One of the area’s most active real estate investors has acquired the shuttered Affymetrix manufacturing plant in West Sacramento and is negotiating to lease it to one or more companies in the life sciences field.
Ethan Conrad, who has been on a commercial property-buying spree for the past several years, said Wednesday he closed on the state-of-the-art, 165,000-square-foot complex at the end of the year – one of five December deals completed by his firm, Ethan Conrad Properties.
The building, at 890 Embarcadero Drive, was abandoned in 2009 as part of a consolidation move by Affymetrix. The Santa Clara-based biotech firm spent almost $60 million outfitting the facility with clean rooms, R&D space, conditioned warehouses and offices.
Conrad said he got it for under $6 million from a company eager to unload it before the end of the year.
“It’s kind of mind-boggling,” he said of buying the building for little more than 10 percent of its cost despite improving conditions in the local commercial real estate market.
“This could be a phenomenal home run if we find the right user,” he said. The company is talking with three firms – one in Chicago, another from Southern California and the other a foreign company – that are interested in leasing parts or all of the building for operations that could employ “500 to 700” people, said Scott Kingston, a Conrad Properties vice president.
“They’re all in the medical, life sciences, bio categories” that require high-tech facilities, Kingston said.
He added that the prospective users are attracted by a building “like no other” in the area, with specialized amenities that Affymetrix used to produce DNA-coated wafers for analysis of blood and tissue samples. But, he said, “they view not only the real estate as a good deal but (also believe) the cost of doing business is lower here than in other markets like San Francisco.“
Even if no lease deal is done immediately, Kingston said the building is a “calling card” property that could be used by the Sacramento Area Commerce and Trade Organization, among others, to lure new employers to the region and fuel efforts to make this area a national life sciences hub.
West Sacramento Mayor Christopher Cabaldon said Wednesday he was not aware of specific plans for the site but said life sciences “is an important sector for the city and the I-80 corridor” and that the city has placed “a high priority on replacing Affymetrix with a company” in the same emerging industry.
Conrad, a 47-year-old, one-time real estate broker, has emerged as one of the Sacramento area’s most active bargain hunters, acquiring 76 properties since making his first acquisition here in 1995 and founding his company in 2000. Among his higher-profile purchases: the former Breuners building off of Interstate 80, the Plaza de Oro shopping center in Rancho Cordova and the former Zokku Lounge in downtown Sacramento.
Thirty-six of his purchases have come in the past three years and 16 were made in 2012, including five in end-of-the-year deals, according to company reports.
Among the December deals was the purchase, for less than $1.5 million, of a 35,000-square-foot complex on Ethan Way, next to the Century Stadium 14 theaters. Conrad said his firm will be seeking a radio station to take studio space there that was once occupied by KFBK and Y92, and a financial institution to move into space soon being vacated by US Bank.
Conrad Properties also purchased three never-occupied office buildings – ranging from 5,400 to 6,100 square feet – on Del Paso Road in the Natomas area for $1.3 million. His plan is to offer them for sale to owner-users in a market where “all of a sudden there’s not a lot of competing product.”
“They’re beautiful new buildings, but they all went back to (Bank of America),” which sold the note to Conrad, who in return released the former owner from his obligations under a deed in lieu arrangement, Kingston said.
Conrad’s method of operation has been to acquire a variety of troubled office, retail and industrial properties at deep discounts, then fix them up and lease them for good returns.
“We buy properties where there’s a fair amount of vacancy, then come in and give them some love,” Conrad said. “We make them look good, inside and out, and add value. It’s a fun process.”