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Research
Facilities
Availability of biotechnology facilities in the Seattle area, like many other biotechnology
centers nationwide, is a serious problem for companies seeking room for expansion or start-up.
Lack of biotechnology lab construction in recent years - during the dot com boom - has
resulted in a lack of lab space in many of the nations biotechnology centers.
The decision to site a biotechnology facility is based primarily on proximity to
research institutions, such as the Fred Hutchinson Cancer Research Center and the
University of Washington, the ability to recruit and retain highly skilled employees, and
the availability of facilities. (see Facility
Location Factors).
The greater Seattle metropolitan area currently has less than 25,000 square
feet of biotechnology lab space available for immediate occupancy. Another
400,000 square feet of largely office space is available, but lab build out is required, and
these facilities are located outside the desirable Seattle-Bothell areas where many biotechnology
companies are concentrated. These issues combined with poor financial markets, and
national and international economic uncertainty will constrain industry growth in the near term.
Despite the economic downturn in 2001, biotechnology and medical technology companies in the
greater Seattle area absorbed more than 527,000 square feet of space, compared to more than
614,000 in 2000. More importantly, we expect that existing companies will continue to absorb between
400,000 to 500,00 square feet of space annually through 2005. However, less than 25,000 square
feet of lab space is available for immediate occupancy.
Biotechnology and medical technology firms in Washington State currently occupy more
than 5 million square feet of facilities with 90 percent of the facilities located in
the Seattle metropolitan area. Biotechnology firms alone account for an estimated 3 million
square feet or 60 percent of the total industry absorption. The typical biotechnology firm
in Seattle is a research and development stage company, less than ten years old, has fewer
than fifty employees, and facility needs ranging from 10,000 - 20,000 square feet.
Biotechnology facilities require extensive tenant improvements including specialized
HVAC, electrical and mechanical systems, water handling, animal containment facilities,
and clean room environments. The specialized tenant improvements result in lease
rates significantly higher than typical office or business park space.
First generation biotechnology space is typically leased on a triple net (NNN) or equivalent
basis for the shell with the leasee paying for the majority, if not all of the tenant
improvements. The costs of tenant improvements can range from $100-150 per square
foot ($200-$300 per square foot for specialized areas). The initial lease rate with
tenant improvements factored in ranges from $30 to $35 per square foot with second
generation lab and lab support leases averaging $25 to $40 per square foot. Since suitable
space is at a premium, and demand is high, available space with required tenant
improvements is usually leased quickly.
The demand for biotechnology and medical device facilities has increased steadily over the
last decade growing from an estimated 2 million square feet in 1990 to more than 5 million square feet
in 2001. The following include annual facility absorption figures for biotechnology and medical
technology companies in Washington State from 1998 to 2001 (see Recent
Real Estate Transactions).
- 2001: 527,174 sq. ft.
- 2000: 614,090 sq. ft.
- 1999: 382,626 sq. ft.
- 1998: 640,021 sq. ft.
The bad news is that over the short-term there are few, if any biotechnolgy lab
facilities available - less than 25,000 square feet, plus a few other other small pockets of
potential sublet space in the Seattle area. However, several projects are in the planning
and permitting stages in Seattle, Bothell and other areas that will range in size from
45,000 to 200,000 square feet. In fact, more than 400,000 square feet of space
is in the planning stage, including:
- Canyon Pointe, Bothell
- Pacific Northwest Technology Park, Spokane
- Seattle Life Science Center, Seattle
- Snoqualmie Ridge Business Park, Snoqualmie
- South Lake Union/Seattle Biomedial Research Institute, Seattle
- Canyon Pointe, Bothell
One unknown on the horizon is the continued use of, or disposition of the Immunex,
now Amgen biotechnology lab space in downtown Seattle. Immunex, founded in 1981,
was the largest biotechnology company in the Pacific Northwest with more than 1,600
employees employees in 2001. The company’s blockbuster drug Enbrel is the
first biologic product for use against rheumatoid arthritis. The $11.1 billion acquisition of
Immunex by Amgen, located in Thousand Oaks, CA, was completed in 2002. The company
subsequently reduced employment in the Seattle metro area by an estimated 30 percent.
The real estate question is what will become of the 51 University Street facility upon completion
of the Helix Project now under construction on Elliott Avenue? The good news is that Amgen has
announced that it will maintain a strong presence in the Seattle area:
- The Helix Project under construction along Elliott Bay will continue, and the $650 million
facility will incude approximately 750,000 square feet of space for research and development.
The first phase is scheduled to be completed by the end of 2003.
- The project investment has been reduced by $100 million, and the total facility size
has been scaled back 260,000 square feet with reduced need for administrative space.
- Amgen will retain the former Immunex manufacturing plants in Bothell, including the
process-development plant for biotechnology drug production.
Seattle has reached a critical mass. The area now produces roughly ten new start-ups
annually, many existing companies are seeking space for expansion, several companies have
relocated to the state and other companies are looking to move to the state. Unfortunately,
centrally located biotechnology lab facilities in the greater Seattle area will remain
in short supply until planned projects are available for occupancy in the first quarter
of 2003. Until these planned projects are completed, firms may be required to locate
outside of the Seattle research center hub and possibly outside of the state of Washington.
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ZymoGenetics "Steam Plant" Photographic Tour
Photo credit: ZymoGenetics.
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