Economic Notes: Life sciences companies show interest in Solano

November 13 2017

By Daily Republic From page B7 | November 12, 2017

As development professionals, it is critically important to have a feel for the current economic landscape, but more importantly, what trends may affect the economic landscape in Fairfield in the near future. Many real estate experts are whispering that the life sciences industry is taking a closer look at the entire span of Solano County.

Biotech landed in Solano in a big way when Genentech purchased 100 acres in Vacaville in 1994 and built out their large manufacturing and research campus (at the time, one of the largest in the world). Others were soon to follow. But several years later, after several mergers and acquisitions, economic cycles and major shifts in the biotech industry, while the Genentech facility remains a powerhouse, many of those companies that followed moved, downsized and consolidated in other locations.

The main drivers in biotechnology site decisions have always been talent, investment capital and appropriate office and research laboratory space. As you can imagine, proximity to a University of California campus – the University of California, San Francisco – as well as Stanford and other major research institutions placed the San Francisco Bay Area as one of the top 10 locations for biotech development. However, Solano County did not see anything like the millions of square feet of office and research space that occurred in places like Mission Bay, South San Francisco, Emeryville and West Berkeley.

There are indications that this situation may be changing. A number of “prospects” are looking closely at Solano County for new locations and the reasons are interesting.

While talent is critical, there is currently a “vacuum” effect in the San Francisco Bay Area. There are three primary reasons for this:

·   Demand for talent in all technical sectors has resulted in unemployment below what economists call “full employment,” or roughly 4 percent. In locations like Mountain View, unemployment has now dropped into the 2 percent range. The result is “hyper-inflation” in wages.

·   Some companies are finding a lack of office space and the physical infrastructure to accommodate the new construction of such space.

·   The scarcity of housing creates a situation where homes are not affordable, or even in some cases, available. While Fairfield has always enjoyed a balanced market, the city overall has more housing available than jobs, with a jobs-to-housing ratio at or below 1.0. That does not mean Fairfield has entirely avoided the growing regional pressure on the housing market, but the central Bay Area has an actual housing shortage, with a jobs-to-housing ratio surging above 2 or even sometimes 3. The growth of jobs has outpaced new housing growth in the central Bay Area for many years, contributing to rents and home prices two to three times greater than Solano County.

Due to these factors, there are a variety of incentives for companies to look again at counties like Solano. Fairfield and other cities within the county offer (relatively) value-priced housing while remaining a reasonable distance to headquarters locations in San Francisco and the South Bay.

Fairfield’s industry clusters in food processing and packaging, along with the strong agricultural base, are potential markets that might attract biotechnology and life sciences companies as well.

Solano County also has suitable industrial space. One obstacle for companies looking to grow outside of the traditional “bubble” of the 10 metro areas with strong biotechnology industrial presence is “wet lab space.” Unlike conventional office space, wet lab space supports has the utility and infrastructure needed to conduct the research and prototype manufacturing needed by these companies.

Locations, off of university campuses, without a traditional base of biotechnology, often have little to no immediately available lab space. (Sacramento is a local example.) However, Solano County does have a supply of this specialized space. This allows the area to compete for deals that are sometimes decided in days rather than months or years. And available space is critical.

Finally, Solano County has several major colleges that support biotechnology, including one of the most advanced in the world, the University of California, Davis. UC Davis receives more than $700 million annually on research, primarily life sciences. Research ranges from food innovation to drug discovery, and everything in between, yet over the years the city of Davis has not been effective in capturing research activities, private or public, “off-campus.” Voters have disapproved a number of substantial research park projects.

With these factors at play, we are seeing evidence that the biotechnology industries are again waking up to opportunities Solano County presents. Talent, affordability, research institutions, existing lab space and proximity to the leading location in the U.S. for venture capital. Tied together, even to the most skeptical, it is a compelling argument.

Economic Notes is an update from Fairfield City Hall written by Brian Miller and Robert Burris of the Fairfield Planning and Development Department. They can be contacted at 428-7461 or by email at rburris@fairfield.ca.gov or bkmiller@fairfield.ca.gov.

http://www.dailyrepublic.com/solano-news/solano-business/local-business-columnists/economic-notes-life-sciences-companies-show-interest-in-solano/