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Canadian Company Buys SD Life Science Properties for $464M

The Canadian-based Oxford Properties Group has entered the San Diego life science market in a big way, buying 13 buildings for $464 million with plans to buy more.

Totaling 650,000 square feet, the buildings are in Sorrento Mesa and Sorrento Valley.

“The scale of 650,000 square feet doesn’t occur very often. It fits very well with our program to get scale in the San Diego market, which fit in well with our overall life science push to be in several of these top tier markets across the country,” said Tycho Suter, vice president of investments for Oxford Properties.

“San Diego is, by all accounts, the third most important life science market in the U.S. and you could argue globally,” Sutter said.

 

Founded in 1960, Oxford Properties Group is owned by Ontario Municipal Employees Retirement System (OMERS), the Canadian pension plan for Ontario’s city workers.

Innovative

Most of the San Diego buildings that Oxford bought are leased, but Suter said that the company plans to renovate the buildings as leases expire.

“Some of the buildings are longer term leases than other. There’s a good chunk that have leases that mature next year,” Suter said. “We do plan to upgrade, to refresh the spaces aesthetically as well as the lab infrastructure within the buildings.”

In addition to the 13 buildings, Suter said that Oxford acquired land in that will be developed for life science. He declined to give details but said that they would be forthcoming later this year or next year.

“The San Diego life science market is supported by a strong STEM presence, a highly skilled labor force as well as world-renowned research and academic institutions,” Suter said. “Together, it creates a highly innovative ecosystem that captures research funding, venture capital and business growth to the region.”

Suter said that Oxford has projects in the San Francisco Bay area, Seattle and Vancouver, Canada, but this is the company’s first project in San Diego County.

Investing $2B in Past Year

Oxford began investing in life science projects in 2017 and Suter said that life science has been “a key focus for us for a number of years.”

In the past 12 months, Oxford has spent more than $2 billion acquiring life science projects across North America.

“Our team continues to create sustained, yet targeted growth against one of our highest conviction global investment strategies to build a dedicated life science business of scale,” said Chad Remis, Oxford executive vice president for North America.

Remis said that the acquisition of the San Diego buildings “adds high-quality, income-producing assets to our growing portfolio and perfectly complements the beginning of our development pipeline in San Diego.”

“Life science portfolios of this size rarely trade, so it presents a unique opportunity to add immediate scale in a globally significant life science market that is characterized by high barriers to entry,” Remis said.

About 60% of the space in the San Diego buildings is leased for life science with the remainder used for general offices, according to Oxford.

Oxford’s entry into the San Diego life science market comes as the county closed a record year of investments in life science, with companies scrambling to find space and building owners rushing to convert general office space to fit life science tenants.

According to the commercial real estate brokerage CBRE, there were 19 conversion projects underway in San Diego at the close of 2021 totaling 1.6 million square feet and eight new life science projects under construction totaling 3.2 million square feet, 27% of which had been preleased.

CBRE also reported that the vacancy rate for life science space in Torrey Pines ended the year at zero, leading to a rush for life science companies to find space elsewhere in Sorrento Mesa and Sorrento Valley.

The vacancy rate for life science space in Sorrento Mesa ended the year at 5.8% and the vacancy rate in Sorrento Valley finished 2021 at 3.9%.

Oxford Properties Group

Founded: 1960

Headquarters: Toronto

President: Michael Turner

Business: property investment

Employees: 2,000+

Website: www.oxfordproperties.com

Contact: 1-416-865-8300

Notable: Oxford is owned by the Canadian pension plan for Ontario’s city workers.

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