Diego, New York City, Seattle, Suburban Washington, D.C., and Research Triangle Park. Alexandria’s high-credit client tenants span the life science industry, including renowned academic medical research centers, multinational pharmaceutical companies, public and private biotechnology entities, U.S. government research agencies, medical device companies, industrial biotechnology companies, venture capitalists, and life science product and service companies. Forty-seven percent of Alexandria’s total annualized base rent is from investment-grade client tenants. As the recognized real estate partner of the life science industry, Alexandria has a superior track record in driving client tenant productivity, collaboration, and innovation through its CBD locations adjacent to leading academic medical research centers, best-in-class laboratory/office space, unparalleled life science real estate expertise and services, and longstanding and expansive network in the life science community, which we believe result in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. For more information, please visit www.are.com.

This press release contains forward-looking statements within the meaning of the federal securities laws.  Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our Annual Report on Form 10-K and our other periodic reports filed with the Securities and Exchange Commission.

SOURCE Alexandria Real Estate Equities, Inc.

Article source: http://www.dailymarkets.com/stock/2013/03/04/alexandria-real-estate-equities-inc-announces-long-term-lease-with-leading-global-commercial-stage-oncology-company-onyx-pharmaceuticals-inc-for-new-build-to-suit-facility-in-south-san-francisco/

David Becker, principal, Bay area office of BNBuilder.

Blanca Torres
Reporter- San Francisco Business Times

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HQ: Redwood Shores

Company: BNBuilders, based in Seattle, opened a Bay Area office in 2003 focusing on bioscience and lab buildings. The local office employs about 150 people with $140 million in revenue in 2012 and an estimated $175 million for 2013. Recent projects include a 162,000-square-foot headquarters for Onyx Pharmaceuticals in South San Francisco, the build-out of Twitter’s offices at 1355 Market in San Francisco and a lab building for Valero in Benicia. Its client roster features Alexandria Real Estate Equities Inc., Shorenstein Properties, Kilroy Realty, Wareham Development and Hudson Pacific.

Background: Becker came to the Bay Area to …

Blanca Torres covers East Bay real estate for the San Francisco Business Times.

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Article source: http://www.bizjournals.com/sanfrancisco/print-edition/2013/01/11/david-becker-principal-of-bay-area.html

Nowhere in the country has the tightening of lab space supply been more evident than in the supply-constrained San Francisco Bay Area — especially in South San Francisco and the San Francisco CBD, where leading life science owners and developers such as Alexandria Real Estate Equities Inc. (NYSE: ARE) and HCP Inc. (NYSE: HCP) are competing with technology and Internet companies for some of the last available land parcels.

In recent months, tech companies have scooped up land in the Bay Area that effectively eliminates millions of square feet previously earmarked for lab and biotech buildings in one of the nation’s tightest land markets. In response, Alexandria and HCP have acted recently to lock up available properties and fill the demand at increasingly healthy return profiles on new development, including assets within the Mission Bay redevelopment in San Francisco’s CBD, one of the most desirable biotech addresses in the country.

However, observers say they don’t expect another speculative boom like the one during the mid-2000s upcycle that fueled construction of millions of square feet of life science space in clusters like the Bay Area, Boston/Cambridge, San Diego, Raleigh and Durham, NC; New York, Seattle and suburban Maryland. Even in the tightest markets like Boston and San Francisco, companies are still mainly interested in less risky build-to-suit or solid pre-leased projects.

“Building true, specialized life science space on spec is a challenge given both the above-average cost per square foot and the unique needs of each user,” noted Chris Macke, senior real estate strategist for CoStar.

Just seven months ago, ARE sold most of its undeveloped Mission Bay land to cloud computing company Salesforce.com for construction of a global headquarters — a loss of up to 2 million square feet of potential new lab space development. In April, ARE jumped back into the Mission Bay market, acquiring a newly developed two-building property at 409-499 Illinois St. developed by Shorenstein Properties and SKS Investments.

Alexandria paid $293 million for the two towers totaling 453,000 square feet located across the street from the $1 billion University of California, San Francisco (UCSF) research and development campus and medical center.

The first 240,000-square-foot tower is 97% leased to a biotechnology company through November 2023, while the second tower has 212,000 square feet of rentable space in shell condition, which the company plans to build out. The acquisition gives ARE the capacity to develop nearly 300,000 square feet of additional new supply in Mission Bay, where it now has a footprint of more than 975,000 square feet of existing space at a vacancy rate that has dwindled to just 1%.

The peninsula has recently experienced a sharp increase in absorption, driving direct vacancy rates in South San Francisco to less than 5% and total vacancy to near-single digits when including subleased space, said Paul Gallagher, HCP chief investment officer, during the company’s first-quarter earnings call earlier this month. The ramp up of tenant demand from tech, life science and medical device companies has driven up rental rates by as much as 25% this year.

“This activity reiterates the importance of understanding which industries are driving the various markets and even submarkets across the country,” Macke said. “South San Francisco and the San Francisco CBD are benefitting from the confluence of tech companies and life science companies, as they have both chosen those submarkets as the place to be in the San Francisco MSA.”

ARE essentially traded development risk for leasing risk when it sold the Mission Bay land to Salesforce.com and acquired the new buildings from Shorenstein last month. But the decision whether to acquire or develop buildings is more than just a simple matter of comparing yields or initial rates of return, noted Joel Marcus, Alexandria chairman, president and CEO.

With a major presence in San Francisco, New York City and Boston/Cambridge, three of the nation’s strongest life science markets, the company is positioned to capitalize on pent-up demand as one of the few companies with the ability and resources to develop both build to suit and preleased projects.

In additional to the 300,000 square feet of remaining development capacity in Mission Bay, ARE has about 800,000 square feet left to build in New York at the Alexandria Center for Life Science, where it hopes to begin pre-marketing a 400,000-square-foot tower next month. The company also expects to announce the first build to suit at its Kendall Square project in Cambridge, where it has 1.7 million square feet in its development pipeline.

Leasing isn’t as brisk at its San Diego and North Carolina properties, but on May 18, Alexandria announced plans to build a 50,000-square-foot agricultural research center with 18,000 square feet of research greenhouse space near Research Triangle Park in North Carolina. The multi-tenant project will be called Alexandria Ag-Tech Center.

About 20% of HCP’s wholly owned properties are in the life science sector. Its portfolio also includes senior housing, medical office, post-acute/skilled nursing and hospitals assets.

In its life science portfolio, HCP has only about 750,000 square feet of vacancy across six buildings, with significant interest in about half of those buildings, HCP Chairman and CEO James Flaherty said.

Large tech companies such as HP, Motorola, Google and others have been expanding within Silicon Valley in recent quarters. Firms are now pushing from Mountain View and Sunnyvale northward into San Francisco, sometimes into land and space previously earmarked for life science development.

With lab vacancy now at about 5% in the San Francisco area, development may become an attractive option, with existing buildings for sale likely to be priced in the mid to high $600-per-square-foot range, HCP’s Flaherty said. And the company has jumped right in, announcing the purchase April 15 of the largest undeveloped site in the city, a 20-acre parcel called The Cove at the former U.S. Steel site in South San Francisco.

HCP acquired the land, next to the REIT’s 900,000-square-foot Oyster Point campus anchored by Amgen, from Genentech Inc. for $65 million and began development of The Cove at Oyster Point late last month. The project will deliver up to 800,000 square feet of new lab and office space at an estimated 8.5% return on cost, said Gallagher, the HCP CIO.

Flaherty emphasized that the bullish outlook on development is based on the heated South San Francisco area market, rather than a full-on development play across the company’s life science portfolio.

HCP, holding an already significant market share with its Amgen and Genentech campuses, will “move very quickly on [The Cove] to prepare for what we expect will be an attractive supply-demand dynamic in South San Francisco,” Flahery said.

Article source: http://www.costar.com/News/Article/LAND-GRAB-Developers-Ease-Back-Into-Life-Science-Market-As-Supply-Tightens/128906