On a Monday morning in November that hints winter may finally reach the North Bay, Lindaro Street in San Rafael is awash in cars. BioMarin Pharmaceutical, Inc. employees and others are competing for parking at the biotech company’s main campus. The 406,000-square-foot center sits as a profound statement about how Marin County is seen by the corporate world, and that view continues to evolve.
While BioMarin was happy to plunk down $116.5 million in December 2013 to purchase the center and lockdown its international headquarters in the county, the transaction was a reminder of how the center was built and of the enduring reputation facing Marin. Right or wrong, the rap against this place is that it’s a difficult spot to do business—expensive, wrapped in red tape and regulation and, ultimately, a place companies with ambition must eventually abandon to fulfill their need to grow and thrive.
The cold, hard facts
The list of companies that left Marin to seek their fortunes elsewhere is impressive. Fair Isaac Inc., a credit analytics and technology company shoved off for Minnesota, leaving the very campus BioMarin later purchased behind. Fair Issac, listed on the New York Stock Exchange, boasts a market capitalization of $2.7 billion, traded in November at $87 per share and now has its corporate headquarters in San Jose.
Software companies Broderbund and Mindscape were purchased in 1998 by the Learning Company and moved out of Marin shortly after. WinCup Inc., the company that was long known by locals for having the plant next to Highway 101 that constantly produced its own cloud cover, took its manufacturing facility out of Corte Madera after 42 years, departing for Tolleson, Ariz., with more than 100 jobs.
With a 180-unit multifamily complex called Tam Ridge Residences going up on that site, it’s hard to say which residents feel worse about: the jobs that left town, or the development critics hate.
Even long-time Marin stalwarts like LucasFilm and Fireman’s Fund couldn’t be counted on. Lucas jumped at the chance to build a digital facility in San Francisco’s Presidio, closing up shop in San Rafael’s canal district. Fireman’s Fund, which once had 2400 employees in Novato, took its last 550 employees, and eased on up Highway 101 for Petaluma last year, putting Marin in its rear view mirror.
Need more examples? Recently, FIS Mobile left Larkspur for Petaluma. Biosearch Technologies, Inc., now headquarters in Petaluma after being bought by LGC, though a manufacturing facility remains in Novato. Rustic Bakery’s wholesale division will soon call Petaluma home. Spice company Morton & Basset lit out for decidedly unspicy Rohnert Park from Novato after efforts to move to Petaluma were unfruitful.
Marin County supporters will be quick to point out that Fair Isaac still maintains an outpost on Smith Ranch Road in San Rafael, and that Lucas still has facilities in Lucas Valley, even after founder George Lucas sold off to Disney in a deal worth $4.05 billion in 2012. Marin proponents will also say that the move by German insurance giant Allianz to have its Fireman’s Fund subsidiary light out for Sonoma County had more to do with changes of a corporate nature rather than the county being inhospitable to those seeking greater fortunes in the world of commerce.
And all of that is true.
Critics can rightfully ask, however, that if Marin is such a strong business location, why does the 750,000-square-foot campus the insurance giant once called home sit fairly empty (with TravelSmith, Willis Lease Finance and Pacific Pulmonary being notable exceptions)? The center, complete with a man-made lake, is a former dairy farm and a monument to the reality that, while Marin is the land of organic milk and farm-to-table honey, it’s also a place where small companies are a rule and corporate-sized ventures generally move out.
It’s also fair to point out that American Assets, Inc., a company tied to San Diego-based real estate investment trust American Assets Trust, has been shopping the Fireman Fund site since 2011 and still owns it, which could indicate that the landlord wants out as well. It’s floated ideas of turning it into a mixed-use property, complete with a hotel and retail, but that was only loose talk. A wild rumor began floating about, around the time Allianz began selling off insurance holdings, that Google intended to suck up some of the space. To be sure, Calico Life Sciences Inc., a South San Francisco-based company backed by Google, teamed with the Buck Institute for Research on Aging in April on a joint venture. But the high-tech giant hasn’t hoovered any of the space where Fireman’s Fund formerly hung its hat.
Dr. Robert Eyler, a professor of economics, Interim Dean of the School of Extended and International Education and Professor of Economics and director of the Center for Regional Economic Analysis at Sonoma State University, says the perception that Marin County is a difficult place to do business is tough to shake. “Marin isn’t overly business friendly and space to expand is limited. Permitting can be difficult as well if changes need to be made. Transportation doesn’t help the argument either,” he says. “In that regard the SMART train will be a real test; it’s a possible game changer.”
One veteran commercial real estate player I spoke with says the problem isn’t necessarily with residents 
Examples on both sides
In 2012, Lucasfilm came back to the county for a new approval of a project that had been initially approved 16 years before, but never built. The company wanted to go ahead with a version of the project that actually had a less significant environmental impact and would have added hundreds of jobs and millions of dollars to the local economy. The planning department approved the new version, but the county board of supervisors delayed a vote because neighbors had threatened to bring a lawsuit against the county. Infuriated by the delay, George Lucas himself pulled the plug on the studio project and announced plans to turn the land over to affordable housing development.
That project has yet to come back to the county.
Not all of the news is bad. Worldwise Inc., a pet products company with brands like Smarty Kat and Trusty Pup, merged with Quaker Pet Products in May and moved from San Rafael to Novato’s Hamilton Landing for its new expanded digs. Worldwise is privately held and backed by Mistral Equity Partners.
Restoration Hardware, which has been headquartered in Corte Madera in a corporate lifecycle that’s included going public, going private and then going public again, is listed on the New York Stock exchange and traded at $92 per share in November. It’s currently planning on building a new retail store at The Village shopping center in its hometown. Well OK, it’s not a store. “We don’t build retail stores,” CEO Gary Friedman said in a corporate video. “We build inspiring spaces that blur the lines between residential and retail, indoors and outdoors, physical and digital, with garden courtyards, reflecting pools and rooftop parks.”
The inspiring space is slated to be 67,000 square feet on three levels—or slightly smaller than Friedman’s ego. The new retail spot will incorporate all of the lines of the luxury brand home furnishings company as long as shopping center owner Macerich Inc., Restoration Hardware officials and the town of Corte Madera can get together on the project’s environmental impact and design. The company already has a pair of stores in the shopping center.
“We need a group of businesses that can tell their stories of staying in Marin,” says Eyler. “There are companies like EO Products that made a decision to stay in Marin when they needed to move and there are others as well. Stories about Lucas or Fireman’s Fund leaving get written, but nothing is said about EO or others staying in Marin.”
Guilty as charged.
One of those companies could be Autodesk, headquartered in San Rafael, which has 1,000 employees in Marin and 30 years in the county. While it’s grown like a weed with its corporate strategy of acquiring companies at the drop of a hat (at least 48 and counting) and opened offices all over the world, it’s always been content to house its corporate office here.
Brian Foster, a managing director with Cushman & Wakefield in Larkspur who worked on the EO deal, says it was exceptional in that the company was set to move, but property that wasn’t even on the market became available and was adapted for EO’s use.
Foster says the reasons companies head for Petaluma or the East Bay are pretty straightforward. “Companies typically either get acquired and somebody else decides to move them,” he says. “Or they need suitable space and they can’t find something in Marin that’s a good fit in terms of size or price. The company does a ZIP code search of its employees and finds out that half of them are commuting from someplace else. Add that they can save up to 30 percent by leasing space in Petaluma, and executives enjoy a cup of coffee during the reverse commute.”
Eyler says he’s seen some positives in Marin. “I think the economic collapse [in 2008] was a wake-up call for a lot of elected officials locally. Now, they better understand how businesses impact communities and the economy. It used to be that, as you went north from Sausalito to Novato, you’d see communities become more business friendly. But I think now, you see cities with more understanding about why they need businesses to be healthy. Even in Sausalito, that has historically been bifurcated regarding business, you now see the city getting that residents and the city coffers and the tourists need healthy businesses.”
The professor also points to two advantages the county has in attracting or holding businesses. “There’s a very educated workforce here that’s interested in working close to home,” Eyler says. He points out that a company looking to hire may not have to pay for relocation given the talent in the local pool. He also says that, because much is made of the environment and the love of everything green in Marin, the beauty that’s been protected via open space and parks can be a draw for relocating employees.
Stewart admits NBLSA has tried to market off Marin’s environment. “We call it ‘Life science meets lifestyle’,” he says.
The alliance has further decided to take a regional approach to attracting new life science companies.
“If they want to put their headquarters in Marin County, and then they later need lab or warehouse space, maybe they could consider Solano County, or in Sonoma County. We think looking at the North Bay as a region that works for life science companies makes better sense.”
The answer
For years, economic development types pointed to the Buck Center for Research and Aging as a potential magnet for biotech and pharma companies, and Stewart sings that same tune. “It has an amazing amount of talent and equipment and, short of having a research university here, it’s a great resource to have.”
He also points to BioMarin and the influence the company had not only by making Marin its home but
And those roots brings us back to the San Rafael Corporate Center. Truth be told, the site has a checkered history. In 1998, Fair Isaac was poised to build its own headquarters at the location, carrying a price tag of $86 million. But it got cold feet and opted instead to pay a $2 million penalty to walk away and move its corporate center to Minnesota. Equity Office Properties, at the time the largest office real estate trust in the country, bought the project with phase one finished in 2001. By 2005, Equity wanted out of the underperforming 60 percent vacant asset, so it packaged the property with five others in the Bay Area and sold the lot to a joint venture led by Hines and Sterling America Properties for $329 million. In 2007, San Rafael-based real estate investment firm Seagate Properties teamed with an investment vehicle tied to JP Morgan to buy the center. Seagate held the complex until BioMarin purchased it in in 2013.
BioMarin already had a 10-year lease for its space at the center, signed in 2012. But a year into the lease, the biotech company decided that not only was the campus right, the company was staying put long-term. “We are committed to being in Marin County,” says spokesperson Debra Charlesworth. “We believe it’s valuable to have a long-term control over the property.”
She also notes that the deal got done at a price that was lower than what it would cost to build new and that the cost of ownership was not far from what leasing the space would be. All told, BioMarin will have seven structures at the corporate center when it’s totally built out. The company has 10 buildings in southern Novato, and one more to the north, housing a total of 1,410 employees in Marin.
At this point, it could be considered the last of a dying breed of companies, holding fast in Marin after most of the others have pulled up stakes. Or it might just as easily be thought of as the first of a new breed of companies, with a focus on life sciences leading the way for Raptor, Ultragenix and others to follow suit.
Is the beaker half-full or half-empty?
