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Monday, Jun 24, 2024

Del Mar Office Building Transformed for Life Science Labs

REAL ESTATE: Genesis-Del Mar to Serve Biotech Startup Community

An 86,000 -square-foot Del Mar office building has been renovated as lab space for startup and small life science companies by the same company that converted a former downtown San Diego law school into life science labs.

Phase 3 Real Estate Partners repositioned the 86,000-square-foot building, which it is calling Genesis-Del Mar, and has already signed leases for about half the space, said BJ Van Aken, executive vice president of Phase 3.

The project is targeting start-up and small biotech companies looking to grow – a market that Van Aken said has been largely underserved with most life science projects aimed at bigger companies who need more room.

BJ Van Aken
Executive Vice President
Phase 3 Real Estate Partners

“We’re ready to serve small and growing companies, lab and early-stage research companies that are coming out of small incubator space or academia and don’t need a larger, long-term space, but need a landing spot for a couple of years to advance their science to a point that it’s fundable,” Van Aken said.

Phase 3 Real Estate Partners previously renovated a 200,000-square-foot building in downtown San Diego at 1155 Island Ave. that had been home to Thomas Jefferson School of Law, which it renamed Genesis-San Diego.

Van Aken declined to say what the Del Mar renovations cost but said that the firm bought the building in August 2021 for $34,750,000.

JB Pacific, based in Sorrento Valley, was the general contractor on Genesis-Del Mar and HGA, based in Minnesota, was the architect.

Meeting a Specific Need

Rather than serving one or two large tenants, Genesis-Del Mar has labs ranging from 4,000 square feet to 12,000 square feet and is meant to serve a dozen tenants, Van Aken said.

“Most would look at an 80,000-square-foot building and say, ‘We can build four 20,000-square-foot suites or land one or two tenants,” Van Aken said. “We made the commitment to focus a lot of energy and effort and focus to say, ‘We see an 80,000-square-foot building serving 12 different companies. We made the commitment and I think we have been rewarded with a nice response from the market.”

Maxwell Therapeutics, Inc., a company that focuses on the discovery and development of antibody and protein-based drugs in multiple therapeutic areas, has leased 6,722 square feet in the building.

Tristen Schneider and John Hundley of Kidder Mathews represented Maxwell in the deal.

Genece Health, a company that combines artificial intelligence with whole genome sequencing for early detection of cancer from blood samples, signed a lease for 5,152 square feet.

Lygos, Inc., a sustainable specialty chemicals company, leased 4,511 square feet.

Shane Poppen of Hughes Marino represented Genece and Lygos.

Chad Urie, Grant Schoneman and Taylor DeBerry of JLL represented Phase 3 Real Estate Partners.

When Phase 3 Real Estate Partners bought the building, it had small offices, Van Aken said.

“We found this building, both from a location standpoint, to be really attractive, but also from a layout and size,” Van Aken said.

The renovation entailed pretty much gutting the interior.

“If you walked through the interior now, compared to what it was when we acquired it, you wouldn’t recognize it,” Van Aken said.

“We even built some of the exterior walls to really make great lab modules,” Van Aken said.

Eight of the 12 Genesis-Del Mar labs and accompanying office space come furnished, ready for companies to move in and immediately start work.

“A company can really sign a lease, take the keys, and be in the space the next day,” Van Aken said.

The remaining four suites are built as spec labs with some space left to be customized to fit a tenant’s specialized needs.

Genesis-Del Mar comes to market at a time when overall venture capital investor interest in life science has waned since the heady days of 2021 and 2022.

At the end of the second quarter of 2023, the overall vacancy rate for lab space countywide rose to 8.2%, up from less than 6% in 2022, according to Marcus & Millichap.

The brokerage reported that venture capital investment in the third quarter was 82% higher than it was in the first quarter, totaling nearly $641 million, but still 37% below what it was a year ago. “While it (venture capital investment) has been largely subdued, we are seeing green shoots in the venture capital world,” said DeBerry of JLL. “What we’re anticipating is a much healthier end of the year 2023, then a much healthier 2024.”

DeBerry said that Genesis-Del Mar has drawn considerable interest because it “fits a specific need in providing turnkey space for early-stage companies.”

Phase 3 Real Estate Partners

Founded: 2000
Headquarters: La Jolla
CEO: W. Neil Fox
Business: Real estate development
Employees: 26
Website:  www.p3re.com
Contact: 858-546-0888
Notable: Phase 3’s portfolio includes nearly 4.5 million square feet in San Diego, San Francisco, and Boston


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