Another South City development asks for 10-year extension

“At this point in time, it's just too difficult to get financing, and that demand in the market for the users isn’t quite there,” said Steven Dunn, senior managing director at Steelwave. “We do feel like it’s recovering in both residential and in R&D. It’s just going to take a little bit more time.”

Typically, entitlements are only valid for two to three years, at which point developers would need to re-apply and undergo the entire review and approval process again.

Just last month, a life science development proposal at 800 Dubuque Ave. also sought a similar 10-year development agreement with the city. In exchange for an extended entitlement, the developers for both projects agreed to pay most of the community benefit fees to the city over five years when typically, such fees are paid by developers closer to the time of permit issuance.

While life science firms continue generating revenue in their local areas after they’re built, much of that ongoing revenue, such as property tax, goes to the county. The city itself relies heavily on new construction, as that is when developers pay impact and community benefit fees, which go toward a number of its services and infrastructure, such as child care, affordable housing and parks.

While the life science sector has strengthened compared to a couple years ago, progress has been slow. As of July, biotech layoffs in San Mateo County were only slightly lower last month than July 2024 — about 1,040 industry layoffs, compared to roughly 1,400 — and real estate development is also proving slow to bounce back.

In Belmont, three of its five major biotechnology projects have been withdrawn or indefinitely paused as of April. According to a CBRE market report, last quarter saw a 32% vacancy rate in life science buildings across the Bay Area — nearly four-fold the rate from 2022. The amount of lab space under construction in the region as of last quarter has also been significantly less than prior years.

With less funding from the National Institutes of Health and pharmaceutical tariffs, the report added, midsize life science firms are reassessing their real estate needs, which has also contributed to higher sublease activity.

The problem is particularly acute in South San Francisco, known as Northern California’s hub for biotechnology firms. According to a staff report, the city has issued one new building permit for a life science project in the last two years, and other projects that are already underway, such as Kilroy Realty’s Oyster Point and Southline, mean the anticipated supply is only contributing to higher vacancy rates.

The Planning Commission voted unanimously to recommend approval of the development agreement which also must be approved by the City Council

“The way the climate is nowadays and how things are, there are a lot of unknowns,” Planning Commissioner Norman Faria said to the applicant during a meeting Aug. 21. “I’m glad to see there is some building going and given the opportunity to extend it and give you the time for the economy to turn around, it’s no problem for me to support that.”