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| The California stem cell agency is located south of Market Street in San Francisco, close to the San Francisco Giants ballpark(upper right). Since the agency has been there, the area has grown from seedy to gentrified. |
Some not-so-good news surfaced today in
San Francisco involving the $3 billion California stem cell agency.
The news has little to do with its
science efforts but everything to do with where it is located and its
overhead expenses. The agency will be forced out of its free office
space – 20,000 square feet – in two years. The free space was
provided under an $18 million recruitment package and is worth at
least $1 million a year, according to the agency's auditors.
The bad news is that the San Francisco
office-space market is sizzling hot. Google, Yahoo, Microsoft and
other technology firms are scrambling for space in
Baghdad-by-the-Bay, as the city is sometimes known. According to a story this morning by James Temple in the San Francisco Chronicle,
the firms are looking for a total of about 800,000 square feet and
are prepared to pay well for it.
One nearly completed deal involving
Yahoo would cost about $48 per square foot for a 10-year lease. If
CIRM paid at that rate, it would have nearly $1 million in additional
costs annually. However, leasing rates are expected to rise substantially in the next year or so. Also involved in a move would
be the cost of parking, which could run about $360,000 a year.
The stem cell agency is already
examining its options for new offices, including some sort of special
deal with the City of San Francisco.
Former State Sen. Art Torres, onetime
chairman of the state Democratic Party and co-vice chairman of CIRM,
briefed agency directors on the matter at its meeting in May. He
said,
“I met with the mayor of San Francisco(Ed Lee), who's a dear friend, and he encouraged us to be aware that he's very committed to helping us find some space in San Francisco. Whether it means tax credits or incentives to a potential landlord, we still have to work that out. Obviously we still have to work out what the space will be. But the fact that the mayor has indicated very explicitly that he wants to keep us in San Francisco, I think it will bode well for us down the road.
“The current owner of the property (Stockbridge Capital Partners) has not been happy that for ten years they've had to supply free rent to us. And what they didn't anticipate was having to provide for over $755,000 in operating costs, which they thought some donors would take are of. Those donors -- some of whom passed away and others who chose to give money to other institutions, UC San Francisco, in particular, to the stem cell lab, which was very much appreciated, I know, by UCSF – but at the end of the day, there's no room for negotiations with this current owner.”
CIRM Director Joan Samuelson asked
Torres whether future rent would also be free. Torres, who is also
president of San Francisco's Public Utilities Commission, replied,
“I would not work on that assumption. I would work on the assumption somewhere between a dollar and more, again, dependent upon what kind of tax incentives the City of San Francisco would provide. We're very fortunate that my son(Joaquin Torres) is the deputy mayor for economic development, so we also have him working on this as well.”
Samuelson replied,
“I'll ask more questions offline.”
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