Mission Bay Rising Catellus' chief keeps the faith in the building biotech park

Tom Abate / SF Chronicle 19mar01

If he builds it, will they come?

Nelson Rising must ask himself that in the private moments when he takes off the armor of optimism he wears as chief executive of Catellus Development Corp. and chief cheerleader for the gargantuan land development project called Mission Bay.

Tucked into the southeast corner of San Francisco, between the Interstate 280 flyover and the waterfront, Mission Bay is 303 acres of warehouses, concrete plants and muddy fields surrounding the railroad tracks of a bygone industrial age.

But on the mind of Rising and in the architect's renderings at the Catellus visitor center on Channel Street, Mission Bay is the future of San Francisco, a city within a city. Over the next decade, it will have 6,000 apartments, 850, 000 square feet of retail shops, 49 acres of parks and open space and a 500- room conference hotel.

The jewel at the center of it all is a 43-acre University of California at San Francisco satellite campus to serve as the magnet that will attract corporate tenants to 5 million square feet of general office and biotech lab space.

Anyone who has hassled with the building department over remodeling plans has only the merest inkling of what Rising has faced since he took over the project in 1994 and guided it through years of red tape. Today, in his most tangible sign of success, the five-story steel shell of the first UCSF building reaches toward completion as builders prepare to erect a second structure nearby.

During a two-hour visit, Rising pointed out other hints of progress, such as the pilings driven deep into the landfill -- Mission Bay was once a cove -- where 283,000 square feet of office space for the Gap will start to take shape later this year.

But I wasn't there to consider the totality of Mission Bay. That would take a team of reporters and gigabytes of imagination. I was focused on the 9-acre swath along the project's western boundary, where Catellus plans to build a million square feet of biotech laboratory space across the street from the future UCSF Mission Bay campus.

"We believe companies will gravitate here to be close to the university that started the biotech revolution," Rising said as we settled into a conference room with Catellus leasing specialist Michael Monroe.

Rising's assertion is more than idle chatter. A couple of years ago, Catellus agreed to give the University of California 30 acres in the heart of Mission Bay, which cemented UCSF as its anchor tenant and broke the political stalemate that had stalled the project.

A little more than a week ago, Catellus announced its first success creating a biotech research park around UCSF. The J. David Gladstone Institutes, a nonprofit research center specializing in cardiovascular disease,

virology and immunology, said it would buy a slice of land in the biotech park and build a 180,000-square-foot lab building.

As encouraging as that may be, it hardly proved the basic premise underlying the biotech park -- namely that corporate biotech is itching to live next to UCSF. For one thing, Gladstone already has lab space on UCSF's old campus and is deeply enmeshed in collaborations with UCSF researchers.

For another thing, Gladstone insisted on buying the land for its lab despite Catellus' expressed intention to retain ownership of the biotech park and lease the buildings to corporate tenants.

Nevertheless, Rising rejected any insinuation that the biotech component of Mission Bay wasn't panning out because he didn't have more deals to show off yet.

"One thing I've learned after more than 30 years in the development business is that this stuff takes time and patience," Rising said. "All these things are chicken and egg, chicken and egg, and then all of a sudden you have critical mass."

Mission Bay's bid for critical mass in biotech couldn't really begin until a few weeks ago, Rising said, when the city approved the final design specs for the R&D buildings Catellus plans to build and lease.

"We like to lease most of the space before we break ground," Rising said. "But until we had final design specs, we couldn't be certain of our costs; and until we knew our costs, we couldn't offer firm lease terms."

Now Catellus is ready to sign up tenants for its first spec project, a triangular five-story building with 155,000 square feet of space opposite the first UCSF building.

"We're talking to a lot of biotech firms with explosive growth plans," said Monroe, Catellus' commercial leasing specialist. "We're seeing no letup in demand for new lab space in our primary market, which is young and startup firms on the Peninsula and in the East Bay."

Competing biotech developers and real-estate brokers confirmed that, so far,

biotech has been immune to the commercial real estate slump that followed the collapse of the dot-coms.

In South San Francisco, home of Genentech Inc. and 79 other biotech firms, officials have issued permits or received proposals to build about 1.5 million square feet of lab space -- in addition to the estimated 2.7 million square feet already in the city's inventory.

"Things haven't blinked an eye so far as R&D stuff goes here," said South San Francisco Economic Development Director Marty Van Duyn, who said South City expects to break ground soon on a 600,000-square-foot lab complex created by Slough Estates, a British firm that has been one of the Bay Area's most prolific builders of biotech space.

In a sign of demand for biotech lab space, Mike Wilson, city manager of South San Francisco, said the Slough projects had originally included a five- story general office building.

Given the office slump and biotech demand, Slough recently asked the city to build a four-story lab building instead. South City, acting with speed Catellus might envy, asked for some design modifications. "If they came in the door tomorrow, I bet we could have an answer back to them in 30 days," Wilson said.

EAST BAY CORRIDOR

The Bay Area's other notable biotech corridor stretches from Berkeley to Alameda, with spurs in Richmond and Hayward, emanating out from the Emeryville headquarters of Chiron Corp.

Rich Robbins, head of San Rafael's Wareham Development, which built Chiron's labs, has been building biotech sites for 20 years and remains active in the field. Among his recent developments is the new Emeryville campus of the Ernest Gallo Clinic and Research Center, which is affiliated with UCSF and which, like Gladstone, should have been a natural for Mission Bay.

"We've been doing biotech development so long that we've been blessed with a lot of relationships that create new relationships," Robbins said.

For Robbins and other incumbent biotech developers, such as San Mateo's Alexandria Real Estate, these relationships amount to more than simply knowing people.

Over the years, the incumbents have learned the tricks of building labs and doing creative finance to make projects happen. To put the biotech startup Sangamo BioSciences into lab space in Richmond, for instance, Robbins took stock in the company as partial payment.

Rising said Catellus is aware of the competitive arrangements for biotech spaces and will be flexible on leasing terms for its new biopark.

I'm not suggesting that Catellus isn't clever enough to write a competitive lease or that it can't design and build the space. But as the newcomer to an incestuous industry niche, Catellus is like the student who transfers into a high school in senior year. It just takes time to get a prom date.

But with the boundless confidence that has sustained him thus far, Rising looks beyond the empty fields of Mission Bay and the doubts of skeptics and sees the gleaming glass buildings that now exist only on blueprints.

"We're in this for the long haul," he said.