Oxford Properties Stakes More Than $460 Million on Rising Industrial Demand in San Diego

Canadian Investor Buys Buildings From BioMed Realty After Previous $87 Million Purchase in Region

By Lou Hirsh CoStar News February 10, 2022 | 4:23 P.M.

Oxford Properties Group acquired 13 San Diego buildings from BioMed Realty for more than $460 million, underscoring escalating demand for industrial space geared to industries including technology, life science and logistics.

CoStar and public data show Toronto-based Oxford purchased the buildings, spanning a total of nearly 643,000 square feet in neighborhoods including Sorrento Mesa and Mira Mesa, for approximately $464.3 million, or $722 per square foot. The buildings include biotech and other technology tenants and were largely built between the 1970s and 1990s on Nancy Ridge Drive, Pacific Center Boulevard, Sorrento Valley Road, Waples Street and Bunker Hill Street.

The deal follows close behind Oxford's December acquisition of 12 San Diego industrial buildings totaling nearly 190,000 square feet for approximately $87.3 million, or $459 per square foot, from a real estate entity of John Hancock Life Insurance Co., according to CoStar and public data.

Representatives of Oxford Properties did not immediately respond to requests from CoStar News for comment. CoStar data as of Feb. 10 shows the per-square-foot price paid for the BioMed portfolio was well above the average of $289 paid for San Diego life science-related industrial properties over the past year.

San Diego-based BioMed Realty, a portfolio company of global investor Blackstone Group, is among the nation’s largest owners of biotech real estate but also houses technology tenants not involved in life sciences. It owns more than 13 million square feet of buildings and ongoing development projects in San Diego, Boston, San Francisco, Seattle and the United Kingdom, and during the past five years has more frequently been buying rather than selling properties in its core regions.

"BioMed Realty remains committed to the San Diego market and continues to make strategic and concentrated investments to advance future developments that will appeal to a variety of local, regional and national life science and technology employers seeking to tap into San Diego's rich talent pool," a BioMed spokeswoman said in a statement emailed to CoStar News Thursday.

"Consistent with this, BioMed may dispose of selected assets from time to time in the normal course of business in order to recycle capital towards developing, modernizing and expanding sustainable research facilities in the San Diego market," she said.

BioMed last month acquired a pair of industrial-office flex buildings in San Diego’s Sorrento Mesa neighborhood for $115 million, or $798 per square foot, in a deal that included debt assumption from the seller. A BioMed spokesman said at that time that the company was scouting more acquisitions in that and other San Diego neighborhoods.

Thursday's statement said BioMed has committed to spend more than a half-billion dollars in the San Diego region "to create mission-critical infrastructure" for life science and technology companies, with planned projects expected to create more than 600 construction jobs over the next several years.

CoStar data shows San Diego’s industrial property sales reached $4.4 billion in the past year, up 150% from the prior year, as rents grew 8.3% and vacancy remained tight at 3.2%. Joshua Ohl, director of market analytics for CoStar Group in San Diego, noted Sorrento Mesa alone posted $1.3 billion in industrial property sales in 2021, among the highest tallies for area and helping the region reach a 20-year high for industrial investments.

Oxford Properties is among numerous investors looking to capitalize on rising nationwide demand for industrial space geared to high-demand industries, including e-commerce, life sciences, cold storage and other logistics services. It is among several life science-oriented investors that have boosted their San Diego industrial presence over the past two years, including Alexandria Real Estate Equities and IQHQ, along with e-commerce and logistics tenants such as Amazon and RL Jones.

In December, Oxford and Denver-based EverWest Real Estate Investors announced a joint venture aimed at accelerating the growth of Oxford’s U.S. industrial portfolio. Company officials said the venture’s first investments, totaling about $160 million, included six properties spanning more than 1 million square feet in Denver, Colorado; San Diego, California; Phoenix, Arizona; Houston, Texas; Nashville, Tennessee; and Portland, Oregon.

Oxford Properties previously announced plans to increase its life sciences holdings in regions including North Carolina. Also in the past year, it acquired a 14.5 million-square-foot, nationwide industrial portfolio from investment firm KKR for approximately $2.2 billion.


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