Rendering of the planned Landing at Oyster Point development in South San Francisco, California.
It took eight years, a team of developers, marketers, city officials and one of China’s biggest state-backed developers. But with the infusion of $1 billion, the transformation of a stubbornly empty swath of South San Francisco waterfront real estate the size of 40 football fields into a biotech centerpiece is set to launch this year.
A joint venture led by the Los Angeles-based Greenland USA paid $171 million for the 42-acre strip of land, called the Landing at Oyster Point, nestled on the edge of the San Francisco Bay. On top of the purchase price, the venture is injecting more than $1 billion to turn the land into a large-scale office and research and development complex.
Greenland USA said it’s too soon after the deal, announced on Aug. 18, to say just which anchor tenants they’ll court for this new complex. But the biotech direction makes sense given the industry’s growth and the city of South San Francisco’s attempts to attract life sciences businesses.
South San Francisco is home to 240 biotech companies and 11 million square feet of biotech R&D space, according to the city’s figures. The new project and several other projects in the pipeline will push that number to more than 17 million square feet.
“We have the largest biotech cluster in the world,” South San Francisco City Manager Mike Futrell said by telephone.
But the Greenland project will mark the largest single development in South San Francisco. “We are very excited,” Futrell said.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Neighbors of the future tenants include Calico Labs, a life sciences spinoff of Alphabet (Google’s parent holding company, which is based nearby in Mountain View, California), and the therapeutics company, Amgen. The site sits next to a Johnson & Johnson’s JLab, Merck, Pfizer and the headquarters of biotech giant Genentech. They’re surrounded by research universities and laboratories like Stanford, UCSF and UC Berkeley.
An initial $300 million injection will set the development in motion, Futrell said. They’ll start with 508,000 square within the next 12 months and bring in another 1.7 million square feet of biotech office space on the heels of the first buildings.
They’ll work their way toward developing the entire 2.25 million square-foot site by 2021, Futrell said.
The City of South San Francisco will be contributing $30 million from the state’s now-defunct redevelopment funding program, originally aimed at combating blight. The money was allocated to development projects before California Gov. Jerry Brown dissolved the redevelopment program in 2012.
Futrell said the money will pay for infrastructure work, such as sewage and roads, for the Greenland site. That work will spill over onto 32 acres of adjacent city-owned land at the tip of the peninsula on which the development is situated.
Right now most of the Greenland land is vacant, Futrell said. But some tenants in an existing business park will likely be relocated to make way for a blank slate. A boutique hotel may go, but the marina will stay put.
“The development of Oyster Point presents tremendous opportunity for the South San Francisco community and Greenland USA has approached it with the vision, expertise and energy needed to bring it to fruition,” South San Francisco Mayor Mark Addiego said in a statement released by Greenland.
The purchase adds another property to Greenland USA’s portfolio of U.S. flagship projects, which includes a sprawling $1 billion project along the 110 Freeway in downtown Los Angeles. The second is a $6 billion project in Brooklyn, New York.
“The San Francisco Bay Area is known globally for its leadership in innovation and we’re proud to bring Greenland’s expertise and vision for transformative properties to the area,” said Yuliang Zhang, chairman of Greenland Holding Group, parent company of Greenland USA, in the company’s statement. “The U.S. continues to play a critical role in our overseas expansion and we look forward to what will be a landmark property.”
The company did not make Zhang or other executives available for an interview.
Greenland Group is a development juggernaut publicly traded on the Shanghai Stock Exchange. It has developed projects across China and in nine other countries, according to the company’s website.
For the Oyster Point project, they brought in three equity investors to the deal including Ping An Trust, which is controlled by China’s second largest insurer, the Ping An Insurance (Group) Company of China. Those two will hold 85 percent between them. Two smaller partners, Agile Group and Poly Sino Capital, will absorb the rest.
The deal ends an eight-year journey for the city and the original developer, San Francisco-based Shorenstein Properties and SKS Partners, who paid $84 million for the land in 2008 and ushered it through zoning and permitting. Last week, they handed over the site to the new investors. No further approvals are necessary before construction begins.
In 2015, Shorenstein/SKS hired Chicago-based JLL Capital Markets to find a buyer for the Landing. “We expect to receive significant interest in the opportunity at The Landing at Oyster Point from both domestic and foreign investors,” JLL Managing Director Michel Seifer said in a statement at the time.
Less than a year later Greenland signed on, likely lured by the promise of biotech, the darling of venture capitalists. Greenland pumped in $2.3 billion worth of investments during the second quarter of 2015 — a 32 percent increase over the prior quarter, according to a report by PricewaterhouseCoopers and the National Venture Capital Association, with data provided by Thomson Reuters.
That doesn’t mean biotech is recession-proof but the industry did weather the Great Recession relatively unscathed. Greenland is reported to be the world’s largest developer, Futrell said, “so they’re not at the mercy of banks.”
Image: Greenland USA
