By Lou Hirsh CoStar News June 7, 2022 | 5:26 P.M.
Canada’s Entos Pharmaceuticals has established its first beachhead in the U.S., taking space in San Diego with plans to more than double its local workforce and real estate footprint in the coming 18 months as demand for life science space in the region remains strong.
The Edmonton, Alberta-based company began research and development operations this week in the city’s Torrey Pines neighborhood, the region’s core biotech cluster, where it leased 9,600 square feet in RMR Group’s newly redeveloped Muse at Torrey Pines complex at 3040 Science Park Road.
CEO John Lewis called the opening a “significant milestone” for the 6-year-old developer of genetics-based medicines, including COVID vaccines and treatments for cancer and neurological disorders. The new space will house operations of Entos and three sister companies. Entos recently entered into multimillion-dollar agreements for research partnerships with major global pharmaceutical firms including Eli Lilly and BioMarin.
“With UC San Diego and all the early-stage biotechs and the bigger pharma companies in the Torrey Pines area, we thought this was a great place to do research and development and also interact with potential partners and current partners,” Lewis told CoStar News. “We just loved the area.”
Lewis said the company established its U.S. presence with a staff of about 30, approximately the size of its Edmonton staff, which is housed in a 10,0000-square-foot space in the Canadian city. Over the next 18 months, the company plans to hire another 70 to 75 people as it boosts its San Diego space by another 10,000 square feet at a manufacturing facility it is setting up in a nearby Torrey Pines building at 10835 Road to the Cure, set to begin operating by the end of this summer.
When these local moves play out, Entos will have roughly tripled its original real estate footprint, which includes the Edmonton office and a satellite location in London. The San Diego expansion comes as demand for biotech space continues to ratchet up. Numerous developers have acquired and redeveloped older properties in San Diego — the nation’s third-largest hub for biotech real estate after Boston and San Francisco — to serve the needs of the growing industry.
Record Year for Leasing
San Diego is coming off a record 2021 for biotech leasing, which included 160 transactions totaling 4.4 million square feet, according to brokerage and CoStar data. An April report from CBRE noted that San Diego is second to Boston for in-progress conversions of conventional offices into biotech lab space, with 1.6 million square feet underway as of this year’s first quarter.
The nation’s 12 largest life sciences markets had a total of 9.9 million square feet of such conversion projects underway at the end of 2021, up 49% from the beginning of the year. Ground-up lab construction, not involving conversions, rose 42% over that same time span, reaching 18.8 million square feet in progress nationwide at the end of 2021, CBRE reported.
Lewis said recent partnerships with Eli Lilly, Johnson & Johnson and other global firms have helped Entos navigate a climate in which venture funding for biotech research nationwide has been leveling off this year after hitting record highs during 2020 and 2021. RMR Group completed its extensive redevelopment of the 1985-vintage Muse at Torrey Pines in late 2021, after leasing about half of its 186,000 square feet to Surgalign Spine Technologies. Entos is sharing its space with sister companies Aegis Life, OncoSenX and Oisin Biotechnologies.
Lewis said the location at Muse gives Entos access to several amenities it does not have in its older Edmonton office, including an on-site, full-service restaurant operated by Urban Kitchen Group and modern fitness and conference spaces.
Lewis first became familiar with San Diego and its biotech ecosystem about 20 years ago, during his early science studies at the nearby Scripps Research Institute in La Jolla. With the office vacancy rate in Torrey Pines at 2% and rents rising more than 3% in the past year in a neighborhood that remains among the region’s most expensive, according to CoStar data, Lewis said he knew he would need to pay a premium to outbid at least two other public firms that were eyeing the same Torrey Pines space, though the company did not disclose terms with its landlord.
Lewis said the site selection came after Entos had also considered locations in nearby enclaves that have garnered biotech tenant and developer attention in recent years as space became tight in Torrey Pines, including University Town Center and Sorrento Mesa. (This story was updated June 9 with details on the relationship among Entos, its sister companies and Eli Lily and BioMarin.)
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