San Diego Metropolitan - North County Develops High-Tech Space Program

A walk in the flower fields, a walk on the beach, a walk on the pier. In North County you could amble along at the pace of a semi-rural retreat from the big-city lights of San Diego. You could chase the ponies at Del Mar, rainbows at Carlsbad’s flower fields and rhinos at the Wild Animal Park. But you couldn’t chase a Nasdaq listing or a spot on Market Wrap, and that’s the change.

Now San Diego’s bedroom towns are racing to add high-tech development like IDEC Pharmaceuticals’ $1.3 billion manufacturing plant in Oceanside. High-tech development is changing the face of Oceanside from low-rent to upscale. Already nesting in Carlsbad are Invitrogen, a maker of research kits that’s valued at $3.3 billion, the second most valuable biotech company in San Diego County, and Isis Pharmaceuticals.

“North County is ripe for even faster high-tech expansion,” says Fred Cutler, director of UCSD Connect. “You have corridors like the Carlsbad Research Center on Palomar Airport Road. In Rancho Bernardo, big companies like H-P and Sony employ thousands and attract early stage information companies to cluster around them. And then you have companies like ResMed in Poway which treats sleeping disorders, growing fast and very profitable.”

In the south coastal area of North County, a new financial nexus has arisen along High Bluff Drive, where venture capitalists and technology companies have replaced open land. Inland, Rancho Bernardo, home of golf courses and red-tiled homes, also is home to rising startups such as AirFiber, developer of broadband wireless networks that connect office and industrial buildings to the Internet with invisible lasers.

But with all this fattening development, North County also has an eye on its arteries, including traffic and continued quality of life debates over development as city after city edges closer to “build-out,” which would sadden Cole Porter.

Wide And High

But it is land, lots of land, that drove IDEC’s decision to place its manufacturing campus in Oceanside. After a five-year national search to locate its new $500 million manufacturing campus, the choices came down to sticky San Antonio and something closer to home. “Oceanside was one of the few sites we looked at that had 60 contiguous acres,” says IDEC CFO Phil Schneider. “Another advantage is that we can build to 80 feet tall; some places only let you build to 35 feet. And we know our employees are going to be happy there.”

“Oceanside is unique, with the possible exception of Poway in having access to the labor pool in three counties without the issue of a border crossing, which might be an issue if we were located further south,” says Bill Rastetter, CEO of IDEC. “Oceanside was attractive because of proximity (IDEC recently purchased 45 acres in UTC to serve as the corporate headquarters), the reverse commute and also seemed like a place where the cost of living would probably be lower than in, say, La Jolla.”

The city’s more than 400-acre business park has some of the largest tracts of business park space in the county, says Jane McVey, Oceanside’s economic development and redevelopment director. “One of the features of San Diego is that it’s a very linear town, not a round one,” says McVey. “The I-5 and 15 corridors are like a ladder without rungs, but we have (Route) 76 to the I5, and 78, and in four years, light rail that connects the 5 and the 15.”

McVey says the mayor and other city leaders keep a high profile in the tech community, regularly touring businesses so “if there’s a problem, they know who to call.” In fact, when asked about Oceanside, CFO Schneider first mentions the “obvious enthusiasm” of the city administration.

A residential space race also is under way, fueled by recent construction of 475 new homes near the city’s Old Town priced between $375,000 and $500,000. “The downtown is taking on an entirely new flavor and ambience,” McVey says. The city has pitched in $300,000 for additional landscaping downtown, and MiraCosta College is adding culture, with a new branch campus taking over an old shopping center. Manchester Resorts’ planned $120 million, 400-room resort goes before the Coastal Commission in February.

‘Temecula Effect’

From her roost down the I-5 from Oceanside, Carlsbad’s economic development director Cynthia Haas has been watching the “Temecula effect” in her neighbor to the north. “Several years ago, we noticed Orange County housing prices were higher, so people could live in Oceanside and work in Orange County,” she says.

In Carlsbad, Haas expects to see more niche manufacturing, in which a company uses its North County complex to finish and inspect work done overseas. Or to design and assemble, as does the city’s largest manufacturer, Callaway Golf. The reason? A lack of warehousing, only about 650,000 square feet, compared to 5.6 million for R&D, and 4.2 million for light industrial property.

“Because land is so expensive, the manufacturing we have tends to be small scale,” says Haas.

Carlsbad’s urban planning, says Haas, attempts to balance its reliance on manufacturing with tourism and retail. “And tourism is suffering right now, so if that’s all we had, we’d be concerned. Our biotech and electronics companies don’t always have the same (expansion) cycles and that’s good, ” Haas says. “Right now, biotech is hot and that’s good for (Carlsbad resident biotech) Invitrogen. But electronics are downsizing.”

Carlsbad is about two-thirds built out, but that doesn’t mean 33 percent is left. “About 40 percent of the vacant land is reserved for open space,” leaving about 450 developable acres remaining. With 16 million square feet of space built, Carlsbad can go another 5 million before an eventual buildout at 21 million square feet.

Another potential for high-tech development is the site of the old Hughes plant at El Camino Real and Palomar Airport Road. Satellite communicator ViaSat has landed as the anchor tenant with 180,000 square feet of space, roughly a third of the available footage.

As Oceanside transforms its gritty downtown, Carlsbad is in the process of adding a lifestyle center. Called Pavillion of La Costa it is a 265,000-square-foot retail playground on 18.3 acres on the border of Carlsbad and Encinitas. Look for an opening in November of next year.

Gateway To Poway

Also offering developable land is Poway, aka the “City in the Country,” population 50,000 and rising. Gateway recently moved its headquarters and 500 employees there, and 850 acres are yet to be developed in the South Poway Business Park along Scripps Parkway, four miles east of Interstate 15. Following a plan first developed the mid-’80s, the park is home to about 380 businesses, employing 12,000 people in the more than seven million square feet of space built so far, says Ingrid Alverde, the city’s economic development manager. As employees stream in, Alverde says the city has up to 1,500 workforce housing units in the works as well.

Although Poway’s population grew by 7,000 in the most recent decade, Alverde says the city has been able to blend quality of life expansion through “our schools, low crime rate, housing alternatives from apartments to estates, and we’re also geographically central to El Cajon, Carlsbad and La Jolla.”

Some of the North County’s new techies don’t work with genes or silicon. They’re networkers, like the executive team behind Technology Assurance Group, a national trade group that provides education and sales training to more than 50 reseller and distribution members in the interconnect telecommunications space who provide equipment to the Nortels and Lucents of the world. They’re building a membership list, so square footage is less an issue than for a manufacturing company.

“We could be anywhere,” says Chief Executive Dale Johnson from his 2,000-square-foot office north of Carlsbad Mall. “But the San Diego region is the headquarters for some of our members such as Teledata and Transwest Network Solutions.”

Johnson expects the tech trek to North County to continue. “There’s still room to grow, and there’s still competitive (space) pricing and leasing.”

Cutler sees tech growth in North County through the eyes of competitors in Connect’s Most Innovative New Product competitions. Carlsbad’s Callaway Golf was a winner in the most recent edition for its software that helps custom fit golf clubs. “And the biotech commitment to North County is continuing to take advantage of the substantial difference in the cost of doing business,” says Cutler, “compared to the sweet spot of Sorrento Mesa and Torrey Pines.”