New California Transplant Adds Fuel To Slow-Burning Texas Life Sciences Fire

Companies from telecoms to Tesla have moved from California to Texas or set up a new office in the Lone Star State in recent years. One of the nation’s largest lab operators and developers says life sciences may not be far behind. 

Alexandria Real Estate Equities Chairman Joel Marcus said he sees the newly opened Alexandria Center for Advanced Technologies at The Woodlands, outside of Houston, as an attempt to build up a subcluster for commercial life sciences. Alexandria will also invest via its seed capital platform in company creation, in effect creating demand for its new supply of lab space.

Nurix Therapeutics, a publicly traded life sciences firm based in the Mission Bay neighborhood of San Francisco, is the latest transplant. The company will open a headquarters in Alexandria's Woodlands project, suggesting the possibility of more movement between coastal life sciences hubs and Texas markets. Nurix is leasing 46K SF in the 123K SF first building on the newly opened campus, which has space for five total buildings. 

“Firms like us would run a similar equation and probably come up with something similar, I would guess,” said Arthur Sands, president and CEO of Nurix. “It's also, needless to say, a very business-friendly environment. I think we're not alone in terms of other companies that have moved from California to Texas.”

Sands said the economics of moving his firm from San Francisco to Houston were clear: fewer regulations, lower cost of living, more affordable real estate. Since the cost of operations in Texas is lower, firms can get more for their investment dollars, allowing them to focus their money on drug discovery, not capital expenses. 

The 300-employee firm, which focuses on targeted protein modulation and went public in 2020, has expanded rapidly, with three drugs in clinical trials for oncology. Leadership evaluated other sites, but The Woodlands won out. Nurix already has employees who have moved, and Sands said there is a tremendous talent pool from the Texas Medical Center.

“There’s a misperception that there isn’t a big talent pool here,” Sands said. “It’s an attractive location for recruiting.”

Recent months have seen substantial life sciences development news coming out of Texas markets. Dallas landed an Advanced Research Projects Agency for Health facility, Plano is on the verge of approving a massive life sciences-focused redevelopment plan, and progress continues in Houston with development of lab space around the medical center.

Texas markets still have runway for progress, Marcus said. He told Bisnow last November that Austin, where Alexandria purchased a 3.8-acre tract downtown for $108M, offered an opportunity “over the next decade” and that tenants in the REIT’s California markets were inquiring about the potential to move into Alexandria buildings in Texas.

Marcus compared the development of Houston to Alexandria's early investments in New York City, attempting to solve one of the four ingredients needed to build a subcluster: world-class location, scientific and management talent, great science, and technology and risk capital. He said the Houston market lacks risk capital, translational research and scientific capability to seed new startups. Texas markets, for the most part, are “embryonic.”

“There’s literally no life science venture capital in any of the major cities in Texas,” Marcus said. “So that's kind of what we have to do. And we hope to recruit others, co-investing with us, working with us and ultimately spending time and maybe moving and setting up offices around The Woodlands. So that's kind of the game plan.” 

Developing a new center of gravity in The Woodlands makes sense, Marcus said. He didn’t develop near the Texas Medical Center, an area just south of Downtown Houston seeing significant lab real estate activity due to the multibillion-dollar TM3 project, because it is a center of institutional and academic medicine. He said it is imperative to create a nexus for more entrepreneurial activity near a live-work-play center.