Biotech buildings
Aerial view of the Sorrento Valley biotech buildings acquired by Oxford Properties Group in 2022. Photo credit: Courtesy of the company

San Diego is the third largest biotech cluster in the U.S. and has become a top focus for real estate investors, who hold a substantial slice of the market, according to a new report.

Institutional investors are estimated to own 44% of existing life science lab and office space in the region, and one, IQHQ, a private real estate investment trust in Solana Beach, owns 21 such properties.

Phase 3 RE Partners, a San Diego developer, is also considered a player in the market. according to a mid-year overview of the national life science sector by Newmark, a commercial real estate firm based in New York.

Here’s a breakdown of the hot areas in the San Diego market, with a total of nearly 21.3 square feet of research and development and laboratory space available:

  • Sorrento Mesa – almost 6.9 million square feet of space with a 5.7% vacancy rate.
  • Sorrento Valley – 1.5 million square feet of space with a vacancy rate of 2.6%.
  • Torrey Pines – 5.5 million square feet of space with the lowest vacancy rate in the region, 1.3%.
  • UTC – 4 million square feet of space with a 2.6% vacancy rate.

As lease rates continue to rise – the highest, according to the Newmark report, are in Torrey Pines and UTC – nearby submarkets such as Del Mar Heights have started to emerge as candidates for new life science clusters.

Those submarkets collectively offer 3.35 million square feet of space. More than 11 million square feet of additional space is proposed, half in Sorrento Mesa.

The growth has been further stoked as expanding biotech firms seek larger blocks of space outside the region’s traditional life science hubs. Tenants regarded to be in expansion mode include Eurofins, Cibus, Debut Bio, LocanoBio, InvivoScribe and SmartLabs.

Overall, Newmark analysts placed the sales volume in the last 12 months for San Diego lab and R&D space at $3.4 billion.

San Diego trails only Boston and San Francisco as the top life-science clusters nationally. The trio continue to be the epicenter of leasing and capital markets activity.

Combined, these four markets make up over 93 million square feet of laboratory and related space with a future construction and renovation pipeline of 33.2 million square feet.

To compare, over past 12 months, sales volume in Boston and the Bay Area exceeded $5 billion.



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Ellen Bullock