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North County rides growing technology wave

When Idec Pharmaceuticals began shopping around for a place to build a large manufacturing plant back in 2000, the San Diego-based company considered various locales -- even Texas.

But the company decided to build their 1.3 million-square-foot plant on a 400-acre business park that's under construction in Oceanside. Now, the $400 million building is slated to begin rolling out its recently approved multiple sclerosis drug Tysabri in 2006, company officials say.

"I think one of the reasons Oceanside was chosen was because it was near San Diego -- a biotech hub," said company spokesman Jose Juves. "Certainly, being near a biotech hub is very important in terms of getting the employees one needs for these facilities."

Idec -- which merged with Biogen in 2003 to form Biogen Idec (Nasdaq: BIIB) -- is not the only biotech or high-tech company to set up shop in north San Diego County, and local officials are pushing hard to promote the region bordered by Del Mar and Poway to the south and Camp Pendleton and Riverside County to the north as a good place to do business.

North County has been experiencing a growth spurt for more than a decade. The area boasts seven of the 10 fastest growing cities in San Diego County -- Carlsbad, Encinitas, Escondido, Oceanside, Poway, San Marcos and Vista -- and 41 percent of new home sales in the county, according to The Meyers Group, a real estate research firm.

While the bulk of technology companies are located in the northern part of the city of San Diego, North County continues to grow as a hub for high paying tech jobs, according to a recent report by the San Diego Economic Development Corp.

According to a 1998 survey of more than 57,000 employees in biotech and high-tech companies, Carlsbad has the second highest concentration of biotech workers in the county (722) and the third highest number of communications, software and computer manufacturing jobs in the county (2,693).

A large number of the high-tech work force is also employed in San Marcos (1,031) and Escondido (933).

In 2004, the group surveyed 18,824 workers from 109 biotech and high-tech companies in the county and found that more than half those workers live outside La Jolla, Carmel Valley, Sorrento Valley and the other northern parts of San Diego's biotech hub. And of those, 16 percent reside in North County.

That fact lies at the heart of some of the efforts to recruit more biotech companies to the area, said Gary Knight, president of the San Diego North Economic Development Council.

Because North County continues to be an expensive place to live -- with median home prices ranging from just under the county average of $575,000 to well in the millions -- people who choose to live in North County had to make a certain income.

The median household income for coastal North County ranges from $56,285 in Oceanside to $95,889 in Solana Beach; and median incomes for folks living in inland areas range from $52,378 in Escondido to $87,059 in Poway, according to data compiled by the San Diego Association of Governments.

Retail and service-related businesses followed the growth into North County during the past decade, according to Knight, in order to serve the residents who return home and want to shop and eat near their homes.

"So, many of the businesses are locating around software, high-tech and biotech versus base manufacturing," Knight said.

And a lot of those people work in the biotech and high-tech industries, as evidenced by the gridlock on Interstates 5 and 15 between Oceanside and north San Diego's tech hub.

Efforts are being made to improve driving conditions. In early December, Congress approved $153 million for road and transit projects in San Diego County, such as a $55 million Sprinter commuter rail line that's under construction between Oceanside and Escondido.

Another $1.7 million will go toward rapid transit bus lanes and "reversible" managed lanes on Interstate 15, and $1.5 million is slated for improvement to Interstate 5 at the Sorrento Valley/Genesee Road interchange. Improvements are also earmarked for state Highways 78 and 76.

But if those traffic woes are ever really going to improve, Knight said people will have to live closer to their offices -- hence the need to attract more high-end companies to North County.

"We have to continue to create more jobs in our local area that fit our lifestyle, instead of driving down to San Diego," Knight said.

Biotechnology and other technology-related companies already have a firm foothold in North County. Invitrogen (Nasdaq: IVGN), Isis Pharmaceuticals (Nasdaq: ISIS) and ViaSat Inc. (Nasdaq: VSAT) are among the region's top employers. Some of the other large companies in North County are Anacomp Inc. and Cardiff Software Inc.

When Biogen Idec's manufacturing plant opens in 2006, the company plans to bring 575 manufacturing jobs to the area, Juves said. Construction began in early 2002 and the company plans to begin test production next year.

"We're really going to need that Oceanside facility to meet the demand that we expect for Tysabri," said Juves, speaking from the company's headquarters in Cambridge, Mass. "It's going to be a very important facility."

Biogen Idec will be housed within a 400-acre business and industrial park dubbed the Ocean Ranch Corporate Centre, which local officials hope will serve as an economic engine for the area's economy.

Other companies that have signed leases for buildings in Ocean Ranch include Cruzan/Monroe LLC -- which is planning a 520,000-square-foot industrial park called La Pacifica -- the Carlsbad-based golf giant Ashworth Inc. (Nasdaq: ASHW) -- which is building a 205,000-square-foot facility and Coca-Cola Bottling Co. (Nasdaq: COKE) -- which is building an 80,000-square-foot manufacturing plant.

Other tenants include One Source, Car Sound, Roger Mann Packaging and Magnaflow Performance Exhaust. At build-out, Ocean Ranch is expected to bring more than 4,000 jobs to the city.

Other developments are popping up elsewhere in North County, including the 140-acre Bressi Ranch development in Carlsbad, the 140-acre "Palomar Concourse" and an 80-acre development at the Carlsbad raceway.

Further inland, a 186-acre commercial park is under development in Escondido called the Escondido Research & Technology Center. Located west of Interstate 15 and south of Highway 78, the center is expected to bring about 4,000 jobs to the city.

Sempra Energy (NYSE: SRE) is building a 550-megawatt power plant at the center and Stone Brewing Co. -- San Diego County's largest brewery -- is building a $10 million brewing facility there.

But the days where North County can attract large, job-generating manufacturing plants are numbered. Given rising construction costs, high land values and the fact that large tracts of land have become a scarce commodity, the commercial real estate trend is leaning toward smaller buildings under 20,000 square feet, said Joe McDermott, a senior vice president and partner at Coldwell Banker Commercial in Carlsbad.

"We are a small tenant market for the most part," McDermott said. "The trend is for developers to build small buildings for sale."

Such buildings are above the century mark in price these days -- between $185 to $200 a foot in the 1,200-square-foot range and $75 to $85 for 2,000 square feet. Add rising construction costs and land values and it soon becomes cheaper to rent a building than to buy one.

"In the last four or five years, prices have doubled for small buildings," McDermott said. "If you approach a developer, he's going to say, 'I can't build buildings under 10,000 and make money.'"

That's where biotech and other technology companies come into play. McDermott, who also sits on the North County Economic Development Council's board, said developers who can attract high dollar companies such as those can get a return on their investment. Plus, it make sense to have those companies mingling with the existing manufacturing and retail sector and "feeding off" one another, he added.

"Developers can't manufacture demand," McDermott said. "They can only build what makes sense on land that's getting more expensive."

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