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Life Sciences: Filling a void in the emerging Boulder, Colo., LSRE market

BREI talks with Ben Rosenfield and Bill Jencks about PMB’s new $280M development

By Murray W. Wolf

Initial plans for the $280 million, 365,000 square foot Coal Creek Innovation Park in Downtown Superior development call for three office/lab buildings ranging in size from 85,000 to 150,000 square feet. (Rendering courtety of PMB)

San Diego-based PMB, a longtime healthcare real estate (HRE) developer, and Montgomery Street Partners, a real estate private equity firm with offices in Dallas and New York, announced Wednesday (Aug. 31) that they have received town board approval for the planned Coal Creek Innovation Park in Downtown Superior, a $280 million, 365,000 square foot life sciences project in downtown Superior. Located about 10 minutes from Boulder, “the development will be the first speculative, purpose-built life sciences project in Boulder County,” according to PMB, in an area of “low vacancy and high demand for lab space.”

Groundbreaking is slated for the second quarter (Q2) of 2023 with completion in Q3 2024. The first phase will include an owner-furnished, 27,000 square foot speculative suite space “to enable quick occupancy for growing companies in need of high-quality lab space,” according to the Aug. 31 news release. Initial plans call for three office/lab buildings ranging in size from 85,000 to 150,000 square feet, and a fourth building with ground-floor retail and structured parking.

This announcement caught our eye for a number of reasons. First, PMB is one of the oldest and most successful developers in the HRE space. Founded in 1988, and with a predecessor company dating back to 1971, as we noted in a 2019 article in our sister publication Healthcare Real Estate Insights (HREI), “PMB’s history and reputation go back as far as almost anyone’s in the relatively young business of HRE development.” Over the years, PMB has developed more than 115 facilities representing about 6 million square feet, and it owns and manages 70 medical facilities totaling more than 5.2 million square feet.

Another thing that intrigued us about this announcement was the geographic market. The Denver-Boulder area is an emerging hub, ranking as the 11th largest life sciences research talent cluster in the recent “Life Sciences Research Talent 2022” report from CBRE Inc. (NYSE: CBRE). (For a copy of the CBRE report, please click here.)

Additionally, the recent “2022 Mid-Year Life Science Overview & Market Clusters” report from Newmark Group Inc. (Nasdaq: NMRK) noted that 2022 LSRE development in Denver-Boulder “has already outpaced 2021’s total of $491 million,” with “numerous” Boulder-based companies expanding this year, including SomaLogic, Biodesix, Enveda, Edgewise Therapeutics and Vitrivax. (For a copy of the Newmark report, please click here.)

LSRE firms are responding to that market demand. Breakthrough Properties, Lincoln Property Company and FCP, BioMed Realty, SteelWave LLC, and Nuveen Real Estate and NexCore Group, among others, have also announced LSRE projects or investments in the Denver-Boulder area during the past year.

To learn more about the Denver-Boulder LSRE market and the Coal Creek Innovation Park development, Biosocience Real Estate Insights (BREI) reached out this week to PMB Senior VP of Development Ben Rosenfeld and SVP Bill Jencks, who are spearheading the project. Here’s what we learned.

BREI: Is this PMB’s first LSRE development? What prompted PMB to expand into LSRE?

Rosenfeld: PMB has been focusing on LSRE for the last five years as a part of our continuum of care development strategy. Given PMB’s deep experience with highly technical and complicated facilities across the continuum of care, we are uniquely qualified to deliver and continue to innovate in life sciences real estate. We have been highly selective in the LSRE development opportunities we pursue.

BREI: Is this PMB’s first project with and/or a new relationship with Montgomery Street Partners? Have you worked together on any HRE projects? Why did you choose them as a joint venture (JV) partner? How did the partnership come about?

Rosenfeld: Montgomery Street Partners (MSP) and PMB formed a strategic partnership in 2021 to focus on life science ground up development projects across the United States. MSP is an expert co-GP (general partner) with principals that excel in life science strategy, execution and capital relationships. The PMB and MSP partnership was an immediate cultural fit focused on mutual growth by leveraging each other’s strengths and relationships.

BREI: The largest LSRE clusters are Boston/Cambridge, South San Francisco and San Diego/Sorrento Mesa. So why choose the Boulder area for your first LSRE project? Sure, Denver-Boulder is attractive, but still – why not start in San Diego, in PMB’s own back yard?

Rosenfeld: PMB has a variety of life sciences projects in different geographic markets in the pipeline at the moment. The Coal Creek Innovation Park is the first of those in the pipeline to receive its entitlements. There is a significant unmet need for institutional‐quality space, with the existing inventory largely comprised of small‐scale – less than 60,000 square feet – converted single‐story flex product, which offers limited expansion opportunities for high‐growth and/or more mature life science companies. Coal Creek Innovation Park will fill the purpose-built lab space void in the market, delivering almost 400,000 square feet of R&D-specified lab space in Boulder County.

Jencks: Emerging LSRE markets like Boulder can have significant benefits compared to the established Boston, San Francisco and San Diego clusters. Coal Creek Innovation Park can offer best-in-class facilities with proximity to leading research institutions, with a lower cost of living and more competitive lease economics than the saturated Tier 1 markets.

BREI: Breakthrough Properties, Lincoln Property Company and FCP, BioMed, SteelWave, and Nuveen and NexCore, among others, also recently announced LSRE developments or acquisitions in the Denver-Boulder area. Are there enough tenants to go around?

Rosenfeld: We see these other conversions and investments as a positive sign and good for the overall life science ecosystem. Vacancy in the Boulder market is below 1 percent and there remains over 1 million square feet of demand in the market. We are targeting early growth and established R&D life sciences companies. The project’s scale and base-building infrastructure are ideal for small and large companies. We are providing 50,000 square feet of move-in-ready space in addition to providing a generous TI (tenant improvement) allowance for the balance of the building. We believe that there will be a natural flight to high-quality, purpose-built life science buildings like Coal Creek Innovation Park as the market continues to grow.

BREI: Are you concerned about what seems to be a recent slowdown in life sciences investment and LSRE activity?

Jencks: There is a fundamental need for new life science research and development as our population continues to grow, median age increases, and new discoveries expand treatment options for various diseases. Well planned, located and designed LSRE projects are getting done. Coal Creek Innovation Park at Downtown Superior fits that criteria.

BREI: Totally spec projects are very rare in HRE. How did PMB get comfortable with pursuing spec projects in the LSRE space? Is this project totally spec or do you have some tenants already interested and/or in the pipeline?

Jencks: We have had initial conversations with a handful of users but do not have any leases signed yet. LSRE projects are often financed on a 100 percent speculative basis. We are confident that leasing velocity will increase once tenants start to see the construction activity and as the delivery date nears.

BREI: Are you working on any other LSRE projects in the Boulder area and/or other markets? If so, can you share any details?

Jencks: Coal Creek Innovation Park at Downtown Superior is our primary life sciences focus in the region. PMB is pursuing multiple life sciences projects in other geographies – stay tuned!

BREI: Is there anything we haven’t asked about that you’d like to mention?

Jencks: Starting in 2017, PMB developed the Superior Medical Center, a 60,000 square foot medical office building leased by Boulder Community Health, SCL Health, Orthopedic Centers of Colorado and Touchstone Imaging. Building on the success of the Superior Medical Center, PMB and the master developer, RC Superior, entered into a PSA (purchase and sale agreement) in 2021 for the Coal Creek Innovation Park project. PMB has spent the last two years working with its life science design and broker consultants, town staff, the community and elected officials. Coal Creek Innovation Park is located at Downtown Superior which includes access to 70,000 square feet of walkable retail, 42 acres of parks and open spaces, and access to the Sports Stable.

The Boulder office of Dallas-based CBRE Group (NYSE: CBRE) is handling leasing. In the Aug. 31 news release, CBRE SVP Erik Abrahamson noted: “Life sciences companies are looking to the Boulder/Denver region as a place where they can plant their flag or grow their operations. They are attracted to Colorado’s highly educated and skilled workforce and ecosystem of educational and research institutions.

“While historically it has been difficult to find available lab space in Boulder County, projects like Coal Creek Innovation Park are helping to change that.” ❏

News Release: PMB and Montgomery Street Partners announce approval on the first speculative purpose-built life sciences project in Boulder County, CO


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