Breakthrough Properties Rolls Out New Concept as a Response to Soaring Demand for Life Science Space
By Lou Hirsh CoStar News March 9, 2022 | 4:15 P.M.
Developer Breakthrough Properties’ soon-to-open biotech complex in San Diego is an experiment unto itself: high-demand life science real estate crossed with flexible-lease spaces along the lines of office coworking from providers such as WeWork.
The company's StudioLabs by Breakthrough concept, set to debut this summer in its Torrey Plaza campus in San Diego, is touted as a turnkey, flexible lab and office offering targeting “hyper growth” early-stage life sciences firms not ready to make longer-term, potentially higher-cost commitments for space.
Headquartered in Los Angeles, Breakthrough Properties is a biotech-focused joint venture of New York-based Tishman Speyer, a nationwide developer best known for general-office properties, and L.A.-based investment firm Bellco Capital. Bellco was formed by Rebecka Belldegrun and Arie Belldegrun, founder of Kite Pharma, a Santa Monica, California, immunotherapy company sold to Gilead Sciences in 2017 for $11.9 billion.
If the concept catches on, Breakthrough said in a statement it planned to deploy the strategy at some of its other biotech properties and in future developments, stretching from California to Europe. And its competitors could follow.
“Companies get private, dedicated ‘studios’ with collaboration areas for community and peer learning,” a Breakthrough Properties spokeswoman said in an email to CoStar News. “Unlike coworking or incubators, companies establish their own operations, get branding and identity of their spaces, but with support of an experienced operational and concierge team.”
Breakthrough’s biotech offering is similar to Studio, a branded concept rolled out in 2018 by Tishman Speyer and now available at 14 of its general-office properties worldwide. At the time of that concept’s debut, Tishman joined other major U.S. office landlords responding to the rapid rise of flexible-lease, workspace-sharing offerings from companies such as WeWork, Knotel and IWG. Flexible as Demand RisesThe hybrid biotech offering arrives as demand for life science real estate is soaring, fueled by historically high levels of venture funding into companies involved in research and development of medical treatments, with coronavirus vaccines most notable during the past two years.
Biotech projects under construction nationwide reached a record 31.6 million square feet in the fourth quarter of 2021, according to brokerage CBRE, and nearly one-third of that space had been preleased at year’s end. Much of this is spurred by the growth of life sciences companies taking in venture funding that hit a record of $32.5 billion in 2021, growing 328% over the past five years.
Breakthrough Properties’ inaugural StudioLabs space, spanning 28,000 square feet, is slated to open this summer at the company’s larger Torrey Plaza campus in San Diego’s Carmel Valley neighborhood. Breakthrough, formed in 2019, acquired the approximately 228,000-square-foot, three-building campus in April 2021 for $123.1 million, according to CoStar and public data. It is at 10945 Vista Sorrento Parkway.
Company officials said the first StudioLabs space at Torrey Plaza has been preleased by early-stage firms Protego Biopharma, Velia Inc. and Actio Biosciences, with financial terms undisclosed. Breakthrough Properties does not publicly disclose pricing on its shared-space offerings, though the Breakthrough spokeswoman said costs will be based on "market rates."
StudioLabs’ fully furnished and “curated” private lab and office suites range in size from 4,000 to 15,000 rentable square feet and include meeting rooms and fully functional wet lab spaces, with “starter lab equipment” packages also available, according to a statement.
In a statement, Susie Harborth, Breakthrough Properties executive vice president, said an on-site support team will “handle the most operationally intensive aspects of the lab environment” so that tenants “have the freedom to focus solely on growth and discovery.”
Breakthrough is among several developers looking to capitalize on fast-rising biotech space demand in regions including San Diego, the nation’s third-largest life science real estate hub after Boston and San Francisco. Companies with major San Diego developments under construction or in planning include Alexandria Real Estate Equities, Kilroy Realty and IQHQ.
Joshua Ohl, director of market analytics for CoStar Group in San Diego, said a biotech coworking format might be attractive to smaller firms looking to gain a foothold in high-profile life sciences neighborhoods such as Torrey Pines, University Town Center, Del Mar Heights and other parts of Carmel Valley.
However, the pricing on that flexible space would also need to be competitive and affordable. Ohl noted newer biotech projects in the high-demand neighborhoods are now fetching monthly rents north of $6 per square foot, far above the regional average of around $3.75 for general office space and $4 to $5 for older life science space.
“Cowork space might be more flexible for a smaller company, but it could also be a lot more expensive depending on the location,” Ohl said.
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