Life Sciences are the path to a better 2040 and this is how we get there
Welcome to August 2020 or as we like to say, Groundhog Day!
I’ve spent the last couple of months speculating and prognosticating about what the future of not just the Bay Area would be, but the future of work in general. Bottom line, real estate in the Bay Area is going to do well, San Francisco is in for a bumpy period but that may actually work out for them to solve some of their long term concerns, homelessness and an intransigent mental health crisis, a sadistic school board dead set on making school selection confusing and incomprehensible, and a tax structure that is killing the very businesses that brought the City ingenuity and vibrance generations over. Silicon Valley is already transforming with San Jose now becoming the southern anchor to our Megalopolis. The Peninsula and inner East Bay are already beginning a full turn to biotech, pharmaceutical and life science innovation. The outer East Bay, already home to most of the residents of the Bay Area, is seeing a coming renaissance as commutes get rebalanced (Contra Costa county home prices and sales are up the most on a percentage basis since March).
So if I was in charge of a Bay Area Plan for 2040 how would I start?
Invest in mass transit hubs
While the current orthodoxy of thinking is that these transit hubs are going to face significant headwinds from reduced ridership, municipalities and transit enthusiasts should double down. The Bay Area and other mega regions will enter into a virtuous feedback cycle if things go right. Essentially, jobs will migrate out to meet workers through hub and spoke outgrowth. Then, as the outgrowth meets the demand created by quality of life and environmental needs, jobs and demand will recover in the urban cores. With jobs and housing more distributed, those transit hubs will only increase in value, since they allow access to the rest of the network. In the web of any megalopolis, the more housing jobs and infrastructure are tied together, the better the structural supports between them are, the healthier and better a society we have.
Be ready for labs
The next great therapeutic will be made here, and the one after that and that and that…
From Bank of America serving working Italian immigrants in North Beach creating the consumer banking business, William Shockley leaving Bell Labs and moving to the Orchards of Santa Clara County starting the microchip revolution, the Manhattan Project’s National Laboratories locating in Livermore, and Berkeley distilling the finest scientists the world has ever seen, Leland Stanford founding a University that created the society we live in, to two immigrants and engineers begging the question of what is a google and making a ubiquitous product that dwarfs the library at Alexandria, the Bay Area has lead the innovation of American Society and the world for more than 100 years. That innovation has included the founding of Genentech and the decoding of the human genome.
The newest darling is one that we have danced with before. Roche, Exelixis, Penumbra, Bio-Rad, Genentech, Sangmo, Ten-X genomics, Thermo Fisher, biotech is going to drive the next 20 years in the Bay Area; cities need to prepare themselves to get these jobs. Office and Warehouse business districts need code updates. Experts need to look at what the city of South San Francisco has done, transforming from a sleepy burb on the wrong side of the hill to an international powerhouse on par with Boston and San Diego.
My friend Alex Greenwood has a lot to do with this, he’s been the Economic Development Director through the whole run in South San Francisco. Drug companies do the same sort of bottom up analysis for locating as the tech companies do. Brainpower counts. Also, quality of life counts. The idea is to get as many of the smartest people under one roof and give them the resources needed to solve some of the world’s toughest problems. These are the people the Bay Area has always attracted in abundance. As tech enters a new industrial age, the focus on the Bay Area will turn to using the mapping of the Human Genome to solve these problems here. Cities, I’m looking at you Concord, San Leandro, Richmond, Pleasanton, need to recognize these are the jobs of the future. They all have been, to an extent, the seeds have been planting all around us. Look at Emeryville a generation ago: It was a struggling train depot that because of a visionary developer, Rich Robbins, and a far-seeing city council became a mecca of high paying jobs and innovation. We’re on the precipice of a new boom in the Bay Area.
The insular real estate and tech industries have developed a blind spot for many of the Bay Area’s most talented suburbs. This moment in time we’re living in is crystalized by increasing demands for suburban housing and should be what breaks through the myopic view of headquarter location. Life science is an insular industry itself and should take this chance to really view where the best talent in the Bay Area resides. Specifically for life sciences the outer East and North Bays represent untilled soil.
Where should they go? Three projects specifically jump to mind as life science growth opportunities.
Conducive Zoning, check
Conducive far seeing landlord, check
Big Block of space, yup, AT&T has put its 1 million square foot space on the market with phase 1 being 500,000 square feet. GE Digital’s space is also available.
Employee base, check, check, check! GE Digital may not have taken off, but the base of scientists that built its massively successful headcount growth is still sitting in its suburbs with their children enrolled in some of the country’s best public schools.
North Concord Naval Weapons Station (Delivery: TBD)
Housing, check with an additional +13,000 homes, 3,000 more over the hill in Pittsburgh via Seeno Development and a new school coming whenever this mega project can finally wind its way through one of the Bay Area’s most twisted development sagas.
Conducive Zoning, check, tbd
Conducive far seeing landlord, tbd, one of the major biotech developers will take this project to the finish line. God, I hope so.
Big Block of space, yup, up to 3 million square feet of lab space slated for zoning.
Employee base, check, same strengths as Bishop Ranch but better access to transit means the whole Bay is at your doorstep.
Conducive Zoning, check
Conducive far seeing landlord, check
Big Block of space, yup 1.2 million square feet is available.
Employee base, check go Ags (full disclosure my brother went there and I remember some very good times from Woodstock Pizza and playing midnight hoops at Hickey Gym).
The future is still bright
I ascribe to Warren Buffet’s long term view, no system of society has ever produced the kind of innovation that ours has. We have serious challenges, skyrocketing costs of living, income stratification, environmental challenges and a need for massive reinvestment in education. I like our chances. As long as we continue to attract the best and brightest and keep a clear eye on innovation the sky is the limit. Let’s just get through this pandemic first. Wear a mask.
Eugene McGrane is an Executive Managing Director of Cushman & Wakefield in the company’s Walnut Creek, CA office.