By David M. Greenwald
Executive Editor
Davis, CA – Those who argue that DiSC 2022 will be decided by assessments on traffic are probably correct, but if previous debates and proposals are any guide, there will be an argument that demand does not justify the entitlement of now 100 acres for a high tech research park.
On the other hand, recent discussions with those in the wet lab space show that there is a shortage of such facilities in the Central Valley and that when space becomes immediately available, it fills up. The success of Inventopia also demonstrates the demand for start up level incubator space.
A week ago a Business Journal article found that “Tenant demand outpaces life-sciences construction as sector heads into another robust year.”
CBRE Group Inc. found recently that “life-sciences companies were collectively seeking nearly 23.8 million square feet of new lab space across 12 U.S. markets with a life-sciences hub in the third quarter of this year.”
“Tenant demand for life-sciences space is outpacing supply in 2021, a trend that’ll continue next year as the sector sees billions pumped into it,” the article noted. “Nationally, lab space vacancy is at 4.9%, although several markets are far below that. Boston-Cambridge, Massachusetts’ lab market, for example, has 1.1% vacancy.”
“Life-sciences labs quickly are becoming a highly sought-after property type for both tenants and investors,” said Ian Anderson, CBRE’s Americas head of office research, in a statement. “This intense demand for lab space is the natural result of a global push for new medicines begetting strong funding and hiring in the life-sciences sector.”
We learned this locally last year when Yocha Dehe Lab funded by the non-profit AgStart moved into Woodland.
Leanna Sweha, the program director of AgStart this year told the Vanguard that the wet lab space quickly filled in Woodland – it is both costly and difficult to come by.
She told the Vanguard last year, “We just talked to somebody who’s interested in the lab at AgStart and he said before he learned about the lab at AgStart, he was concluding that there’s no lab space left in the state.”
Last year when the Davis City Council approved the University Research Park’s mixed use project, Mark Friedman of Fulcrum, told the council, “there’s good demand in Davis for research tenancies… We’re 98 percent leased.”
He later added, “It’s actually interesting, at the moment I’m more concerned about the apartments than the lab and the research space.”
He noted that, the kind of tenants they have, “it’s very essential for people to come in and make sure their experiments are working. That’s not something that you can do from home.”
The Business Journal noted, “The life-sciences sector is notably different from the four primary commercial real estate sectors — office, industrial, retail and multifamily — because it’s particularly reliant on having an established ecosystem and labor pool in a market for it to be successful. Apartments, for example, are in demand in most areas of the U.S., but life-sciences investment is concentrated in only about a dozen key markets nationally.”
The top three clusters for life sciences remain Boston, San Francisco and San Diego.
The article citing Chad Phillips, global head of office and life sciences at Nuveen Real Estate, warning “there will continue to be strong tailwinds for life sciences in the coming year, with most of the 10 markets Nuveen invests in seeing sub-3% vacancy right now.”
“It has gotten more crowded,” Phillips said. “We’re certainly cognizant of the supply but the fundamentals are so strong that we see great opportunity.”
One of the biggest challenges will be “how quickly tenants need to occupy space.” He said, “That puts additional pressure on delivering space quickly. Unlike big office users, which frequently look for space years out from a planned move, life-sciences groups frequently need to find space within six to nine months of a search beginning.”
That means the space must be available immediately.
A few key points here from the perspective of Davis.
First given the proximity to the Bay Area, the access to researchers at UC Davis and high quality labor coming out of the university, Davis is positioned well to take advantage of this situation.
With costs of space, rent, and lack of space in the Bay Area, Davis is in a perfect position to take advantage of this. The article notes “markets with key ecosystem components in place — such as number of life-sciences Ph.D.s and life-sciences professionals, and access to venture capital dollars — will capture the most meaningful activity.” That could be the Davis-Sacramento region if there is available space to utilize.
But third, without the ready available space, it will not work. Davis is not poised to move in six to nine months. Even the Nugget headquarters move which was fast by Davis standards would not work for the life sciences market.
Fourth, this area is largely immune to the pandemic changes. As Mark Friedman pointed out, you aren’t going to be running experiments out of your home. The need for life sciences space, which has only grown with the push for new medicines and vaccines, is not one that will go to a remote economy.
Davis has an opportunity to take advantage of this moment, but only if the community is willing to grant the opportunity.
Davis has an opportunity to take advantage of this moment, but only if the community is willing to
grant the opportunityadd even more traffic to the Mace Mess.Keith,
Are there any benefits from development at DiSC that would or could balance out your traffic concerns, or is traffic the most important issue in your mind and there are no benefits that outweigh traffic?
And yet- this place hasn’t even broken ground, several years after failing in Davis:
http://woodlandresearchpark.org/
https://www.cityofwoodland.org/583/Woodland-Research-Technology-Park
Tell you what – take away the housing at EITHER of these proposals and watch how fast they fold.
I believe the site in Woodland was zoned for a business park some 20 years or so ago.
Ron, one thing I have never understood from some of the people on your side is that it seems that you like to present arguments and criticisms for two diametrically opposed scenarios. The first scenario, which you mention quite frequently, is that zoning more land for an innovation center will “fail,” presumably in the sense that it will not be built out–this seems to be the gist of your criticism regarding the development up in Woodland. In this scenario, however, if there is no buildout, then there will be no impacts–and, of course, whatever percent that is built out will correspond roughly to the percentage of impacts (50% buildout generating roughly 50% impacts).
Thus, if an innovation center “fails,” then there will be little to no impacts. So, what precisely is your concern? If you are convinced that it will fail, as it seems clear from your many posts claiming this over the years, then why would you care if nothing gets built? Wouldn’t that be your ideal scenario given that you say you oppose any rezoning of farmland?
This is also something I have never understood regarding Matt William’s point of view here. He says he thinks there is no demand. If he is correct, then nothing would change and I don’t see what harms he sees in the scenario where there is no demand. The losers in the “no demand” scenario would be the developers.
On the other hand, however, you and your side also like to raise concerns about the impacts you believe development will create. But you can’t have it both ways! If there is no demand, then there are no impacts. And if you are concerned about impacts, then that means you believe that there is demand. Do you see the logical disconnect here?
The housing will “cause” it to be built, or sold to some other developer.
And of course, no bicycle/pedestrian underpass, until the “other half” is approved. Which no doubt would be entirely a housing proposal. If I’m not mistaken, the “landing” for that is already on the other “half”.
Take away the housing, and let’s see if they even propose it. Again, that was the original plan.
Also see Nishi (where the commercial component was dropped), the Davis Innovation Center (now in Woodland, adding 1,600 homes in the process), The Cannery (now a housing project) . . .
And that doesn’t even touch on the ongoing conversion of existing commercial sites, for housing.
The same is true in Woodland. Take away the housing, and it will never be built.
A lot of the points you are raising here seem somewhat confused to me. Are you concerned that there isn’t enough commercial space? It seems that you are implying this, but I don’t think that is true.
Here is how I understand your argument. Please correct me if I am wrong:
There isn’t sufficient demand for commercial innovation space. Thus, if there was a commercial-only project it would not be built. However, because the project is mixed use, the residential component will result in a full project buildout (is this due to a fixed costs argument? I would appreciate clarification for the mechanism you think would drive this process). You do not like any development that occurs on land zoned for agriculture. Thus, because the project has housing, development will occur whereas it would not if it were commercial only.
So, as I understand it, your concerns do not really have anything to do with the project particulars. You are opposed to developing land zoned for agriculture under any circumstances and to the degree that any project would result in development on land zoned for agriculture (you believe that residential construction is the most likely driver of development), then you are in opposition. Is this a correct summary? I feel that sometimes we get bogged down in arguments on the VG about project particulars which can lead to some mental contortions given that the arguments are fundamentally about whether any development should occur on land zoned for agriculture or not. Is that your read here as well or am I missing the mark?
I should add that opposing any development of land zoned for agriculture is a valid view. I happen to disagree quite vehemently with this, but it is essentially a view based on preferences which can vary substantially from person to person.
I don’t think I’ve put forth anything confusing.
No. I don’t think there’s demand for even the “half” that’s being proposed. There is market demand for housing, however.
But if there’s such a significant demand for commercial space, wouldn’t you think that they’d want to reserve the entire site for commercial development? Rather than compromising it with housing? (The inclusion of housing can also have a restrictive impact on the type of commercial development pursued, as well.) And of course, there’s probably a reason that the “other half” of the development dropped-out, as well. (To be resurrected as a housing proposal, most likely.)
That’s right. They had an opportunity to pursue that some 5 years ago or so. I was there at the council meeting when that direction was confirmed by the council. The developer subsequently withdrew their commercial proposal, entirely. And later returned with housing – as I PREDICTED at the time.
It’s due to the fact that there’s a market demand for housing.
See above.
For the most part, that’s correct. But in this case, it’s also expanding the city beyond a reasonable/logical boundary. Along with Shriner’s, the other half of DISC, etc.
That’s right.
My main concern is any development on that land, some 4-5 miles from campus (and beyond a logical boundary for the city). In addition, it’s the first step in additional development in that area (and the dependence of the bicycle/pedestrian underpass provides additional evidence of that). In addition, it’s a downright “weird” place for high-density housing, when housing that’s actually closer to the city is much lower-density.
Not entirely correct. But this site is too far from the heart of the city and UCD, and is entirely dependent upon I-80. It’s essentially separate from the city itself.
I don’t know what you’re asking.
Your view is the very reason that sprawl continues to occur.
I also believe that (if successful), adding more jobs would increase the likelihood of additional peripheral development in that area. This is an “evidence-based” opinion, and is also a consideration when SACOG assigns RNHA allocations for housing.
My fifth comment for the day.
One argument is that small subsidized operations show market demand, and another argument is that when life-science needs something they need it now. But subsidy doesn’t show market and that ‘now’ isn’t now it’s the now of when a future unknown and maybe a not wants something now. I don’t find either argument logical. Mr. Spock.
Well, how about Aggie Square, then?
Oh, wait . . . .
Alan M
What makes you think this demand is all coming from small subsidized operations? There’s lots of life sciences lab space locally that does not appear to be any more subsidized than other businesses, e.g., Bayer/Monsanto, HM Clause, Marrone, etc.
Richard, are Bayer/Monsanto, HM Clause, and Marrone “life sciences” businesses? I may be thinking too narrowly, but I’ve always thought that life sciences relate to human lives rather than non-human lives. Therefore, I see Bayer/Monsanto, HM Clause, and Marrone as “agricultural sciences” businesses.
Using that same line of thinking, about 20 years ago UCD moved its “life sciences” campus from Davis to Sacramento to bring the teachers and academics and researchers closer to the Med Center where those life sciences professionals treat human lives and conduct research that affects the health and longevity of human lives.
Matt – It would have taken about two minutes of Google time to see that you’re mistaken here.
This is the press release on UC Davis – HM CLaus ***Life Science Innovation Center*** (link)
This was the 2012 press release from Bayer: “Bayer CropScience acquires US-based biological company AgraQuest for close to US$ 500 million” (Link)
David, I posed Richard a question … with the caveat that I might be thinking too narrowly. But with that said I still see Bayer/Monsanto, HM Clause, and Marrone as “agricultural sciences” businesses, which are very different from Pfizer, Moderna and Genentech which I see as “life sciences” companies.
However, I did get an e-mail that said you and I were
There was some wisdom in that e-mail.
I write my arguments in the morning before I’m fully caffeinated so that they only half make sense. That way, people can interpret them any way they want and it makes for a more interesting conversation.
The article could have mentioned Agenus and the 120 acres they purchased in Vacaville last summer. Better comp than Woodland, which is not aiming at the same market.
Alan talks subsidies, but ignores the role of VC and angel investors in early stage development.
By the way, the operations at Aggie Square are not subsidized, the physical infrastructure (1 million sf) is being constructed by UC Davis and the City of Sacramento.
Yes, David – if you get a free building and site (funded by taxpayers), that’s pretty much the definition of a subsidy.
Do you want them to subsidize the actual operations, as well? Perhaps also give them a tax-free status (like the Vanguard)? (Actually, I’m now wondering if they’d get that, as well.)
I’d suggest a few “paint nights” to help fund actual operations.
In the case of DiSC and the Woodland site, the housing is what is subsidizing the hoped-for commercial activities.
I’m not David. Rent is rent. Start ups do not build, they move into existing spaces.
True story.
Nor can they afford significant upgrades, re-do’s, tenant improvements. So converting a warehouse or office space to a wet-lab ain’t going to be a happening thing.
Ironically, same is true of Burrowing Owls… they do not create the burrows… usually, in this area, ground squirrels do… the owls are precious to many, they contribute much… but they need others to create the space to flourish… a symbiotic relationship (Burrowing Owls are not known to prey on ground squirrels, as I understand it)…
It takes development of right-sized, provisioned, property to attract folk to do business, create revenue beyond their cost and profits (community benefit via taxes)… especially true for ‘start-ups’…
Is it evil, or negative, if developers (ground squirrels?) provide spaces suitable for start-up (or even up-start) endeavors that may lead to innovations, and revenues to benefit us all? Providing space for burrowing owls, as it were? And the burrows should perhaps provide ‘housing’…
Beyond my ken or pay-grade… but something to ponder…