By Meghan Hall
In a move indicative of big pharma’s interest in the Bay Area’s strong research and development sector, Chicago-based AbbVie Inc. has signed a lease to take 479,000 square feet of space at BioMed Realty’s Gateway of Pacific project in South San Francisco, according to an announcement made by BioMed Realty. AbbVie will pay biotech market rate — around the low to mid $60s per square foot — for the space; the company will also receive a tenant improvement allowance of $125 per square foot. The new 12-story office building would accommodate around 1,500 employees.
“The expansions of these world class tenants within our Bay Area portfolio is not only a testament to the region’s reputation as a leading life science, tech and healthcare center of excellence, but also to the importance companies place on access to unmatched facilities in innovative and collaborative environments,” said Jon Bergschneider, executive vice president and chief development officer at BioMed Realty in a statement.
AbbVie will not move into Gateway of Pacific until its other current leases wrap up in 2021, even though the anticipated delivery of Gateway of Pacific’s first phase is the fall of 2019. According to BioMed Realty, Abbvie is the first tenant at the Gateway Campus, and Phase One of the development is roughly 555,000 square feet of laboratory and office space. An amenity center with dining and a health club are also part of the project plans. When completed, the entire Gateway of Pacific development, located at Oyster Point and Gateway boulevards, will total around 1.2 million square feet. The first phase of the development broke ground in the spring of 2017. The second phase of the development, which has yet to break ground, will include an outdoor plaza and garden and will total 431,000 square feet. BioMed Realty anticipates the completion of Phase Two in late 2021.
Currently Abbvie has sites in South San Francisco, Redwood City and Sunnyvale and has been known to collaborate on a variety of research projects and medical treatments with companies such as Alector. The company has also bought other Bay Area companies in recent years, including Pharmacyclics and StemCentrx.
Other major pharmaceutical companies such as AstraZeneca, Merck & Co. Inc. and Bristol-Myers Squibb Co. have expanded their operations in the Bay Area as the conditions for emerging and innovative biotech companies have remained ripe. Early stage funding and longer time frames for investment have only served to allow smaller companies to incubate and grow further before major companies such as AbbVie acquire them, according to a fall 2018 report released by brokerage firm Transwestern.
According to the same report, venture capital funding for biotech and life sciences companies has also risen over the past couple of years, surpassing 2016’s funding levels by more than 50 percent. The effect has been a high level of competition amongst companies for space in the San Mateo county especially, where the bulk of life science companies are concentrated and where the vacancy rate hovers at around two percent.
BioMed Realty did not immediately return The Registry’s request for comment.