Sorrento Mesa is gaining attention when it comes to attracting life science companies.
Most recently, Voit Real Estate Services had three Sorrento Mesa deals go through totaling $17 million centering on the expansion and relocation of Eton Bioscience.
Another life science firm, AnaptysBio, Inc. signed a lease to take 45,057 square feet of space in a recently renovated Sorrento Mesa office building. The company will use the space for its corporate headquarters and research and development work.
That flurry of activity comes at the same time that Longfellow Real Estate Partners based in Boston bought a three-building office campus in Sorrento Mesa for $39 million with plans to convert the buildings into lab and office space for the life sciences.
Companies are drawn to Sorrento Mesa in part because rents are lower than in the traditional life science submarkets of Torrey Pines, Sorrento Valley and UTC and because space is not as tight in Sorrento Mesa, said Grant Schoneman, a managing director of the commercial real estate brokerage JLL in San Diego.
“There’s a good supply of renovations coming available in the second half of 2020, new lab space in amenitized campuses,” Schoneman said.
Rents in Sorrento Mesa also are running in the low-to-mid-$4 a square foot compared to the low to mid-$5 per square foot in Torrey Pines.
“Companies can go in and secure new office space but at a lower price point than Torrey Pines or UTC,” Schoneman said.
Because of newly redeveloped property becoming available, “I think you’ll see demand continue to be sustained throughout the year. I think what you’ll see is rents will remain relatively flat through the second half of the year in that submarket,” Schoneman said.
Schoneman and Chad Urie of JLL represented the Wateridge Property Owner in the lease of space at 10770 Wateridge Circle to AnaptysBio.
Wateridge Property Owner, a joint venture of Harrison Street and BioScience Properties, owns the building. BioScience last year spent about $20 million renovating the 180,000 square-foot building in late 2019.
About 60 percent of the building was preleased to Maravai Life Sciences before the renovation was completed. About 16,500 square feet remains to be leased, Schoneman said.
The deals by Voit Real Estate Services are testaments to the resiliency of the life science industry even during a disruptive pandemic, said Chris Duncan, company vice president.
“They’re an industry that weathered the storm, probably as well as any other than ecommerce,” Duncan said. “They’ve remained an essential business throughout the pandemic since day one. They never really had to deal with the full shutdown.”
In the most recent instance, Eton Bioscience sold four office/lab condominium units it owned in Sorrento Mesa at 5820 Oberlin Drive for a combined price of nearly $3.6 million.
The buyers, represented by Voit, were Axis Pharm and American Testing Labs.
“Eton Bioscience was looking to sell their current lab/office space and expand into a new location that would better fit the growing company’s needs,” Duncan said.
After selling its condo units, Eton bought a two-story, 211,278 square-foot building at 10179 Huennekens St. in Sorrento Mesa for $5.3 million from Pangea Properties, LLC.
Duncan represented Eton in the Huennekens Street sale and Brant Aberg and Ryan Downing of Cushman & Wakefield represented Pangea Properties.
Converting Office Space
In an unrelated deal brokered by Voit Real Estate Services in Sorrento Mesa, BPS Bioscience bought a 37,991 square-foot building at 6405 Mira Mesa Blvd. for $8.5 million from Courtyard II Holdings, LLC.
BPS Bioscience plans to convert the two-story building into lab space, said Duncan, who represented BPS.
Matt Pourcho and Scott Kincaid of CBRE represented Courtyard Holdings II.
Duncan said demand for space in Sorrento Valley that can be converted for use by life science companies has been intense.
“For life science, you’re just seeing a big influx,” Duncan said. “A lot of these buildings in the 25,000 to 50,000 square-foot range, what you’re finding now is investors are coming in and buying these buildings to reposition them and attract life science companies.”
Longfellow Real Estate Partners is among them.
The company is in the process of redeveloping 17 Sorrento Valley buildings in 2018 and 2019 into a single life science campus and in May expanded its presence in San Diego County to Sorrento Mesa, acquiring the 93,483 square-foot Sorrento Tech campus from BLT Enterprises.
Apart from Sorrento Mesa, Schoneman of JLL said demand for life science space throughout San Diego has been strong despite the COVID-19 pandemic.
Schoneman said that few of the clients that he’s working with have put their search on hold because of the pandemic.
“The life science market has continued to be good,” Schoneman said.