Alexandria Real Estate Lands Major Life Science Tenant

June 26, 2024

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A pharmaceutical company has inked a 10-year lease in San Diego.

A top-20 pharmaceutical company has taken more than 127,300 square feet in a 10-year lease, with expansion options, at 10075 Barnes Canyon Road (Building C), a 253,000-square-foot life science building under construction in San Diego. The space will be used as a new R&D facility upon completion in 2025, upping the company’s footprint in San Diego by more than 50 percent.

The building is part of SD Tech by Alexandria Mega Campus, a development of Alexandria Real Estate Equities in the Sorrento Mesa submarket of San Diego. With the new lease, 10075 Barnes Canyon is now 70 percent leased ahead of delivery, according to Alexandria.

Alexandria did not respond to a query about the identity of the tenant, nor did Cushman & Wakefield, who had listed the building for lease.

Earlier in June, Japanese pharmaceutical company Shionogi leased about 20,000 square feet at Building C, where it will focus on antimicrobial research, along with the development of treatments for infectious diseases.

Common amenities at 10075 Barnes Canyon include a number of eateries, a health and wellness center, meeting and conference spaces, a lawn and a 7-acre central park. The building is targeting LEED Gold Core & Shell and Fitwel certifications.

The lease brings Alexandria’s 1.2 million-square-foot pipeline of under construction mega campus developments in San Diego to 94 percent occupied, according to the REIT, which has five such projects underway in the market. Last year, Alexandria recapitalized a joint venture which owns 9625 Towne Centre Drive, another San Diego life science asset.

Besides San Diego, Alexandria Real Estate Equities, a life science REIT, has properties in Greater Boston, the San Francisco Bay Area, Seattle, Maryland, the Research Triangle of North Carolina and New York City.

The company holds about 7.8 million square feet of life science space in San Diego, its third-largest market after the San Francisco Bay Area (7.9 million square feet) and Greater Boston (10.8 million square feet). As of the end of the first quarter of 2024, the REIT had more than 1.1 million square feet of space under development in the San Diego market, the largest total of any of its markets.

San Diego life science still in demand

A number of sizable pharmaceutical leases in the first quarter of 2024 kept demand in the San Diego life science market at a respectable level, according to CBRE, with almost 1.7 million square feet of leases inked. That represents a small amount of positive absorption for the quarter, however, at about 6,800 square feet. That makes two quarters of positive absorption, after four negative quarters.

Companies are taking a more conservative approach to leasing life science space in the market, considering the current capital market and dodgy economic environment, CBRE noted. The largest lease during the first quarter was by Pfizer, which took 233,000 square feet in the Torrey View submarket.

Investors, on the other hand, seem optimistic about the market’s longer-term prospects. Venture capital investment in the market totaled nearly $1.4 billion during the first quarter of this year, the first time that figure topped $1 billion in almost two years, and 155 percent about the quarterly investment average in 2023, CBRE reported.