Changes for Biotech in the Next Decade

Schoneman: “Over the past eight years, San Diego’s life-science landlords have placed a large emphasis on building R&D facilities that help to foster increased collaboration and innovation. They have done so by creating newly modernized and amenity-rich research environments that create meeting and collision points for the local life science community to further engage with one another.”

SAN DIEGO—The trend to reshape San Diego’s real estate and use it to spur on future scientific innovation will continue to grow during the next five to 10 years, JLL VP Grant Schoneman tells GlobeSt.com. The firm’s recently released report on the life-sciences sector here revealed that after a strong 2014 that saw record leasing activity and healthy rent growth, 2015 continued to build on the momentum from the prior year with 1.7 million square feet of gross leasing activity, a 31%-increase from the five-year annual average. Transactions for new build-to-suit facilities have reached rents in the mid-$4-per square-foot NNN range, a 10% to 15% increase from the end of 2014. Likewise, rates for second-generation class-A lab space have increased. Starting rents for deals signed at the end of 2015 ranged from the mid $3 to low $4 per square foot NNN, an increase of approximately 10% during the year.

Over the past 12 months, more than 800,000 square feet of office buildings have been acquired by life-science landlords, who are actively repositioning these assets into new class-A wet-lab facilities. To date, approximately half of this new inventory has already been leased. Also, San Diego biotech companies secured $149 million in venture-capital funding among 11 deals—a 24% decrease from the prior quarter, but a 172% increase from Q4 2014. San Diego trailed only San Francisco and Boston/Cambridge in terms of venture capital invested into biotech during Q4 2015.