Today, the industry has matured and has become a majorcontributor to US and global economies while generating substantialcash flows for investors. Funding for R&D has increased, andwhile the cost of product development has not decreased, manycompanies are now stable enough to cover their financialburdens.

The Bay Area is also home to the venture capital industry--whichhelps provide many start-up firms much needed seed money. Theregion has three primary biotech submarkets: San Francisco, SouthSan Francisco and East Bay/Oakland.

The San Francisco life sciences market has roughly 30 million sfof inventory with a sub 7% vacancy rate. It is clearly one of thelargest clusters of life sciences real estate in the US. Thevacancy rate is low, and developers have new construction projectsunderway to cater to large space needs. The existing vacant spacesare typically small, to house the hundreds of start-up companies inthe area. Existing large users will typically take advantage ofbuild-to-suit opportunities for new requirements; an example ofthis is Gilead's recent expansion in Foster City, CA. Absorptionactivity in the market has been robust, and continued strong tenantdemand is anticipated in the short term.