Genesis Complex Adds Excellos to Tenant Roster, Its Second Life Science Firm of 2022
By Joshua Ohl CoStar Analytics October 31, 2022 | 2:31 P.M.
Downtown San Diego secured its largest biotech tenant to date in the fourth quarter after Excellos leased a full floor totaling 36,000 square feet for a new global headquarters at the Genesis complex at 1155 Island Ave. Excellos, which does research with novel cell and gene therapy, will move into its new headquarters next year, expanding from Southeast San Diego where it currently occupies space.
The terms of the deal were not disclosed, although downtown office tenants are generally receiving one month of free rent for each year of the term. In North County, where biotech tenants more commonly cluster near the University of California, San Diego, up through Sorrento Mesa and Carmel Valley, lab tenants often receive allowances for tenant improvements in the neighborhood of $200 per square foot on a 12- to 15-year term. Lease rates in North County are also approaching $7 per square foot on a triple-net basis.
Excellos' was the second biotech lease at the Genesis property this year. Native Microbials signed the first lease at the building earlier this year for a 27,000-square-foot space.
Those deals come as Downtown is hoping to tap into San Diego’s vibrant life science scene. Construction is underway on more than 2 million square feet of life science space that is scheduled to begin coming online next year.
The largest of those projects is the Research and Development District, which is located along an 8-acre waterfront site across from the Embarcadero. IQHQ has not announced any tenants for its 1.7 million-square-foot campus there, which according to the developer, represents “the largest urban commercial waterfront site along California’s Pacific coast.”
In the downtown core, Stockdale Capital Partners is working on the Campus at Horton, a 1 million-square-foot, mixed-use campus that will include 300,000 square feet of retail and more than 500,000 square feet of lab space. According to Stockdale, it represents “the largest adaptive reuse project in the United States,” replacing the former Horton Plaza Mall. The Campus, like the IQHQ project, has not announced any tenants.
Those projects arrive at a time when there have only been a few biotech deals signed in downtown San Diego. While they receive attention, North County, where 50,000-square-foot leases are common, receives the lion’s share of demand.
Instead, the vacancy rate downtown has been 6% higher during the fourth quarter of this year than the 2019 year-end rate. Net absorption has fallen by 400,000 square feet since then, with the Navy’s possession of its 372,000-square-foot, build-to-suit tower in 2020 accounting for the surfeit of positive absorption. The amount of available space has doubled, now exceeding 6 million square feet, since the end of 2019. The median time on the market for available space is roughly 18 months, which is 50% longer than the average across the San Diego region.
All of which is to say, Downtown faces significant headwinds while the central business district deals with a swelling homeless population and concern over rising crime and open drug use.
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