By Jon Peterson
Speculative development is not something often heard across the greater Bay Area region. Yet, San Francisco-based Presidio Bay Ventures has kicked off just one such development at 777 Industrial Road in San Carlos. The lab space/R&D project will have a total development cost in the range of $130 million to $140 million, according to the property owner, and it will look to reshape the landscape of this city’s burgeoning biotech space.
“We are starting this project on a speculative basis with no tenants. We do feel good about the market demographics given the kind of space that we will be bringing to a market this is in very high demand from a tenant perspective,” says K. Cyrus Sanandaji, founder and managing director of Presidio Bay Ventures.
The project has a number of institutional sources of capital on both the debt and equity sides of the development. On the debt side, the company has been able to obtain a $118 million construction loan on the development provided by New York City-based Square Mile Capital Management. Presidio Bay also has a private family office trust that is its institutional equity joint venture partner on the project.
The development will be replacing an existing car dealership that had been located on the site. This parcel will now be turned into a 150,000 square foot Class A lab/R&D space building, which the property owner is expecting to be completed by November 2023. The flexible design of the property allows for either a single-tenant occupancy in the building for a headquarters kind of location or a number of tenants occupying the building over four floors. The leasing on the project will be overseen by Cushman & Wakefield through its Burlingame office. The main people involved in this project are Ben Paul, vice chairman, and Marc Pope, executive director.
777 Industrial Road will have a state-of-the-art lab buildout. It also will include a fitness center with full locker rooms and a roughly 4,000 square-foot roof deck with ample outdoor seating. The location of the project is also a strong one for public transportation; the property sits one-half mile from the San Carlos Caltrain station. In addition, the building is within walking distance to downtown San Carlos, which provides a number of additional amenities and access to dining, retail services and alternative transportation options.
Presidio Ventures believes that the San Carlos market for lab and R&D space will continue to strengthen over time. “The area has really no vacancies for lab space with much more tenant demand than there is space to accommodate companies. This is one reason why rents have continued to escalate significantly over the past 12 to 24 months,” said Sanandaji.