Lee Chesnut knows what it’s like to be a pioneer. The former Valley resident and Arizona State University grad, now head of Del Mar, Calif.-based Chesnut Properties, is staking about $100 million in the development of a biotech lab and office complex at Mill Avenue and Washington Street in Tempe.
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So far the half-finished building has no firm tenants lined up. Chesnut is just counting on the state’s emerging lifesciences industry to need the 265,000 square feet of space that will become available in December.
“I’m on pins and needles to see what happens,” he conceded. “In my gut I feel we will be successful financially in terms of seeing tenants. But from a logical standpoint, it’s hard to prove we will be.”
Chesnut has hired the Grubb and Ellis real estate firm to conduct a worldwide marketing campaign to attract tenants, and it’s starting to pay off, he said.
“I can tell you that in the last month we have started talking to some real prospects that could have a substantial benefit on that project,” he said.
Chesnut is ahead of the curve in building biotech lab and office space in the Valley. Other labs have been built, but they generally are associated with institutions such as Arizona State University, hospitals or the Mayo Clinic, he said.
Chesnut’s project, called Papago Gateway Center, is the first speculative lab building in the Valley to be aimed at biotech companies developing new treatments and cures for diseases and medical conditions.
Development of the life-science industry is a high priority for the state of Arizona, which has invested millions of dollars to attract and develop programs such as the International Genomics Consortium, Translational Genomics Research Institute and Arizona BioDesign Institute at ASU.
Chesnut believes his Tempe complex will help to advance the industry in Arizona by providing lab space for start-up companies still in the process of developing their products.
The high profile location north of the Mill Avenue bridge over Town Lake is well suited to forming a biotech cluster because of its proximity to Phoenix Sky Harbor International Airport, Loop 202 and light rail line, he said. Chesnut is contributing to the cost of building a light rail stop next to the building, which is located on land owned by the Salt River Project.
Chesnut has an 80-year lease on the five-acre site.
The structure will include the latest energy-saving technology such as an external shade system over the windows to reduce solar heat gain. To provide the most advanced facilities, the building will have double the electrical capacity and more than triple the mechanical capacity of a normal building, Chesnut said.
“This is a true state-of-theart, full horsepower building,” he said.
Although the Tempe project is the first, similar biotech research centers may be
built in Chandler, Surprise and Phoenix, said Jon McGarity, president of the Arizona BioIndustry Association. “Some of the cities are still evaluating it, but I think you’ll see more,” he said, adding that demand for such space appears to be growing.
“We’ve lost a few companies because we didn’t have the lab space available for them,” he said.
Christine Mackay, Chandler economic development specialist, said the city has hired a consultant to study the market feasibility of a biotech center in Chandler. The results are expected this fall, she said. The study will help determine if the city needs to participate or if the project could be accomplished solely by the private sector.