Fordyce lists three strategies being used today to compete in this market. One: don't mess around. Get your space leased today. Two: design creative lease structures, using free rent, lower rent in the first part of the lease term and tenant improvements. Three: market the property at what was underwritten in the year 2000 purchase of the asset using the financial hurdles from the underwriting.

"The first two strategies are working to varying degrees currently and the third is not," Fordyce says. "Tenants are in an enviable position today to take advantage of this marketplace. This is an excellent time for them to secure long-term leases in submarkets of choice to drive their businesses."

Another broker at the conference pinpointed three keys to biotechnology companies relocating in particular areas, saying that landlords would need to make significant tenant improvements to current R&D facilities to attract these companies.

Broker Rob Shannon says that the companies look at the proximity to research universities, the proximity to a scientific labor base after the incubation period, and the ability to cluster with other biotech companies. "It is a very thin tenant segment and location barriers still exist in Silicon Valley," Shannon adds. "However, lenders are growing more comfortable with this industry and appropriate underwriting criteria. Add to that the clustering factor and some landlords will be able to do very well in the biotech industry."

Broker Tom Loeswick commented that 2001 saw $817 million in investment activity in Silicon Valley, down from more than $2 billion in 2000 and $1.8 billion in 1999. "We are continuing to see strong interest for stabilized assets with profitable tenants," says Loeswick. "However, considering the start-up nature of many of the Valley's tenants and the current vacancy rates, we expect that there will be few opportunities that meet this demand."