San Diego life science companies attracted more than $4.6 billion in venture capital investment during the 12 month period ending in April, according to the real estate brokerage
As of July, there was 3.3 million square feet of life science lab and office space under construction, including 1.6 million square feet of space being converted from general office and other uses, according to CBRE.
As of the end of June, CBRE was tracking a demand for 3.8 million square feet of space from life science companies, said Trevor O’Sullivan of CBRE’s life sciences office in San Diego.
That’s nearly three times the level of demand for the past five years, O’Sullivan said.
In submarkets such as Torrey Pines, which is the epicenter of San Diego’s life science market, the vacancy rate is running at about 1%.
“You’re running into issues where there’s no place to go,” O’Sullivan said.
Five years ago, life science property deals for more than 1,000 square feet were a rarity with about one a year, O’Sullivan said.
So far this year, there have been more than 11.
New construction includes five projects that are going up on speculation with nearly 25% of the space already leased, CBRE reported.
We’re Number Three
Cushman & Wakefield, a commercial real estate brokerage, reported that for the five quarters ending with the first quarter of 2021, San Diego, Boston, the San Francisco Bay area, New York City and New Jersey accounted for 74% of the venture capital raised nationally for life science companies.
San Diego continues to be ranked as the nation’s third largest life science center, according to Cushman & Wakefield and CBRE, but O’Sullivan of CBRE said the market is maturing.
“It’s been kind of the step-brother to San Francisco and has been historically thought of as a little brother market. What we’re starting to see is the maturation of San Diego,” O’Sullivan said. “The maturation of San Diego has been pretty remarkable. You’ve seen not only startups prosper in the San Diego life science market and push their products through commercialization and onto the commercial market, you’re also seeing the big pharma grow.”
It’s highly unlikely that San Diego will ever eclipse the Bay Area, O’Sullivan said, but the outlook is for continued growth.