SAN DIEGO—Life-sciences firms continue to provide San Diego with some of its most-dynamic leasing, investment and development activity, according to a Q2 office report from Savills Studley. But what is causing this sector to thrive?

According to Michael Labelle, SVP and branch manager of Savills Studley's San Diego office, the unique cluster of research institutions in the market has a lot to do with it. “The synergy among research institutions such as Scripps, local universities (UCSD) and entrepreneurs is surpassed only by San Francisco and Cambridge,” Labelle tells GlobeSt.com exclusively. “Startups and more-established life-sciences and biotech firms—as well as investors—continue to look to these areas first for talent, expertise and investment opportunities. “

Labelle adds that IPO volume in San Diego totaled just $400 million in 2014—all in the biotech sector. “While frenetic R&D and funding activity keep demand for space in Torrey Pines and the surrounding areas brisk, it only indirectly supports leasing of traditional office space, which still relies on the banking, legal and professional/business-services firms.”

According to Savills Studley's report, traditional office space users are still proceeding cautiously and continue to pursue value plays in the class-B sector as they encounter elevated rents. Overall asking rent of $2.53 per square foot per month rose by 2.4% from the first quarter and has jumped by 5.4% from a year ago. Class-A rent, which is at $2.96 per square foot per month, posted more-moderate increases of 1% for the quarter and 3.6% for the year.

The report also reveals that quarterly leasing approached 2 million square feet, exceeding the market's long-term average of 1.8 million square feet and a big jump from the weak first quarter. A diverse mix of tenants, ranging from biotech and software to communications and defense contractors, signed deals during the quarter.