Clarion Partners Fund Buys Life Science Property in San Diego
The acquisition marks the firm’s entry into the San Diego market, which is one of the top life science hubs in the country.
Clarion Partners Real Estate Income Fund has entered the San Diego market with the acquisition of Fusion Life Science HQ, a 121,541-square-foot creative office and research and development property in Carlsbad. The property is fully leased to Alphatec Spine.
The class-A property features a landlord-owned solar panel roof system and ample parking, along with a fitness center, electric vehicle chargers, fire pits, bocce ball and basketball courts, putting green, barbeque station and outdoor meeting amphitheater. It is located the 5 freeway and the 15 freeway, and it is directly adjacent to the McClellan-Palomar Airport in the North County submarket.
The acquisition marks CPREIF’s foray into San Diego, which is one of the top three life science hubs in the country and has experienced significant growth in the last year. According to research from JLL, demand for laboratory space increased 34% last year from 2020 with more than 1 million square feet of leasing activity in both the third and fourth quarter, according to the fourth quarter report from JLL. In 2021, there were 139 life science leases completed in the San Diego market, representing a total of four million square feet, a 51% increase in transactions and an 80% increase in square footage from 2020. In the fourth quarter, life science leasing activity totaled 1.2 million square feet in 33 leases and representing nearly 75,000 square feet of absorption. It was the second consecutive quarter where leasing activity surpasses 1 million square feet. While leasing activity was down a nominal 3% quarter-over-quarter, it was up a staggering 155% year-over-year.
CPREIF Portfolio Manager Janet Souk said leasing activity in Carlsbad specifically “continues to explode,” crediting strong fundamentals and tenancy as the reason why the purchase of Fusion Life Science was an attractive investment opportunity.
Last year, the activity spurred several major life science transactions, but most notably, City Office REIT entered into definitive agreements to sell all of its life science holdings in the Sorrento Mesa submarket of San Diego for $576 million.