Warner Bonner ’97 (BBA)

SBA Real Estate Alum Seizes Green Real Estate Opportunities

Warner Bonner ’97 (BBA) As a member of USD’s men’s nationally ranked crew team and the U.S. Pre-Elite Rowing Team, School of Business Administration alum Warner Bonner used to dream of Olympic Gold. As a principal at a biotech real estate development firm in San Diego, Bonner now dreams of being awarded gold of a different kind: Gold LEED certification from the U.S. Green Building Council.

Such designations are becoming increasingly important at Phase 3 Properties, where Bonner has focused on biotech development and management projects since he joined the company, founded by CEO Neil Fox, in 2001. Given that the projects Phase 3 is taking on these days involve federally subsidized development plans for universities, research institutions and nonprofits, most are required to be sustainable, as judged by the Leadership in Energy and Environmental Design (LEED) Green Building Rating System.

“We’re on the frontline of putting green technology into play,” says Bonner.

Along with his partners at Phase 3, Bonner is currently involved with four green development projects:

  • Pacific Station—An eco-friendly mixed-use site in Encinitas, which incorporates solar panel systems in the form of roof shingles. This project is fully under construction and is anticipated to receive LEED certification;
  • The New York Science Center—The $350 million conversion of a 500,000 square foot industrial armory that will use heat recapturing, natural ventilation and co-generation systems. The ribbon-cutting ceremony for this LEED Gold Certified project takes place November of 2008;
  • The Asia Pacific Research Center—A 450,000 square foot, $300 million, LEED Platinum development that intakes deep frigid seawater as the source for a green HVAC system; and
  • Georgia State Research Park—A 300,000 square-foot, $150 to $200 million urban bio-tech research tower that is in the pre-development stage.

The level of science that goes into such business deals has provided Bonner with on-the-job educational opportunities he never imagined.

“I graduated from USD with a 3.0, and I had to work hard for that 3.0,” he says. “Now, I’m dealing with the brightest minds in the world—brilliant scientists working on a cure for cancer and AIDS. It’s opened up a whole new world for me.”

It’s also dramatically changed his view of what “quality” development is.

“When I got into real estate, green technologies were not what I was focused on,” says Bonner, who graduated from USD in 1997 with a bachelor’s degree in business administration and an emphasis in real estate. “I was thinking real estate: do well, make money.” Now, environmental considerations are at the forefront. “There is a responsibility back to society,” he says.

The challenge, Bonner says, is balancing the social responsibility with the financial. “These deals don’t typically pencil initially,” he says. “Biotech companies burn through capital, making them tough to finance. The hard costs can run up as high as $1,700 a square foot to build. It makes the Bellagio look cheap.”

To close the gap, Phase 3 relies on sources such as state tobacco settlement funds, New Markets Tax Credits (NMTC), and other subsidy programs, which provide businesses incentives to develop research space in emerging markets.

The processes involved in such government-linked funding are intricate and seemingly infinite at times, not to mention fraught with risk. Says Bonner: “A lot of times, we’re just a little over our skis.”

The lesson, he says, is clear.

“If you start acting like a ‘bling bling’ developer, you’re in trouble. You’ve got to stay humble in this business. Pride cometh before the fall.”