The dream of making downtown San Diego a center for life science companies got a boost with Novoron Bioscience leasing 7,432 square feet of space in Genesis-San Diego, a 200,000-square-foot office building that was renovated to accommodate life science companies.
Executive Vice President
Phase 3 Real Estate Partners
“To some degree, it is a proof of concept,” said BJ Van Aken, executive vice president and head of portfolio operations for Phase 3 Real Estate Partners.
Phase 3 Real Estate Partners, in partnership with Barings and Bain Capital Real Estate, completed the renovation in late 2022. The eight-story building at 1155 Island Ave. is the former home of Thomas Jefferson School of Law.
Novoron is the third life science company to lease space in Genesis. Native Microbials is leasing 27,000 square feet, and Excellos is leasing 36,000 square feet, Van Aken said, adding that the building is about 40% leased.
As encouraging as those leases may be, Van Aken said that “We’ve got a long way to go for downtown to be anywhere near on a par with the central markets.”
At the very least, the three leases “brings us confidence that the building will continue to do well,” he added.
Senior Associate
JLL Life Science Group
Taylor DeBerry, a senior associate in JLL’s Life Science Group, said that the apparent success of Genesis “bodes well for the future potential” for other downtown projects, including the redevelopment of the former Horton Plaza and IQHQ’s Research and Development District (RaDD) under construction on the downtown waterfront.
“What it really means for the market downtown is that the lab users are willing to go downtown,” DeBerry said. “In the grand scheme of things, despite being in a subdued market where the overall tenant activity is not as robust as it was in 2021, the fact that we’re still getting leases done in this emerging market downtown speaks to the viability of downtown.”
Compared to Torrey Pines, UTC and Sorrento Valley – the traditional life science centers in San Diego – Van Aken said that downtown “can provide a higher quality asset at a somewhat discounted price.”
Improving Market
Built on speculation, Genesis was attractive to Novoron because the company needed space quickly, Van Aken said. The company will use Genesis labs to continue developing a lipoprotein drug aimed at repairing damage to the brain and degeneration of the brain and spinal cord, and to treat neurological conditions such as multiple sclerosis and Alzheimer’s disease.
Van Aken said that the former law school building that became Genesis was well suited for conversion to life science with its high ceilings and floors built to withstand more weight than an office building has normally.
“The process of converting it, I would say, was in some ways easier because the (building) shell was a little bit more aligned with what you might want,” Van Aken said. “In other ways, it was a little more challenging building in an urban environment.”
With a portfolio of 4.5 million square feet, Van Aken said that Phase 3 Real Estate Partners focuses on companies like Novoron that need to move quickly and “need to be in the spade tomorrow and can’t wait nine or 12 months for a build-out.”
Despite a slowdown in life science real estate leasing, De Berry said that the market is improving.
“We’re starting to see more dollars come into the industry now, we’re starting to see demand pick up,” DeBerry said. “In the ensuing six months, we don’t have a crystal ball, but given the fundamentals, given all the dry capital that the venture capitalists have, we just anticipate it’s going to get better.”
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
