Pre-Leasing Campaign Begins for Bio-Med Campus

SCOTTSDALE, AZ-Nothing’s been signed yet, but leasing efforts are well under way for a 345,000-sf, office-and-laboratory complex to be built next year along Scottsdale’s Loop 101. The five-building Chaparral Bio-Medical Campus will go up on desert property owned by the Salt River Pima-Maricopa Indian Community.

The complex will consist of four 60,000-sf lab buildings, designed for biotech tenants, and a 105,000-sf medical office building. It will be located just south of McDonald Drive between Pima Road and the Loop 101.

The Salt River Devco, a development company run by Pima-Maricopa Native Americans, hired a Grubb & Ellis/BRE Commercial team–Steven Steinberg, Shawn Greenway and Kris Martin–to find tenants for the bio-medical campus, which has yet to break ground. Steinberg tells GlobeSt.com that the team is looking as far as Japan for biotech companies willing to shell out $28 per sf to $32 per sf on a triple-net basis or sign for a build-to-suit on a ground-lease basis with a 22-year depreciation.

“We’re getting close to some nice deals,” says Steinberg, who expects to reveal the first tenants by the end of this year. “We are going to focus on pharmaceutical companies and research and development companies.”

According to Steinberg, Salt River Devco is reluctant to start building on a speculative basis due to the high construction cost for wet and dry lab space. The goal is to have 50% to 60% of the specialty space pre-leased before construction begins. “It could easily be $250 per sf” for the construction, he says. “The price range we see is $250 to $300 per sf.” Nonetheless, he expects the first building, one of the 60,000-sf labs, to be ready in first quarter 2006.

The Valley has become a hotbed for biotech companies, Steinberg contends, citing the move of well-known scientist Dr. Jeffrey Trent from the Bethesda, MD-based National Institute of Health to the private Phoenix-based Translational Genomics Research Institute in 2002. Trent, a famed genetic scientist who led NIH’s National Human Genome Research Institute, spurred other scientists to locate in Phoenix to work at TGen, as the Phoenix institute is known.

“Phoenix is seeing a life sciences renaissance,” says Steinberg, who stops short of calling it a boom. “We are seeing some movement here.” TGen, which has partnered with local universities to attract research funds and scientists, is located on a 15-acre downtown campus that’s almost fully leased to biotech companies.

Steinberg hopes to entice some biotech companies to the Chaparral bio-med campus from San Diego, where a large concentration of firms are paying higher lab rents and associated costs. “We are hoping to lure these companies that can’t afford to do business in San Diego,” he says. “San Diego, which is number one in the country as far as the density of life science companies, is very expensive to do business in, as are the cost of living and utilities.”

Moreover, in an interesting twist on a property marketing strategy, Steinberg is hoping to attract a research firm for diabetes. He says the Pima-Maricopa tribe suffers from a disproportionately high rate of diabetes due to genetic characteristics and has received federal funding for a population study to help find a cure. “We are focusing on companies that have diabetes as an area of focus,” he says. “They would have over 7,000 Native Americans as a clinical base that could be studied genetically.”

The Chaparral Bio-Medical Campus is just one part of an overall Pima-Maricopa strategy–Generation Seven, which has up to 16 miles of Loop 101 frontage earmarked for future development. The desert land predominately is vacant, except for the Chaparral Business Park. The land is about 15 miles from Sky Harbor International Airport and a 10-minute drive from Arizona State University in Tempe, one of the institutions in the TGen partnership. “It’s a gorgeous location with freeway frontage,” Steinberg says.