Stem-cell agency priced out of SF, moving to Oakland

The stem cell agency, based in S.F. since 2005, plans to relocate to this building near Oakland’s Lake Merritt in October. The stem cell agency, based in S.F. since 2005, plans to relocate to this building near Oakland’s Lake Merritt in October. Photo: Carlos Avila Gonzalez, The Chronicle Buy photo Photo: Carlos Avila Gonzalez, The Chronicle Image 1 of / 14 Caption Close Stem-cell agency priced out of SF, moving to Oakland 1 / 14 Back to Gallery

California’s stem cell funding agency, which made San Francisco its headquarters a decade ago in what was considered a coup for the city, has become the latest victim of San Francisco’s sky-high rents.

The world’s largest stem cell funding agency will move this fall from its 20,000-square-foot space in Mission Bay, where it has been enjoying free rent as part of a deal with the city, to a high-rise office building overlooking Oakland’s Lake Merritt.

The decision came down to money, said Kevin McCormack, spokesman for the California Institute for Regenerative Medicine as the stem cell agency is formally known.

The institute’s 10-year, rent-free arrangement with San Francisco expires in November, and agency leaders found that to rent equivalent space in the city would cost about $1.5 million a year, McCormack said. Nearly the same amount of space in Oakland will cost about half that much, or $697,560 a year.

“The lease is up now, and this is now one of the hardest real estate markets in the country,” McCormack said. “We’re a simple state agency, and we don’t have that kind of money. ... San Francisco is just unaffordable to us.”

Instead of conducting business from offices on King Street not far from AT&T Park, the agency will have its offices in 17,000 square feet of space on two floors near Lake Merritt.

The California Institute for Regenerative Medicine was created by voters in 2004 with the passage of Proposition 71, an initiative that provided $3 billion in bond funding for stem cell research. No research is done in its headquarters. It is where the agency considers grant requests for stem cell research to find cures for such conditions as neurological disorders, blindness, spinal cord injuries, and other chronic conditions and doles out funding, primarily to academic institutions.

At the time, there were high hopes for relatively quick medical advances, and several cities in the state vied to become the stem cell capital of California.

Incentives package

San Francisco was chosen over runner-up San Diego after then-Mayor Gavin Newsom offered a $17 million package that included its current headquarters at the edge of UCSF’s Mission Bay. San Francisco was struggling to regain its economic footing after the dot-com bubble burst, and the selection was considered a sign of resurgence.

McCormack described the 10-year, rent-free arrangement as an “amazing” deal, but with the lease coming to an end, agency officials began looking for a new home more than a year ago. Oakland won out, he said, over such potential alternatives as South San Francisco and Emeryville because of its relative affordability and proximity to public transit.

The agency and its nearly 60 employees will move in October into the 16th and part of the 15th floors of a 27-floor building at 1999 Harrison St., McCormack said. The terms of the leases are five years for the 16th floor and three years for the 15th floor, with the option to extend the shorter-term lease if needed.

Mark Sawicki, Oakland’s director of economic and workforce development, said he welcomes the agency to the neighborhood.

“There’s so much to offer in Oakland,” he said. “The downtown is really hopping ... and there’s a green biotech corridor in the East Bay as well.”

Oakland also has a large health care sector that includes Kaiser Permanente’s headquarters and several major hospitals, Sawicki said. “It’s a good synergy there,” he said.

Meanwhile, Todd Rufo, director of the San Francisco Office of Economic and Workforce Development, said the city has built a strong scientific and medical sector over the past decade that doesn’t depend on any one organization, but involves more than 230 life-science companies, nine biotech incubators and other firms and institutions.

“While we’re disappointed to see them go, the San Francisco biotech sector has never been stronger,” said Rufo said.

“They’re wonderful and do amazing work,” he said of the stem cell agency. “We know that their good work, their investments and type of research will continue.”

Commitment questioned

Jeff Sheehy, a San Francisco AIDS advocate who serves on the agency’s governing board, said he was sad to see the institute, known as CIRM, leave San Francisco.

“It’s seemed like CIRM was a big symbol of a major commitment by the city to develop the health care industry and the biotech industry,” he said. “A lot of folks are having to leave the city these days. The question I have is, how important is biotech to the city?”

The agency has received some criticism because cures have been slow to come.

CIRM officials, however, say the agency is under new leadership and a dozen projects are now approved for clinical trials, a sign the institute is moving more quickly from the lab to human treatments.

“We’re going to be measured by our accomplishments,” Sheehy said. “If we fund cures, more power to Oakland.”

Victoria Colliver is a San Francisco Chronicle staff writer. E-mail: vcolliver@sfchronicle.com

Twitter: @vcolliver