Bay Area Developers and Biotech Execs Build to Entice and Keep Talented Millennials

Bay Area Developers and Biotech Execs Build to Entice and Keep Talented Millennials
February 5, 2016
By Mark Terry, BioSpace.com Breaking News Staff

The two biggest areas for biopharma companies in the U.S. are Boston—specifically Cambridge—and the San Francisco Bay Area. One of the problems the Bay Area is facing is the price of real estate. A number of developers are working on ways to manage those prices in order to keep talented life science employees in the area.

One example is HCP Inc. This company is currently pushing the second phase of its Cove at Oyster Point development in South San Francisco. It currently has 230,000 square feet of office buildings and two laboratories, but its next stage includes 20,000 square feet of retail space. The entire project could hit 884,000 square feet.

The retail area, expected to involve two buildings completed in the third quarter of this year, will include a food court, as well as recreational areas like a bowling alley, pool tables and Ping-Pong tables.

“It’s really taking an urban-type downtown environment and bringing it to a suburban market,” said John Bergschneider, HCP’s executive vice president, to San Francisco Business Times. “It’s large space for people to break out and team build.”

The San Francisco Business Times notes that, despite Genentech ’s Ho-Hos, a bi-monthly company get-together, the biotech industry tends to be more focused on work and less on other worker amenities. But biotech executives and developers are taking a harder look at what they can do to keep talent in the area, even if that means bowling alleys.

Another example is BioMed Realty Trust, which was recently acquired by Blackstone Group LP (BX). It is currently building out a so-called “amenity space” in Foster City, Calif. for Illumina Inc.

But these spaces aren’t cheap in a tough real estate market. The San Francisco Business Times points out that the first two tenants in the first phase of The Cove, CytomX Therapeutics Inc. and Denali Therapeutics Inc., will be paying in the mid- to upper-$50 range once they move in.

Apparently another issue in the Bay Area is just finding the necessary real estate space, let alone the cost of it. Rick Friday, a senior vice president with real estate brokerage CBRE Inc., told The San Francisco Business Times, “Ten years ago, a lot of companies could think two, three years in advance. Now when companies decide they need space, they need it in 12 months or less.”

And home prices in San Francisco are outrageous. The average listing price, according to Trulia, is $1,369,000, with an average price per square foot of $939. Boston’s not much better, with an average listing price of $1,026,792, although the average price per square foot is $309. The median prices are startling, as well, with San Francisco’s median sales price $1,100,000. Boston’s is a slightly more manageable $369,000.

In particular, biotech executives are claiming that the millennial workforce is different from their older peers. Millennials, apparently, want services within walking distance of work.

Some studies suggest that millennials, which is to say, people who are currently between the ages of 18 and 36, prefer cities to suburbs, and prefer mixed-use communities where they can, according to Nielsen, “be close to shops, restaurants and offices. They are currently living in these urban areas at a higher rate than any other generation.”

And because millennials currently make up 24 percent of the population, developers and biotech executives are taking note.

It should be pointed out, however, that not all data supports that. More recent U.S. Census Bureau data indicated that 529,000 Americans between the ages of 25 and 29 moved from cities to the suburbs in 2014, with only 426,000 moving the other way.

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