Property Owner Alexandria Capitalizes on Escalating National Demand for Life Science Real Estate
By Lou Hirsh CoStar News March 2, 2022 | 3:43 P.M.
Pharmaceutical giant Bristol Myers Squibb has leased 427,000 square feet in a San Diego life science campus being redeveloped by Alexandria Real Estate Equities, underscoring soaring nationwide demand for biotech real estate.
Officials of Pasadena, California-based Alexandria, among the nation’s largest owners of life sciences properties, said Bristol Myers Squibb executed the long-term lease for a research and development facility at Alexandria Point, a planned redevelopment and expansion of an existing Alexandria campus that will eventually span more than 2 million square feet in the city’s University Town Center neighborhood.
Financial terms were not disclosed in a Wednesday statement from Alexandria. The deal is among the biggest biotech leases of the past year by square footage in San Diego, the nation’s third-largest hub for life science real estate after Boston and San Francisco.
New York-based Bristol Myers Squibb is planning to aggregate local operations now spread among several San Diego locations, similar to what it has done at Alexandria-owned sites in the Boston, San Francisco, New York City and Seattle areas.
“Having a single campus will accelerate collaboration among our company’s research teams and will foster a flexible working ecosystem to further BMS’s mission to advance medicines for patients who need them most,” Rupert Vessey, an executive vice president of research and development at Bristol Myers Squibb, said in the Alexandria statement.
The big lease comes as a record 31.6 million square feet of biotech projects were under construction nationwide in the fourth quarter of 2021, according to a new report from brokerage CBRE. Much of this activity is fueled by the growth of life sciences companies supported by venture capital funding that has soared 328% in the past five years, hitting a record $32.5 billion in 2021.
Nearly one-third, or 27.8%, of biotech square footage under construction nationwide had been preleased at the end of 2021. “Speculative construction was on par with tenant demand,” CBRE researchers noted. “However, many under-construction projects may not deliver until 2023 or 2024, leaving fewer options for nearer-term requirements.”
Joshua Ohl, director of market analytics for CoStar Group in San Diego, noted numerous developers and investors spent nearly $2.5 billion purchasing San Diego biotech-related properties during 2021, more than doubling the prior year’s $1 billion tally.
Alexandria officials did not immediately respond to requests from CoStar News for details, including development timelines for Alexandria Point, where Bristol Myers Squibb will be an anchor tenant. The project is a redevelopment that is planned to merge 10 buildings and adjacent land parcels already owned by Alexandria off Campus Point Drive into what the firm calls a “mega campus” with additional offices and laboratories.
Daniel Ryan, San Diego regional market director for Alexandria, said in the statement that plans for the Bristol Myers facility include a “dramatic five-story interior atrium.” Other planned campus amenities include a “large event lawn,” an expanded conference center to accommodate events with up to 800 attendees, a gymnasium, new dining options and a rooftop deck with panoramic views.
Alexandria owns more than 38 million square feet of biotech properties nationally, including 13 million square feet in San Diego. The company in January signed Singular Genomics to a lease topping 200,000 square feet at a Torrey Pines campus now under redevelopment, and also acquired a UTC retail center for $125 million with plans to convert it into a biotech campus spanning approximately 680,000 square feet.
Alexandria purchased a five-building business park in San Diego’s Mira Mesa neighborhood for $298.5 million in June 2021, giving it the opportunity to add as much as 400,000 more square feet of biotech space, Ohl noted.
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