Newhall Land Markets Biotech in Order to Sell Property By SHELLY GARCIA Senior Reporter In October, Newhall Land and Farming Co. hosted a conference about the biotech industry. Topics on the agenda included issues such as growth and future prospects for the sector, things that would be of particular interest to those who work in the industry. But the reason for the conference had little to do with running a biotech company. The event was part of a marketing effort to attract biotech companies to Valencia, a master-planned community developed mostly by Newhall Land. Some of the industries that helped to build the Valencia community have matured. Other businesses have been hit hard by the recession. But biotech, Newhall Land officials believe, offers some of the strongest prospects for future corporate tenants. “We’re marketing to a variety of different companies, but biotech is one of the stronger and growing Southern California industries,” said Marlee Lauffer, a spokeswoman for the real estate company. “And with all the predictions that you read about the aging population, there’s going to continue to be a lot of growth in the industry.” Newhall’s success at attracting business to its industrial parks has been formidable. About 1 million square feet of space was absorbed annually through much of the 1980s and 1990s. But the pace slowed last year in the industrial sector, and Newhall officials believe that some of the company’s strongest prospects for growth lay with capitalizing on the interest by like-companies to cluster in close proximity. “We have in the last couple of years done a lot of analysis on the types of businesses that already exist in the Santa Clarita Valley because we know it makes sense for industries to cluster together,” Lauffer said. Biotech, in particular, may be especially attracted to what Valencia offers, namely large expanses of available land at costs lower than many other communities, others say. “It’s a smart move because biomed and nutriceuticals (nutritional supplement manufacturers) need inexpensive land because they end up putting a significant amount of tenant improvements in the buildings,” said Larry Kosmont, president and CEO of Kosmont Cos., a real estate consulting firm. “They need clean rooms and there are some environmental issues they have to meet. Second, they rely on a highly educated population for a workforce, so at some level being out in the suburbs, whether its Newhall or Conejo, they both work.” The availability of relatively inexpensive land in Valencia has long been a draw for many types of companies. But the economic downturn has affected Newhall as it has other real estate developers. In 2001, Newhall sold five industrial parcels totaling 16.8 acres, compared to 11 parcels totaling 58.8 acres in the prior year. It leased 890,039 square feet in its two business parks, Valencia Industrial Center and Valencia Commerce Center, compared to 1.3 million square feet in 2000. In its financial reporting for the year ended Dec. 31, 2001, Newhall said, “As a result of the general economic slowdown and amount of new space on the market from prior years’ land sales, Valencia’s industrial vacancy rate in November and December 2001 was over 13 percent, compared to 4.3 percent at December 2000.” The commercial sector fared better in 2001, totaling 75.5 acres sold compared to 49.7 acres in the prior year. Among the biotech companies already in Valencia are AlleCure Corp., a company that develops products to treat immune system disorders; Advanced Bionics Corp., makers of the cochlear implant; and Second Sight, a company researching devices to correct blindness. In the past month, Alfred E. Mann, the founder of MiniMed who is considered a biotech pioneer, acquired about 160 acres in Valencia’s Rye Canyon Business Park for a biomedical center from another buyer, Legacy Partners. And Specialty Laboratories Inc., which provides laboratory testing services, last month announced that it planned to build a 200,000-square-foot facility to house its laboratory and administrative offices on a 13.8-acre site it acquired from Newhall. But except for Specialty Laboratories, the other biomed companies located in Valencia are direct descendents of Mann’s companies. So far, the biotech companies in the Southern California region have been scattered, unlike communities such as San Diego, Northern California and Boston, where there are highly visible centers of the industry. And last summer, USC hosted a conference hoping to stimulate the growth of the industry in the region at which Mayor James K. Hahn solicited suggestions on how to bolster the biomed presence from industry leaders. “L.A. has some presence, it’s just a little more dispersed,” Kosmont said. “So it’s a good market to go after.” A just released study by Kosmont Partners also ranked Santa Clarita as the least expensive city in which to do business, a feature that Kosmont believes can also help to support Newhall’s marketing efforts. Events such as the conferences attract not only industry practitioners, but real estate brokers, lawyers who specialize in the sector and others who can potentially spread the word about Valencia’s emerging biotech cluster to other companies. “We’re hoping to do another seminar this fall,” Lauffer said. “We think it’s a good way of bringing industry professionals together.”
