Sorrento Mesa Development Marks Developer’s Third Announced in Past Year

Healthpeak Properties is planning its third ground-up development in San Diego geared to life science office and lab tenants announced during the past year, the latest indicator of rising nationwide demand for biotech real estate.

Officials of Healthpeak, among the nation’s largest owners and developers of biotech and medical office properties, said the Denver-based company plans to break ground in the third quarter on Sorrento Gateway, with initial tenant move-ins expected in the first quarter of 2023.

Plans call for a five-story building spanning 163,000 square feet to be built next door to an existing Healthpeak campus off Vista Sorrento Parkway in San Diego’s Sorrento Mesa neighborhood. Tenants and expected development costs have not been announced, and Healthpeak representatives did not immediately respond to a request for comment from CoStar News.

“Strong market fundamentals and tenant relationships give us confidence to commence our next development in San Diego,” Healthpeak CEO Scott Brinker said in a statement, noting Sorrento Gateway would be the company’s third ground-up construction project aimed at life sciences firms that it has announced in San Diego since early 2020.

Two earlier announced Healthpeak projects in the city’s Torrey Pines neighborhood in La Jolla, The Boardwalk and Callan Ridge, have been fully preleased. Healthpeak said this week that San Diego-based pharmaceutical firm Turning Point Therapeutics, which develops cancer-related treatments, has leased the entirety of the developer’s planned 185,000-square-foot Callan Ridge development, with move-in expected at the end of 2022.

Demand for life science office and lab space was on the rise nationally well before the coronavirus pandemic, which further boosted requirements for development facilities tied to vaccines and treatments. Healthpeak and its competitors, including Alexandria Real Estate Equities and BioMed Realty, have been responding with new developments, renovations and acquisitions in several targeted cities.

A first-quarter report from brokerage JLL noted venture capital financings in the biotech sector reached $11.7 billion nationwide, up 35% from the prior quarter and 68% from the first quarter of 2020. The three largest hubs for biotech real estate — Boston, San Francisco and San Diego — together accounted for $8.3 billion or 72% of nationwide funding in the life science sector.

San Diego saw more than $1.5 billion in biotech-related venture funding, quadrupling the year-earlier figure and following a record $2 billion in the fourth quarter of 2020. Other regions seeing significant annual funding growth in the first quarter included Washington, D.C., Seattle, Philadelphia and North Carolina’s Raleigh Durham area, JLL reported.

San Diego’s life science leasing volume more than tripled in the first quarter from a year prior, with 33 transactions topping 758,000 square feet. The region’s life science vacancy rate stood at 4.8% and the availability rate was 5.1% at the end of the first quarter, both well below regional rates for general office properties.

 

See Original Article:

https://product.costar.com/home/news/shared/1305002480?source=sharedNewsEmail