U.S. Life Sciences Property Report May 2024

Demand for U.S. Life Sciences Real Estate Strengthens in Q4

Economic Growth, Job Expansion, and Drug Development Drive Sector Optimism for 2025

The U.S. life sciences real estate market experienced positive net absorption in the fourth quarter of 2024, indicating a steady rebound despite a rise in vacancy rates due to new construction completions. According to CBRE’s latest quarterly report, the vacancy rate reached 19.7% as significant new lab spaces entered the market.

Leasing activity for lab spaces showed a strong uptick, totaling 3.4 million sq. ft. in Q4—an increase of 28% year-over-year. Net absorption reached 920,000 sq. ft., marking the third gain in the past five quarters. This steady demand is fueled by record-high employment in life sciences, multiple drug approvals, and a substantial 19% increase in venture capital funding, which totaled $30.4 billion in 2024.

Despite the heightened vacancy rate caused by pandemic-era construction projects, the pipeline of new developments is beginning to slow. At the end of Q4, 12.1 million sq. ft. of lab space was under construction—significantly down from peak levels in 2024, suggesting a more balanced supply-demand dynamic ahead.

San Diego and Key Market Trends

San Diego emerged as one of the top-performing life sciences markets in Q4, alongside the San Francisco Bay Area, with strong leasing activity and positive net absorption. Overall, 10 of the 13 largest U.S. life sciences markets posted gains, reflecting broad industry resilience.

2025 Market Outlook

Looking ahead, CBRE’s 2025 U.S. Life Sciences Outlook highlights key factors that will influence market performance this year. The report points to an improving economy, robust sector employment, and a more favorable investment climate as positive drivers for life sciences real estate.

However, challenges remain. Approximately 8 million sq. ft. of new lab space is projected for completion in 2025, which will likely contribute to increased vacancy rates, particularly in leading hubs like Boston, San Francisco, and San Diego. Despite these concerns, economic conditions and investment trends indicate a more stable environment for life sciences companies and real estate stakeholders.

“The life sciences sector operates on longer cycles than the real estate market due to the complexities of drug development and commercialization,” said Matt Gardner, CBRE’s Americas Life Sciences Leader. “That said, macroeconomic trends are pointing to improved conditions for life sciences real estate in 2025.”

As San Diego continues to be a key player in the life sciences industry, its strong fundamentals and sustained demand position it well for long-term growth. Market participants should closely monitor economic and investment trends to capitalize on opportunities in the evolving real estate landscape

3010 Science Park Rd, San Diego

Located in San Diego’s renowned Torrey Pines Science Park, 3010 Science Park Road is a state-of-the-art two-story facility designed to support cutting-edge scientific research and development. The building is currently leased by Singular Genomics Systems, Inc., a company specializing in innovative genomic technologies.

Key Features:

  • Comprehensive Renovation: The facility underwent a complete transformation, including the demolition of the existing building envelope, installation of a new curtain wall, and the addition of a striking connecting stairway. These enhancements have modernized the structure, creating a dynamic environment that embodies the future of genomic research.

  • Advanced Laboratory and Office Spaces: The interior features fully modernized office and laboratory spaces, designed to foster innovation and collaboration in genomic research. The facility also includes underground parking for added convenience.

  • Tenant Excellence: Singular Genomics Systems, Inc. is dedicated to advancing science and medicine through continuous and thoughtful genomic innovation. Their mission is to empower scientists to answer their most pressing questions, allowing them to forge a path of discovery without limits.

  • Strategic Location: Situated in the heart of San Diego’s Torrey Pines Science Park, the property offers proximity to a thriving life sciences community, fostering collaboration and innovation.

Experience a facility that combines modern design, advanced laboratory infrastructure, and a prime location at 3010 Science Park Road, supporting the forefront of genomic research and development.

10355 Science Center Dr, San Diego

Situated in San Diego’s prominent Torrey Pines submarket, 10355 Science Center Drive is a premier life sciences facility offering state-of-the-art laboratory and office spaces tailored for biotechnology and pharmaceutical research. The property is part of the Torrey Pines Science Center, a four-building campus that includes 3595 John Hopkins Court, 10410, 10450, and 10355 Science Center Drive.

Key Features:

  • Modern Laboratory Spaces: The facility offers advanced laboratory spaces designed to meet the needs of life sciences research, providing a conducive environment for scientific innovation.

  • Strategic Location: Located in the heart of the renowned Torrey Pines Market, the property is easily accessible from I-5, offering convenience for commuting and proximity to other leading research institutions.

  • Tenant Excellence: The building hosts esteemed organizations such as Amprion Inc., a pioneer in detecting misfolded proteins for neurodegenerative diseases, located in Suite 240.

Experience a facility that combines modern design, strategic location, and a thriving life sciences community at 10355 Science Center Drive, supporting the forefront of scientific research and development.

3115 Merryfield Row, San Diego

Located in San Diego’s esteemed Torrey Pines submarket, 3115 Merryfield Row is a premier life sciences facility designed to meet the needs of cutting-edge research and development. Constructed in 2018, this state-of-the-art building offers advanced laboratory spaces and modern amenities to support innovative scientific endeavors.

Key Features:

  • Modern Laboratory Infrastructure: The facility is equipped with advanced laboratory spaces tailored for life sciences research, ensuring a conducive environment for scientific innovation.

  • Sustainable Design: The building is LEED Gold Certified, featuring energy-efficient systems and sustainable materials that underscore a commitment to environmental responsibility.

  • Tenant Excellence: The property is fully leased to Vertex Pharmaceuticals, a global biotech company specializing in small molecule therapeutics and cystic fibrosis research. This partnership highlights the building’s suitability for leading-edge scientific work.

  • Strategic Location: Situated in the Torrey Pines submarket, the property benefits from proximity to renowned research institutions and a thriving life sciences community, fostering collaboration and innovation.

Experience a facility that combines modern design, sustainable features, and a prime location to support the forefront of life sciences research at 3115 Merryfield Row.

3545-3575 John Hopkins Ct , San Diego

Located at 3545-3575 John Hopkins Court in San Diego’s prestigious Torrey Pines submarket, the University Science Center – East is a premier two-building complex designed to support life sciences enterprises. The facility offers versatile spaces tailored for biology and chemistry research, office functions, and vivarium needs.

Key Features:

  • Comprehensive Amenities: Tenants benefit from an on-site fitness center, equipped with men’s and women’s showers and lockers, an executive conference facility, and secure bike storage.

  • Strategic Location: Situated in close proximity to esteemed institutions such as UC San Diego, The Scripps Research Institute, Salk Institute for Biological Studies, and Sanford Burnham Institute, the center fosters collaboration and innovation. Additionally, the property offers convenient access to a variety of restaurants, hotels, coastal residential areas, and major freeways. It’s also within walking distance to the UCSD campus, library, and Price Center.

  • Available Spaces: The center currently has multiple R&D office spaces available for lease, ranging from 17,083 to 21,470 square feet. These spaces are adaptable to meet diverse research and development requirements.

3535 General Atomics Ct , San Diego

Located in the prestigious Torrey Pines life science cluster of San Diego, 3535 General Atomics Ct offers a premier opportunity for life science companies seeking state-of-the-art laboratory and office space. This world-class facility is designed to meet the specific needs of innovative organizations in the biotechnology and pharmaceutical sectors.

Property Features:

  • Modern Laboratory Facilities: The space is equipped with advanced laboratory infrastructure, including fume hoods, lab benches, and specialized ventilation systems, ensuring a ready-to-use environment for scientific research.
  • Flexible Layout: Offers a combination of open lab areas, private offices, and collaborative spaces to accommodate various operational needs.
  • High Ceilings: Provides ample vertical space, essential for accommodating specialized equipment and fostering a spacious working environment.
  • Loading Dock Access: Facilitates easy delivery and shipment of materials and equipment, streamlining logistical operations.

Amenities:

  • On-Site Parking: Ample parking spaces are available for employees and visitors, ensuring convenience and accessibility.
  • Campus Environment: Situated within a vibrant life science campus, tenants benefit from a collaborative community and shared resources.
  • Proximity to Research Institutions: The location offers close access to renowned research institutions and universities, fostering potential partnerships and talent acquisition.

Location Highlights:

3535 General Atomics Ct is strategically positioned in San Diego’s Torrey Pines area, renowned for its concentration of life science companies and research facilities. The property provides easy access to major highways, including I-5 and I-805, facilitating convenient transportation to and from the facility. Additionally, the area boasts a variety of dining, retail, and recreational options, enhancing the work-life balance for employees.

3550 General Atomics Ct , San Diego

Located in the heart of San Diego’s Sorrento Valley, 3550 General Atomics Ct offers 803 – 31,174 SF of Flex Space, a prime opportunity for businesses seeking versatile office or laboratory space for . This property is situated within a thriving business community, making it ideal for companies in technology, biotechnology, or research sectors.

Property Features:

  • Building Size: Approximately 234,724 square feet
  • Lot Size: 58.98 Acres
  • Year Built: 1985
  • Parking: Ample on-site parking available
  • Zoning: Industrial-Office

Amenities:

  • Interior Layout: The available space offers a mix of private offices, open work areas, conference rooms, and collaborative spaces, designed to accommodate a variety of business needs.
  • Infrastructure: Equipped with modern HVAC systems, high-speed internet connectivity, and energy-efficient lighting.
  • On-Site Facilities: Access to a shared cafeteria, fitness center, and outdoor recreational areas.

Location Highlights:

3550 General Atomics Ct is strategically located with easy access to major freeways, including I-805 and I-5, facilitating convenient transportation and commuting. The property is in close proximity to a variety of retail services, dining options, and residential neighborhoods, enhancing convenience for employees and visitors alike.

16550 W Bernardo Dr, San Diego

Located in the Rancho Bernardo area of San Diego, 16550 W Bernardo Dr offers a substantial flex space suitable for various business operations. The property is part of a well-established business community, providing a conducive environment for corporate headquarters, research and development, or light manufacturing activities.

Available Space:

  • Size: 80,000 to 159,781 square feet
  • Availability Date: October 1, 2024
  • Lease Term: Through March 2027
  • Lease Rate: Upon request

Property Features:

  • Building Size: 198,437 square feet
  • Year Built: 1968
  • Ceiling Height: 20 feet clear
  • Loading Facilities: 5 dock-high doors and 1 grade-level door
  • Parking: 800 spaces
  • Zoning: IP-2-1

Amenities:

  • On-Site Facilities: Full-service fitness center, outdoor common areas, putting green, bocce ball court, basketball court, and sports field
  • Interior Layout: Predominantly open floor plan with cubicle spaces, multiple conference rooms, collaboration areas, cafeteria, and private offices
  • Infrastructure: Approximately 3,200 square feet of electronics lab/R&D space

Location Highlights:

The property boasts immediate access to major freeways, including I-15, facilitating convenient transportation and commuting. It is also in close proximity to a variety of retail services and residential neighborhoods, enhancing convenience for employees and visitors alike.

15070 Avenue of Science, San Diego

Located at 15070 Avenue of Science in San Diego’s Rancho Bernardo/Carmel Mountain Ranch area, this high-quality office/flex property offers a total of 107,318 square feet of space. The building is situated in one of San Diego’s premier business environments, placing your business adjacent to industries such as defense, technology, biomedical, tourism, and golf.

Available Space:

  • Suite 200: A 17,466 square-foot R&D office space is currently available for lease. The space features an 18-foot clear height, two drive-in bays, and 36 standard parking spaces. The lease rate is $18.00 per square foot per year, with a negotiable term and availability within 60 days.

Property Features:

  • Clear Height: 18
  • Drive in bays: 2
  • Year Built: 1985
  • Construction: Masonry
  • Lot Size: 2.84 acres
  • Zoning: IL-2-1
  • Parking: 395 spaces, with a parking ratio of 3.7 per 1,000 square feet
  • Fiber Providers: Cox and AT&T

Location Highlights:

The property boasts an incredible Carmel Mountain Ranch location with high visibility. It offers immediate access to I-15 via Carmel Mountain Road and Camino del Norte and is within walking distance to over 1,000,000 square feet of retail amenities. Notable neighboring companies include Sony, Hewlett Packard, Northrop Grumman, and General Atomics.

Norton Life Science Building: 324 Broadway

The Norton Life Science Building, situated in the heart of downtown San Diego, is a premier facility tailored to meet the evolving needs of the life science sector. This state-of-the-art building offers expansive floor plates, advanced infrastructure, and a suite of amenities designed to support cutting-edge research and innovation.

Key Features:

  • Spacious Floor Plates: Each floor provides approximately 40,000 square feet, some with private patios, allowing for flexible lab and office configurations.
  • High Ceilings: With floor-to-ceiling heights reaching up to 18 feet, the building ensures ample vertical space for specialized equipment and installations.
  • Advanced Infrastructure: Equipped with modern mechanical, electrical, and plumbing systems specifically designed for laboratory operations, ensuring optimal performance and safety.
  • Efficient Logistics: A 44,000 square-foot subterranean delivery tunnel, standing 31 feet high, facilitates seamless and discreet transportation of supplies and equipment throughout the facility.
  • Sustainable Design: The building boasts a direct connection to the Clearway Energy Center San Diego, providing efficient chilled water cooling. Additionally, the design emphasizes sustainability, targeting LEED Platinum certification and aiming for net-zero carbon emissions.

Amenities:

  • Ample Parking: The facility includes access to downtown’s largest parking garage, offering 2,200 spaces for tenants and visitors.
  • Prime Location: Located just minutes from San Diego International Airport and adjacent to the trolley line with a direct connection to the University of California San Diego and UTC, the building offers unparalleled accessibility.
  • Vibrant Community: Being in downtown San Diego, tenants are within walking distance of the historic Gaslamp Quarter, Little Italy, and the waterfront, providing a dynamic environment for professionals.

Why Choose Norton Life Science Building?

San Diego is rapidly emerging as a hub for life science innovation, with record levels of venture capital fueling growth in the sector. The Norton Life Science Building is strategically positioned to support this expansion, offering top-tier facilities that cater to the unique demands of life science companies. Its combination of modern design, advanced infrastructure, and prime location makes it an ideal choice for organizations aiming to thrive in a competitive landscape.

For leasing inquiries or to schedule a tour, please contact our leasing team.

San Diego’s Life Sciences Boom: A Look Ahead to 2025

San Diego is on the brink of another life sciences and biotech boom, with new lab space developments and a surge in venture capital investment fueling the region’s industry growth. As construction cranes continue to dot the skyline along Mira Mesa Boulevard and Sorrento Valley, the city’s biotech sector is gearing up for an exciting expansion.

A Post-Pandemic Surge in Lab Space Development

Over the past few years, San Diego has experienced a post-pandemic construction frenzy in the life sciences sector. According to Daniel Maldonado, Managing Director at Unispace Life Sciences, much of the development that began in recent years is now reaching completion, bringing much-needed lab and research space to market.

By the end of 2025, more than 3.2 million square feet of new life sciences buildings and research campuses will be available across San Diego County. JLL, a commercial real estate firm specializing in biotech properties, notes that these new developments will help accommodate both established companies looking to expand and emerging startups needing cutting-edge facilities.

According to JLL’s Chad Urie, San Diego is better positioned for biotech growth than many competing cities nationwide, thanks to its strong infrastructure, talent pool, and continuous investment in life sciences.

San Diego: A Life Science Powerhouse

San Diego is already one of the top life sciences hubs in the country. Data from Biocom California highlights that the region is home to nearly 2,000 life science-related companies, employing 76,000 people and generating $56 billion in economic output.

With the addition of new lab and office space, companies will have room to scale, hire, and develop new groundbreaking research. As firms grow, they require expanded resources—such as HR departments, sales teams, and operational infrastructure—all of which San Diego is well-equipped to support.

Venture Capital Investment is Fueling Growth

Another key driver of this biotech boom is the influx of venture capital (VC) funding. In 2024 alone, over $3.6 billion has already been invested in San Diego’s life sciences sector, marking one of the highest investment levels in the past decade. The only years with higher funding were 2020 and 2021, when the pandemic spurred unprecedented interest in biotech innovation.

“The money that was on the sidelines is definitely coming back to both the biotech and real estate industries,” says Maldonado, signaling continued confidence in San Diego’s life sciences ecosystem.

A Strong Talent Pipeline to Support Expansion

San Diego’s ability to attract and retain top STEM talent is another critical factor driving industry growth. UC San Diego (UCSD) plays a significant role in this, producing more STEM graduates annually than both Stanford and UC Berkeley combined. This ensures that biotech and life sciences companies have access to a steady pipeline of highly skilled professionals.

“UCSD is an economic engine that’s hard to replace,” says Urie, adding that as we move into 2025, we’ll see even more momentum in hiring, expansion, and innovation.

Looking Ahead: What’s Next for San Diego’s Life Sciences Sector?

With a wave of new lab space, VC funding, and a robust talent pool, San Diego’s life sciences sector is set for another period of major growth in 2025. While challenges remain—such as increasing pre-leasing rates before new buildings open—trends indicate that the city is well-positioned for success.

As San Diego solidifies its reputation as a global biotech powerhouse, companies looking for high-quality lab space and business-friendly opportunities will find no better place to call home.

Stay tuned for more updates on San Diego Lab Spaces as we track the latest developments in this exciting biotech expansion!

13520 Evening Creek Dr N

Presenting 13520 Evening Creek Drive North, a premier Class A office space within the esteemed Kilroy Sabre Springs campus in San Diego’s 92128 ZIP code. Constructed in 2002, this six-story building offers a total of 146,701 square feet of premium office space, with current availabilities ranging from 2,555 to 14,744 square feet.

Location Advantages:

Strategically situated adjacent to the regional transportation hub at the intersection of Interstate 15 and Highway 56, this location ensures excellent connectivity. Proximity to the SR-56 bike path and the MTS Station enhances accessibility for commuters.

Experience the synergy of modern workspace design, comprehensive amenities, and strategic location at 13520 Evening Creek Drive North—an ideal setting for businesses aiming to thrive in San Diego’s dynamic market.

Santa Fe Summit Torrey Santa Fe Rd @ Highway 56 Rd

Introducing Santa Fe Summit Torrey Santa Fe Rd @ Highway 56 Rd, a forthcoming Class A office and life science campus strategically located near Ted Williams Parkway (Highway 56) in San Diego’s Torrey Highlands area. This state-of-the-art development encompasses over 600,000 square feet across four buildings, offering scalable solutions for businesses seeking flexibility and growth opportunities.

Key Features:

  • Total Space Available: 15,000 to 647,000 square feet
  • Building Sizes: Ranging from 132,000 to 179,000 square feet
  • Building Height: Five stories
  • Typical Floor Size: Approximately 35,800 square feet
  • Available From: July 1, 2026

Santa Fe Summit Torrey Santa Fe Rd @ Highway 56 Rd presents an exceptional opportunity for businesses in the life science and office sectors to establish a presence in one of San Diego’s most sought-after locations.

2222 Verus St

Norsouth Business Park present 2222 Verus St, a premier 11,729 SF flex/lab manufacturing available for lease at Norsouth Business Park in Chula Vista, San Diego. Situated on 0.65 acres, this property offers a prime location in one of San Diego County’s fastest-growing and most prestigious residential communities.

Key Features:

  • Premium flex/industrial space in a highly desirable location
  • Easy access to Highway 125 and major retail centers
  • Located near Norsouth Business Park
  • Close proximity to restaurants, office spaces, retail, medical, and industrial properties
  • Reinforced concrete construction with modern upgrades
  • Part of a vibrant community featuring the Chula Vista Elite Athlete Training Center and a championship golf course

Property Facts:

  • Building Size: 11,729 SF
  • Lot Size: 0.65 AC
  • Year Built: 1985
  • Zoning: BC2

This move-in-ready property offers great visibility and signage on a busy corner, making it an excellent choice for businesses looking to establish a strong presence in Chula Vista. Don’t miss this opportunity to lease a high-quality industrial space in a prime location!

2411 Fenton St

Voit Real Estate Services is pleased to present 2411 Fenton Street, a premier 7,343 SF flex/industrial condominium available for lease at The Collection at Eastlake in Chula Vista, San Diego. Situated on 0.77 acres, this property offers a prime location in one of San Diego County’s fastest-growing and most prestigious residential communities.

Key Features:

  • Premium flex/industrial space in a highly desirable location
  • Easy access to Highway 125 and major retail centers
  • Located near Eastlake Village Marketplace, anchored by Kohl’s, Target, Office Depot, and Lowe’s
  • Close proximity to restaurants, office spaces, retail, medical, and industrial properties
  • Reinforced concrete construction with modern upgrades
  • Part of a vibrant community featuring the Chula Vista Elite Athlete Training Center and a championship golf course

Property Facts:

  • Building Size: 7,343 SF
  • Lot Size: 0.77 AC
  • Year Built: 2005
  • Zoning: BC2

This move-in-ready property offers great visibility and signage on a busy corner, making it an excellent choice for businesses looking to establish a strong presence in Chula Vista. Don’t miss this opportunity to lease a high-quality industrial space in a prime location!

5924 Balfour Ct

A free-standing, multi-tenant Industrial/R&D building consisting of 21,481 RSF located within the coastal City of Carlsbad (San Diego). Situated on 1.55 acres, the site is centrally located within the prestigious 560-acre master planned Carlsbad Research Center.

5931 Priestly Dr

Introducing 5931 Priestly Drive, the latest addition to the thriving Carlsbad Research Center, renowned for its vibrant life science community in North San Diego. This exceptional freestanding industrial and research facility spans an impressive 52,777 square feet, strategically positioned in the epicenter of where leading life science and medical device companies thrive in North San Diego County.

With a clear mission to cater to the demands of today’s groundbreaking sciences, technology, and advanced manufacturing, the landlord has meticulously paid attention to all details required for a purpose-built R&D building. Significant capital improvements were completed in 2024, including exterior paint, enhanced with elegant metal cladding features and trellis awnings at all three main entrances, showcasing a modern and professional aesthetic.

An array of features awaits an incoming tenant, leading with prominent new building and monument signage, making a standout impression as you drive up to the building. The property also provides EV charging stations for sustainable transportation options. Two outdoor patio areas offer spaces for relaxation and networking, while the installation of new electrical service provides a remarkable 4,000 amps of heavy power, ensuring more than adequate power to support most any business need. Moreover, the property offers a designated location for a backup generator, safeguarding the continuity of business functions during a major power outage.

Numerous interior updates enhance the overall experience within the building. Notable improvements include newly renovated common area restrooms, a refreshed lobby area with a convenient refreshment center, and energy-efficient LED lighting throughout. Updated elevators ensure smooth vertical transportation for occupants, while the white box office and laboratory area present an opportunity for tenants to have a custom-designed space tailored to their specific business functions.

Adding to the versatility, the property features an existing high-bay warehouse that can be expanded to accommodate advanced manufacturing, cGMP processes, or serve as traditional high pile storage. Currently fitted with three grade level roll-up doors, the warehouse also offers the potential to add dock high loading, providing maximum flexibility and efficiency to support business operations.

To explore this remarkable property further or to arrange a tour, please contact Chris, Steven, Greg or Tim at JLL.

2271 Cosmos Ct

– 88,533 SF freestanding building ideal for MFG-R&D/Lab-Warehouse uses
– High-image industrial facility, featuring a large amenitized entrance, excellent glass line and two-story lobby
– Located amongst a strong set of corporate neighbors in the Carlsbad market
– Unsurpassed access from Palomar Airport Road via a signalized intersection onto Yarrow Road
– 4-minute drive to McClellan Palomar Airport, a 10-minute drive to Interstate 5, and an 11-minute drive to the Coast Highway and beaches
– Close proximity to retail amenities: Palomar Commons (Lowe’s, Chipotle, Five Guys, Panera, California Bank and Trust, and more), Bressi Ranch (Trader Joe’s, Verizon, Board & Brew, Rubios, Peets Coffee, BevMo, CVS, Sprouts Market, Mission Federal Credit Union, Mendocino Farms, and many others)

U.S. Life Sciences Property Report May 2024

The U.S. life sciences market continues to expand, with notable activity in Boston, the Bay Area, and San Diego. Over the past three quarters, these markets have shown an impressive 17% average growth in lab space demand, signaling a strong resurgence in the industry. For life sciences companies, developers, and investors, this upward trend presents both opportunities and challenges as they navigate a competitive landscape.

According to the U.S. Life Sciences Property Report, five major trends are shaping the lab space market, underscoring new opportunities for growth. Quality of assets and neighborhoods is a major draw for tenants, and the success of leasing efforts is increasingly tied to these factors. Additionally, while some markets are still working toward full normalization, key indicators suggest declining vacancy rates and positive macroeconomic fundamentals across the board.

One thing is clear: now is a prime time for life sciences companies to secure high-quality lab space before demand intensifies. For those navigating the San Diego market, the agents at SanDiegoLabSpaces.com offer invaluable expertise. Their team works closely with clients to assess their unique needs and connect them with the perfect lab spaces tailored to their scientific and business goals. By leveraging market insights and local property knowledge, SanDiegoLabSpaces.com helps clients find properties that offer not only the right facilities but also the ideal neighborhood environment for their practice.

With the market’s competitive trajectory, SanDiegoLabSpaces.com stands ready to support life sciences professionals in making strategic, informed decisions about their lab spaces—securing the foundations for their future success in this thriving industry.

The San Diego Life Science Market – July 2024

San Diego, one of the top three life science hubs in the U.S., recently hosted the BIO International Convention, where over 18,000 industry professionals gathered to explore the future of biotechnology. This event highlighted San Diego’s significance within the life sciences sector and drew attention to the challenges and opportunities companies face, from funding difficulties to the need for collaborative ecosystems.

At the convention, companies from all development stages — startups, R&D, preclinical, and clinical research — highlighted the growing challenges of securing investment. As Chris Durbin, a life science specialist, noted, “Venture capital and other investors are much more selective than during the frothy era of 2021–2022.” Companies now face longer and more demanding paths to secure funding, pushing them to explore more resourceful ways to achieve their goals.

One of San Diego’s unique draws for life sciences companies is its collaborative ecosystem, making it an attractive location for startups seeking synergy with other innovators. Durbin shared that San Diego’s culture of cooperation continues to attract top talent and encourage company growth. Beyond just property transactions, he stressed the importance of connecting life sciences businesses with local resources and networking opportunities.

However, San Diego’s life sciences market has faced its share of challenges. In Q1, vacancy rates for lab and office spaces reached 14.3%, an all-time high. This spike is partly a result of new developments initiated during the pandemic, with millions of square feet still in the construction pipeline. Despite these challenges, major players like Pfizer and Alexandria have made long-term commitments in the region, signing substantial leases for future R&D projects. Meanwhile, venture capital investments remain robust, with San Diego securing $1.57 billion across 55 deals in Q1 2024. NIH and NSF research funding, totaling $2.2 billion, further reinforces the market’s future.

For companies navigating this dynamic landscape, the agents at SanDiegoLabSpaces.com provide an invaluable advantage. Their team works closely with clients to assess their specific needs and find lab spaces that align with their scientific and business goals. With extensive market knowledge and a strong network, SanDiegoLabSpaces.com helps clients connect with ideal properties in San Diego’s life sciences cluster, positioning them to succeed in one of the most collaborative and innovative environments in the country.

As the demand for life sciences space rises, SanDiegoLabSpaces.com stands ready to support companies in making strategic real estate decisions that will drive growth and innovation in San Diego’s thriving life sciences market.

Q1 2024 SAN DIEGO INDUSTRIAL MARKET REPORT

San Diego’s industrial market is currently facing significant challenges, with prolonged negative absorption now reaching a fifth consecutive quarter—the longest streak since the Great Recession. High-profile vacancies, particularly from Amazon and biotech firms, have driven total vacancy rates upward, and larger spaces above 50,000 square feet are struggling to rebound to pre-pandemic leasing levels. Many landlords of these large facilities are prioritizing cost control over leasing, which has led to increased availability. In contrast, smaller multi-tenant properties, especially in North County’s incubator parks, maintain high demand and low vacancy rates, with sublet space in flex and lab buildings hitting a 20-year high.

Looking ahead, construction in 2024 will add significant new flex and industrial spaces concentrated near the Otay Mesa port of entry. While demand in Otay Mesa remains robust, broader economic uncertainties might delay a substantial market recovery until 2025. Rent growth has stabilized to long-term averages, reflecting an overall market settling into a pattern of contrasting dynamics between small-bay properties and large logistics facilities.

For companies seeking space in San Diego’s industrial market, SanDiegoLabSpaces.com offers a strategic advantage. Their team can help businesses navigate this complex landscape by providing access to available properties that meet their unique needs, especially in high-demand small-bay and multi-tenant spaces. SanDiegoLabSpaces.com’s agents bring deep local market insights, helping clients find spaces that align with current trends and emerging opportunities.

From an occupier’s perspective, tenants facing high renewal rents can benefit from strategic negotiation tactics in this shifting market. SanDiegoLabSpaces.com’s agents work with clients to secure favorable terms, helping smaller tenants in high-demand spaces and larger tenants leveraging the rising availability. Whether it’s securing short-term leases or navigating concessions, SanDiegoLabSpaces.com is committed to helping clients achieve cost-effective and strategically beneficial leases in San Diego’s evolving industrial landscape.

 

CBRE Report: Post-Pandemic Slowdown Now Evident in Oversupply of Biotech Labs

Lab construction has slowed over the past two years due to the end of the pandemic and economic challenges, with a CBRE report predicting a return to pre-pandemic construction levels by 2026. While lab building costs have risen by at least 20%, largely driven by inflation, material costs, and longer equipment lead times, there is currently an oversupply of lab spaces, especially in major life sciences markets like Boston-Cambridge, San Francisco, and San Diego. Building owners in these areas face record-high vacancies, sparking increased competition to attract tenants.

During the pandemic, lab construction surged to meet demand in Covid-19-related R&D, leading to nearly 40 million square feet under construction at its peak in 2023 across the top 13 U.S. life sciences markets. However, the current slowdown in life sciences funding and market shifts have led to decreased construction and more available space. In the Bay Area, for example, negative net absorption has reached nearly 2 million square feet in the past year, although opportunities exist for adapting some of this vacant lab space to industries like cleantech.

Lab conversions to other uses, such as office spaces, have also slowed, as more new, unleased lab spaces enter the market. Despite this shift, markets like San Diego and New Jersey have seen significant increases in lab construction over the past five years, but not enough to create an oversupply.

To stay competitive, lab owners are increasingly offering tenant-improvement allowances to help tenants customize their spaces. Since 2021, these allowances have grown by an average of 38% in top markets, reflecting landlords’ response to rising competition and the high costs associated with building out highly specialized spaces, like vivariums and clean rooms.

For companies navigating this evolving lab market, SanDiegoLabSpaces.com provides invaluable expertise. With a deep understanding of the San Diego market and connections across the industry, the agents at SanDiegoLabSpaces.com help clients identify and secure lab spaces that meet their specific needs, whether they’re looking for cost-effective solutions or highly specialized facilities. As landlords adapt to pre-2021 development approaches and more lab space options become available, SanDiegoLabSpaces.com can guide clients through these changes, ensuring they find optimal spaces that align with their operational goals. In this competitive market, SanDiegoLabSpaces.com empowers life sciences companies to make strategic, informed decisions about their lab spaces, helping them succeed in a rapidly shifting landscape.

San Diego Life Science – Market Report – Q3 2024

Net Absorption Negative in 2024

  • In Q3, the Central San Diego laboratory market recorded 352,928 sf of negative net absorption, primarily driven by new significant vacancies in Sorrento Mesa. This follows 3 straight quarters of positive net absorption, which followed 4 straight negative quarters. 2024 YTD figure is also now in the red, standing at negative 159,022 sf.
  • Central San Diego leasing activity had been down since late 2022, but thus far in 2024 we’ve seen over 1 million sf of leasing activity (nearly 300,000 sf in Q3), the largest over a two-quarter span since the first half of 2022. 2024 ytd has nearly doubled the overall total for 2023.

Rental Rates Feeling The Pressure

  • Asking rental rates in Central San Diego have leveled off over the last 2 years, as demand has slowed significantly from the highs during the Covid-19 years. Now $6.28 NNN.
  • Downward pressure on effective rents is accelerating, as concessions continue to increase with the rise in available inventory

Large Pharma Helps Demand Levels

  • –Tenants looking for lab space remain cautious, as they continue to extend their existing cash runway and take a more conservative approach in the short term.
  • Big pharma requirements have kept demand above historical pre-pandemic levels, as 2 requirements make up 50% of the overall tenant demand (1.88 msf at end of Q3).
  • VC funding has been very solid in 2024, despite the economic environment, as San Diego firms raised nearly $1.11b in Q3, pushing the YTD total to $3.26b…on pace to finish the year as the 2nd highest yearly figure of all time, and over 3x the annual average over the last 21 years.

IQHQ Navigates a Saturated Market with New Office and Life-Sciences Space

The Research and Development District (RaDD), one of the nation’s largest life-sciences projects, is set to debut in San Diego in the coming months. However, according to a recent report by Bisnow, it currently lacks any biotech tenants.

Why It Matters:

The $1.6 billion project, encompassing 1.7 million square feet of commercial space, is entering a market already grappling with high vacancy rates for both lab and office spaces.

Quick Recap:

San Diego-based IQHQ initiated the project in fall 2020, touting it as the largest commercial waterfront opportunity in California.

  • Former Mayor Kevin Faulconer highlighted that it would establish a downtown life-sciences hub, distinct from the industry’s established northern areas near UC San Diego.
  • In 2006, the U.S. Navy granted developer Doug Manchester a 99-year lease to develop eight downtown blocks, including a new headquarters for the military branch.
  • Manchester completed the 17-story Navy One Building in fall 2020 and subsequently sold most of the remaining project area to IQHQ for $230 million.

Current Challenges:

RaDD has yet to disclose how its 1.7 million square feet will be allocated among office, lab, and retail spaces, and it currently has no announced tenants.

  • The city’s overall office vacancy rate rose to 18.2% in March, up from 14.4% the previous year, according to Commercial Edge.
  • Life sciences vacancies in core submarkets like Torrey Pines, UTC, Sorrento Mesa, and Sorrento Valley stood at 15.3% in the first quarter, per CBRE.
  • Sorrento Mesa, the largest life-sciences submarket, had a 20% vacancy rate.
  • Downtown’s smaller life-sciences submarket experienced a vacancy rate exceeding 50% during the same period.

Key Issues:

Life-sciences projects are driving new office space nationwide, with San Diego’s 3.6 million square feet under construction representing 16% of the country’s pipeline.

  • The Horton Plaza redevelopment will add another 615,000 square feet this year.
  • Downtown’s smaller Genesis San Diego has successfully secured some leases.

The Bottom Line:

RaDD officials mentioned on the Built Podcast in early 2023 that the project aims to create a new economic engine for downtown.

  • However, Taylor DeBerry, a life-sciences analyst at Jones Lang Lasalle, told Bisnow that downtown will likely remain secondary to the industry’s core northern submarkets.
  • “And currently, RaDD doesn’t have any leasing,” he noted. “I think that speaks volumes about the leasing environment downtown.”

San Diego’s Life Science Industry Faces a New Challenge: Excess Space

San Diego’s renowned life science sector has hit a new milestone this year, but not in a positive way. The vacancy rate for lab and office spaces has soared to a record 14 percent.

Just three years ago, companies were scrambling for space in key life science hubs like Sorrento Valley, La Jolla, and Del Mar. Now, there are more buildings available than local companies are willing to lease.

Current Trends:

The overall vacancy rate for life science spaces in the area has jumped to 14.3 percent, up from 5.7 percent the previous year, according to first-quarter data from Jones Lang LaSalle (JLL).

  • Several companies have downsized or completely vacated their offices recently. For instance, gene therapy firm Locano Bio ceased operations, vacating 39,000 square feet in Torrey Pines. Similarly, gene-sequencing giant Illumina offloaded its UTC office to save millions.
  • Many local life science companies are subleasing their unused offices to cut costs or accommodate smaller staffs after layoffs. JLL reports that there are about 1.2 million square feet of available sublease space, nearly double from a year ago.

Market Dynamics:

Taylor DeBerry, senior associate of JLL’s life science group, notes that the market is seeing unprecedented levels of sublease space due to the over-exuberance during COVID-19. Companies are now pulling back as venture capital becomes harder to secure.

  • San Diego startups raised $1.57 billion in venture capital in the first quarter of 2024, a significant improvement after a slow year. However, venture capital deals have been sparse since the record-breaking year of 2021.
  • Life science investors are now more selective, writing bigger checks to fewer companies, which in turn are cautious about their real estate spending.

Tenant Market:

The balance has shifted from a landlord’s market to a tenant’s market. Tenants are now looking for better deals and have more options to choose from.

  • The JLL report indicates that life science tenants prefer newer buildings, securing premium spaces at lower rates due to the oversupply.
  • Most life science companies are concentrated along Interstate 5 and Interstate 805, near major research institutes. The core clusters include Del Mar Heights/Carmel Valley, La Jolla, Sorrento Mesa, Sorrento Valley, Torrey Pines, and UTC.

Rent Trends:

Asking rents in San Diego’s core life science cluster have decreased by 7.2 percent year over year, marking four consecutive quarters of decline after a decade of growth.

  • Del Mar Heights and Carmel Valley have the highest rents at $6.74 per square foot, followed by downtown San Diego at $6.15 and Sorrento Mesa at $6.10. Sorrento Valley has the lowest average asking rent at $5.84 per square foot.
  • The overall average asking rent in the first quarter was $6.02 per square foot, down from $6.40 a year ago.

Notable Deals:

Despite the high vacancy rates, some significant deals have boosted real estate activity. Pfizer signed a 15-year lease for 230,000 square feet at the Torrey View campus, the largest lease in two years.

Future Outlook:

The imbalance of supply and demand is unlikely to normalize soon, especially with new projects coming online.

  • The RaDD IQHQ campus on San Diego’s waterfront, encompassing 1.7 million square feet, is a highly anticipated project focused on life science labs and offices, along with retail, dining, and green spaces.
  • The Campus at Horton, a 10-acre mixed-use development, will feature two 40-story apartment towers, retail, and proposed office spaces for life science companies. Both projects are outside the traditional life science core and have yet to announce any life science leases.