Why Life Science Firms Are Expanding to Sorrento Mesa
Why Life Science Firms Are Expanding to Sorrento Mesa
Biotechnology firm Maravai LifeSciences is exponentially expanding in San Diego’s Sorrento Mesa neighborhood with a 95,000-square-foot lease, reflecting accelerating demand for space in the nation’s third-largest biotech hub.
San Diego-based Maravai, which develops products in growing fields such as gene editing and DNA therapeutics, occupies about 4,000 square feet of office in the area. Company officials said they recently signed a deal with landlord Bollert Lebeau Commercial Real Estate to relocate to significantly larger digs at 10770 Wateridge Circle, a nearly 180,000-square-foot office and industrial building, where they plan to hire more than 250 additional workers. Terms were not disclosed.
The move reflects the continuing transformation of an area recovering from significant downsizing's by the likes of wireless technology giant Qualcomm.
"San Diego is one of the top life sciences markets in the country, and Maravai’s commitment to remain and expand their business here exemplifies the strong ongoing real estate demand and growth we continue to see from this sector," said Ted Jacobs, a managing director with brokerage firm Cushman & Wakefield who represented Maravai in the deal, in a statement.
The company is one of a number in San Diego that make the city the nation’s third-largest cluster of biotech-related office and lab space -- behind only Boston-Cambridge and the San Francisco Bay Area. Sorrento Mesa is the San Diego region’s second-largest life science hub after coastal Torrey Pines.
For decades, wireless tech giant Qualcomm has been Sorrento Mesa’s dominant office and industrial tenant, but it has recently been shedding significant space amid layoffs and other downsizing moves.
In 2015, the company laid off roughly 3,000 workers and put back about 1 million square feet of space on the market. It shot the office market’s vacancy rate up to almost 20 percent. Companies have been slowly reabsorbing that space but in recent months, Qualcomm has placed on the market, vacated or let lapse an additional almost 300,000 square feet, most of it in its Sorrento Mesa home base, according to local brokers.
In total, the neighborhood’s office direct-vacancy rate was 18.3 percent at mid-year, among the highest for the region’s large office submarkets. Its space available for sublease has nearly doubled since last year, according to CoStar.
But there’s significant demand from a variety of industries including growing interest from life science firms. "Halfway through 2018, the submarket has already totaled about 950,000 square feet (of leasing), demonstrating it should outpace its recent historical average by end of year," reads a recent report from brokerage firm Jones Lang LaSalle (JLL).
Experts note that Sorrento Mesa -- consisting primarily of older office and industrial buildings near Interstate 805 -- increasingly now serves as an expansion location for life science companies seeking more plentiful and less expensive space than is now available in the San Diego region’s two other big biotech hubs, Torrey Pines and University Town Center.
Among them, biotech firm Crinetics Pharmaceuticals leased 30,000 square feet in a Sorrento Mesa building formerly occupied by the recently downsizing Qualcomm, Jacobs said.
Now, Maravai’s TriLink division is expanding in the market. It will be the lead tenant in a larger 180,000-square-foot building being renovated by Bollert, with its move-in expected in the fall next year. Maravai’s corporate headquarters and production facilities will also relocate to the new building from current smaller Sorrento offices nearby on Mesa Rim Road.
The move will allow the company to expand its TriLink BioTechnologies division, which currently employs more than 150. The new office can accommodate the company’s plans to add additional workers that could bring the company's total to more than 350, officials said.
"This new facility and related investments we are making in the business position us well for the continuing growth we foresee," said Brian Neel, chief operating officer for TriLink, in a statement. "We can now further scale up our chemistry and biological operations in a state-of-the-art facility and meet the demand for our products in the growing fields of gene editing and DNA/RNA therapeutics and diagnostics."
Additional life sciences firms could move into the area, which offers large amounts of space ready for renovation and a discount of a dollar or more per square foot in rent costs to neighboring office markets such as Torrey Pines, Jacobs said. Nearby office clusters post low vacancies that could push more tenants looking for large swaths of space to Sorrento Mesa.
"Most companies do not have the luxury to wait for built-to-suit, ground-up development," he said.
Article by CoStar
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