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May 18, 2015

SLU vs. Bothell: The region's two hot biotech real estate markets go head to head

Puget Sound Business Journal

Annie Zak

There's a battle fomenting between the Puget Sound region's top two life science and biotech real estate markets.

Seattle has more biotech companies and the name recognition of a major U.S. city, but just to the north, Bothell offers cheaper office space and a long history of housing the industry.

Life science companies aren't new for Bothell: It's already home to biotech Seattle Genetics (Nasdaq: SGEN), Alder Biopharmaceuticals (Nasdaq: ALDR), BioLife Solutions (Nasdaq: BLFS) and others.

But Seattle has focused on building up South Lake Union as life science and biotech hub. According to the city, there are more than 55 biotech companies in Seattle.

Now, though, lab real estate is harder to find in Seattle, so some companies are looking elsewhere in the region. Seattle biotech Juno Therapeutics' (Nasdaq: JUNO) announcement in February that it chose Bothell for its manufacturing facility, on top of Alder's IPO last year, raised a question: Could more up-and-coming life science companies move to or launch operations in Bothell?

Bellevue-based travel company Expedia announced it will move to Seattle and take over California biotech company Amgen's space in Interbay. The result will be a loss of precious lab space in the city.

"The demand for lab space had been very lethargic for a number of years, but it's coming back some now," said Bill Neil, senior vice president and partner at commercial real estate firm Kidder Mathews.

One indication is San Diego-based BioMed Realty Trust (NYSE: BMR), a biotech developer with a big presence in Seattle. The company recently bought the building at 307 Westlake Ave. N. for a record price of $89.7 million. That building houses Juno and the Center for Infectious Disease Research.

Mike Ruhl, senior director of development for BioMed Realty in Seattle, said that South Lake Union and places closer to downtown are still the first draw for companies. But Bothell and also Bellevue represent cheaper alternatives.

"We move cautiously on Bothell because it tends to be a fluctuating market," he said. "The dynamic of Bothell... has a lot of things to offer for a lot of different companies. But if we have a downturn, people tend to draw back into the urban core."

BioMed also developed and is expanding its building at 500 Fairview Ave. N., where biotech NanoString (Nasdaq: NSTG) and Danish pharmaceutical company Novo Nordisk (NYSE: NVO) are located.

Ruhl said office and lab space in Seattle can be $50 per square foot and about $20 to $25 per square foot in Bothell.

When looking for a home, though, a company probably exhausts Seattle options first.

"Companies look for opportunities still in South Lake Union, before moving elsewhere," he said.

Soon, they might not have much choice. Landlords aren't building speculatively for lab space much anymore because it's too expensive.

For the full story, go to Puget Sound Business Journal.

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