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Wednesday, November 01, 2006

Don't Bet On Biotech?

Here's an interesting article that focuses on the influence bio-tech has on Seattle's economy. It's tangentially related to real estate, because of the argument we hear so often that oodles of high-tech jobs are just pouring into Seattle.

In recent years, economic development boosters both in Seattle and on the Eastside have increasingly focused their efforts on attracting biotechnology companies, citing their potential for creating high-paying jobs.

But banking on biotechs can be as risky as betting on dot-coms, or, for that matter, betting on racehorses.

One local stock analyst told the Journal recently that he and his colleagues refer to early stage biotechs as "casinos" because of their 90 percent failure rate.

But conversely they are also referred to as "The Promised Land" by analysts like Paul Latta of McAdams Wright Ragen in Seattle. That's what he calls biotechs that can successfully bring multiple drug products to market because of the profits they generate.

Biotechs that fail to reach the "promised land," however, are bound to either eventually disappear, along with the jobs they provided, or get sold, which often also results in layoffs.
...
Despite the long odds facing early stage biotech ventures, industry observers and local economic development boosters say the benefits to the area that those companies provide, even if they are sometimes short-lived, far outweigh any the risks.

"It is worth it," said Maura O'Neill, the former president of Explore Life, a regional economic development group that teamed up with the city of Renton a few years ago in an effort to establish a "Science City" hub for biotechs on land that Boeing was thinking of selling off.
...
The good news, O'Neill said, is that many of those soon-to-be-former Icos employees will likely elect to remain in the area and either go to work for other biotech companies, which will strengthen them, or perhaps even start up new biotech ventures.

As long as the Puget Sound region is home to outstanding medical research institutions such as the University of Washington and the Fred Hutchinson Cancer Research Center, it will continue to attract biotech and lifesciences companies, and/or birth new ones, O'Neill said.
I don't personally think that the presence or absence of bio-tech companies in our area is going to be what makes or breaks the real estate market. This article appears to support that opinion. There are people that like to throw that into the debate though, and I thought this article was worth pointing out.

(Clayton Park, King County Journal, 10.29.2006)

5 comments:

trackbike said...

Where have you read about biotech jobs "pouring in"? I have read about the plan to attract 20,000 such jobs to SLU. The mayor's office says there are over 4,000 currently. But this is something the city is working towards. It is a rather modest number of jobs, but of course they are high paying and thus would be a boon to the local economy. So do you want to source where you read about all these biotech jobs "pouring in"? And you really think this is some kind of indictment of our real estate market? You are grasping at straws!

MisterBubble said...

Uh, yeah. That's why he used the words "tangentially related."

Learn to read.

MisterBubble said...

Not incidentally...NIH funding levels are currently at all-time lows. A large number of researchers at the UW are losing grant money, and many are cutting back on staff and students.

The UW doesn't tend to pay glamourous wages, but it represents the core of the biotech machine. That machine is getting rusty....

trackbike said...

You should learn how to read, dude. I wanted to know where he'd read that jobs were "pouring in". I notice you can't source that either.

I really think you should all start an "I hate Seattle" blog...or rename this one!

plymster said...

Trackbike - Here's Tim's quote about jobs "pouring in".

It's tangentially related to real estate, because of the argument we hear so often that oodles of high-tech jobs are just pouring into Seattle.

Note that he says "high-tech" jobs, not biotech specifically. If you search through the comments here (I'm not going to do it because it's a highly manual exercise, and not worth my time), you'll find a number of arguments made by housing boosters that Seattle's high paying, high-tech jobs are driving the RE market.

Personally, I think the jobs argument was debunked when a comparison of unemployment rates showed Seattle to be lagging behind other RE markets that are already falling. Nevertheless, biotech is supposed to be the "next big thing", so I think this is a worthwhile post (besides, it's Tim's blog, and he does a good job of posting conversation starters).

I don't know about starting an "I hate Seattle" blog, but I think that an "I hate RE trolls" blog would be entertaining, especially if we could automatically redirect their pointless, data-free whines, complaints, and baiting rants from constructive blogs like this one. I can think of a couple of RE trolls I'm not real thrilled with off the top of my head...