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.”
