Developer for Life Science

As demand for life sciences buildings continues to exceed availability, veteran real estate developer Howard Kozloff has launched a new real estate firm devoted to developing life science workspaces called Noblespace.

Kozloff previously co-founded HatchSpaces, a Westwood-based real estate firm which focused on providing labs for bioscience and biotech startups, in with Allan Glass.

Noblespace, based in Westwood, made its debut in January. Glass is not involved in this venture.

Kozloff said he hopes to replicate the success of HatchSpaces, which has a campus in Thousand Oaks.

“I want to pursue a strategy that focuses on community-based development for science and technology companies emerging out of academic and incubator environments,” Kozloff said.

Noblespace is working on a variety of building scales that range from spaces for small startups to larger spaces for companies that are commercially viable.

“At the core, it’s a real estate investment and development company,” Kozloff said. “The underlying basis is to acquire real estate. Those opportunities might be ground-up development, repositioning of existing buildings or science and technology buildings that we would manage and improve.”

Life science hubs

Kozloff and Patrick Church of Jones Lang LaSalle Inc. identified parts of town as emerging areas with concentrations of life sciences activity including West Los Angeles (Santa Monica, Westwood), the South Bay, Pasadena, East Los Angeles, the Conejo Valley and Irvine.

Each area has its anchors driving the life sciences industry. East Los Angeles is anchored by USC and Cal State L.A. and Grifoles; Pasadena’s scene is centered by Cal Tech; South Bay has the Lundquist Institute; and West Los Angeles is driven by UCLA and Kite Pharma.

“(Alexandria Real Estate Equities) has got their headquarters building in Pasadena,” Church said. “They’ve got their innovation lab over on Hill Street but they’ve got a big presence in Thousand Oaks with their three buildings and they’re fully entitled on another 19-acre site to build an additional 365,000 square feet.”

Anchored by Amgen and populated with offshoot companies such as Atara Biotherapeutics, the Conejo Valley continues to be a life sciences hub for the Los Angeles region as well.

In the fourth quarter of last year, there was nearly 612,000 square feet of lab and research and development space in West Los Angeles and nearly 700,000 in the South Bay while there was 1.4 million square feet in San Fernando Valley with roughly 645,000 in the Conejo Valley, according to a CBRE report.

Future construction of life science buildings in Los Angeles County consisted of only four new projects totaling 291,00 square feet and three conversion projects for a combined 390,071 square feet in the fourth quarter.

The demand is certainly there as National Institutes of Health funding in Los Angeles for last year amounted to $1.6 billion, with $594 million from UCLA.

No one market within Los Angeles  has emerged as the leading area for life sciences companies.

“Nobody has really been identified as the hub in L.A.,” Church said. “We’re not Torrey Pines of San Diego or we’re not South San Francisco. We’re a much more spread out, bifurcated market.”

Church said that Pasadena’s life sciences industry has been expanding to the east.

“Xencor relocated their headquarters from Monrovia, where they moved out of 40,000 square feet and they leased 130,000 square feet (in Pasadena) and they just moved into their space,” Church said.

Developing the spaces

It is amid this competitive and growing life sciences market that Noblespace is looking to make its mark.

Kozloff’s venture is backed by institutional private equity and high net worth individuals. The firm is in the process of securing its first three properties currently under contract in West Los Angeles, suburban Washington, D.C. and Salt Lake City.

“My goal is to build ecosystems locally, regionally and nationally,” Kozloff said.

Increasingly, finding the right property for wet labs has become difficult.

“In West L.A. it’s very hard to find suitable space because you’re competing with a whole lot of other types of users,” Kozloff said. “UCLA itself is the recipient of almost $1 billion of (life sciences) funding. There’s a ton of activity there.

Developers such as Kozloff have been looking at properties that can be converted into life sciences spaces.

“One of the focal points has been on obsolete industrial or warehouse properties where they don’t necessarily meet the needs of today’s users whether it’s because of clear heights, truck bays and loading docks,” Kozloff said. “A lot of those can be repurposed into (science and technology) buildings.”

Church said that the biggest challenge right now in Greater Los Angeles is that demand for life sciences buildings has been outpacing supply.

“The problem that we face right now more than everything is that a lot of these groups coming out of CalTech, UCLA, USC, when they come out of those schools, they don’t have 12 or 18 or 24 or 36 months to wait for something to get built, they need space built today and the one thing we’re lacking more than anything is lab space,” Church said. “It doesn’t exist.”

According to Church, there is currently 11 million square feet of life science space between Los Angeles. and Inland Empire and the direct vacancy is 1%.

“We’ve got six groups that we’re working with in Pasadena right now and finding them space is virtually impossible,” Church said. “And when the spaces come up, they’re gone very quickly.”

Church said that many of his clients seeking larger spaces also want to remain in their neighborhoods.
“There’s a lot of tenants on the Westside that won’t venture out of the Westside,” Church said. “But when it comes to crunch time and if one or two of these companies need to go from 20,000 square feet to 70,000 square feet and the space doesn’t exist on the Westside, but it exists in Pasadena, then you will see those tenants move.”

Church is currently searching for space for some Westside clientele.

“We’re looking for space for a handful of our clients on the Westside, we’re looking at industrial parks that we can convert to life science space because existing lab space does not exist,” Church said. “There is ample demand right now for space, especially in that 5,000 to 30,000 square foot range.”

Church noted that adding to the difficulty of finding available buildings for life sciences is the complication of locating buildings suited to be converted into wet lab space.

“When you look at L.A. in general, three years ago everybody would call me and say, ‘Hey, I’ve a building that I think would be a perfect building for life science,’” Church said. “Well, unfortunately, they’re not (perfect). They’re not buildings that are easy to convert. Based on the cost and what infrastructure that already exists, I think some of the guys who’ve done conversions probably wished they would’ve torn the buildings down and started it from scratch.”

Kozloff noted that there are some basics that make it easier to convert a building into a life sciences edifice that include ceiling heights, power capability, floor loads, vibration tolerance and underlying zoning.

“If you don’t have all of this, it will be cost prohibitive,” Kozloff said. “The easiest building to convert is a single-story industrial building because normally you would have the ceiling heights and floor loads.”

Church said he is under pressure to find the right property for his life sciences clientele because in many cases, if the right property doesn’t turn up, the companies may move out of the Los Angeles market altogether.

“We’ve got to get the space delivered or we’re going to lose these companies,” Church said. “We’ve lost companies to San Francisco. We’ve lost companies to San Diego.”

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