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Sub-Market Spotlight: South
San Francisco’s Life Science
Real Estate

By John Jarvis

The commercial real estate market throughout the Bay Area remains strong in 2018, with increasing rents and limited vacancy. The tightest market? Lab space for life science companies. And the center of this activity is South San Francisco, with rents up over 50% in the last three years and a vacancy rate below 2%.

Life Science real estate is a specialized sector, and as such, it tends to be dominated by large, life science focused institutional landlords. In this report I provide updates on five dominant life science landlords in South San Francisco, one new entrant and the region’s largest life science employer.

HCP’s Sierra Point Project in Brisbane. Image via CoStar.


HCP, formerly known as Healthcare Property Investors, was one of the first developers to make a move to South San Francisco when they decided to move forward and commence construction in 2016 on a speculative basis with their signature project, a one million square foot development project known as The Cove. Prior to their acquisition of the site, the land had sat vacant for 30 years. Their early move has been richly rewarded, as the first and second phase are now fully leased and they are pursuing multiple large tenants for phase three.

Phase one and two landed some great life science companies including AstraZeneca (163,000 SF), Five Prime Therapeutics (115,000 SF), Cytomx (76,000 SF), Global Blood Therapeutics (67,000 SF) and Denali Therapeutics (38,000 SF). Phase three totals another 336,000 square feet.

In nearby Brisbane, HCP is also now underway on another five-building development project, Sierra Point, which will total 616,000 square feet of life science real estate.

A rendering of BMR’s Gateway of Pacific. Image via Gateway of Pacific.


Biomed Realty Trust (BMR), a publicly traded real estate investment trust, is underway on their new development project known as Gateway of Pacific, a 1.3 million square foot life science project next door to HCP’s Cove project. The first phase will include 500,000 square feet and is scheduled to be completed late 2018. This new project will provide sorely needed lab space alternatives and will add to BMR’s existing South Francisco real estate including a two building, 205,000 square foot project fully leased to Life Technologies.


Alexandria Real Estate (ARE) is another publicly traded real estate investment trust focused on life science properties. ARE owns approximately 2 million square feet of life science real estate in South San Francisco, and has hit a few home runs recently. When Amgen acquired Onyx Pharmaceuticals in 2013 they moved the team to Thousand Oaks and left a 407,369 square foot vacancy in the ARE portfolio.   Not to worry, after a year of marketing the space for sublease, along came Verily, the Google life science spin-off, to lease the entire space on a direct basis from ARE. ARE also signed a full building lease with Merck for a 294,000 new building development now under construction at 213 E. Grand Avenue.

At the end of last year, ARE paid $33 million to buy a redevelopment site at 201 Haskins Way with plans to bring to market a new 288,000 SF life science project.

ARE does have vacancy–they are currently marketing a 65,000 square foot space in the building at 681 Gateway Blvd. Asking rent is $60 per square foot, per year with a $125 per square foot tenant improvement allowance offered over a warm shell.

A rendering of Phase 3’s Genesis in South San Francisco. Image via Genesis.

Phase 3

Phase 3 Real Estate Partners, a life science focused developer from San Diego, made a splash when they acquired One Tower Place, a 350,000 square foot office tower from Stockbridge Capital Group for $220 million at the end of 2015. Naming the project Genesis, Phase 3 has proceeded to develop an adjacent 21-story tower adding another 375,000 square feet. The first two floors of the new tower will be dedicated common area amenity space and Phase 3 is building out floors 9-10 as lab space on a speculative basis. With full floors at just under 20,000 square feet, this project could provide a good alternative for growing life science companies, and they are currently close to finalizing two transactions in the new tower.

Phase 3 is also under contract on two new projects in Brisbane including 1000 Marina Blvd, a likely lab conversion, and an 8.9-acre site at 3000 and 3500 Marina Blvd with plans for a 438,000 square foot, three building life science redevelopment project. Both new acquisitions are expected to close later this year.


Kilroy Realty, another publicly-traded real estate investment trust, has made a strong move into South San Francisco with two new acquisitions. While not dedicated to life science real estate, Kilroy has experience owning and building lab space. They bought the 146,000 square foot Oyster Point Tech Center at 345-349 Oyster Point Boulevard in January of this year for $111 million, or $760 per square foot. The project is leased to life science companies 23andMe, Diadexus and Monogram Biosciences and currently has 31,500 square feet available with an annual asking rent of $55 per square foot.

Kilroy is also a partner to China’s Greenland USA and has option to buy the nearby 21 acre The Landing at Oyster Point site where 2.25 million square feet of new development space is approved.

Lane Partners

Lane Partners is a wildcard entrant into the life science real estate puzzle in South San Francisco. While they are not known as a lab developer–Lane Partners made headlines recently for the sale of the Uptown Station office building in Oakland to Uber–this would definitely put them on the map. The project is in the Lindenville neighborhood, an area of warehouse buildings today, and if developed as envisioned would add 1.5 million square feet of badly needed new life science space to the market.  While some may see Lindenville as a stretch for life science companies, Lane Partners is likely hoping that the proximity to BART will enhance interest in their project.


And if we are talking about life science real estate in South San Francisco, I am compelled to mention the area’s largest employer, Genentech. They currently occupy 5.4 million square feet, mostly in property they own, with a site master plan that allows additional development up to 9 million square feet.

While the market today is very tight for lab space, these life science landlords and their ambitious plans for new projects should add considerable additional inventory to satisfy the needs of the region’s growing life science companies.

John Jarvis is a senior vice president of Hughes Marino, an award-winning commercial real estate company specializing in tenant representation and building purchases with offices across the nation. Contact John at 1-844-662-6635 or john@hughesmarino.com to learn more.

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