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San Diego Biotech Properties Trade Amid High Demand

San Francisco Investment Firm Buys Two Buildings for $60 Million, Takes Stake in Four Others

GI Partners of San Francisco acquired full or partial stakes in six San Diego buildings located in neighborhoods known as hubs for life science and technology. (CoStar)

By Lou Hirsh CoStar News October 3, 2022 | 5:43 P.M.

A San Francisco-based investment firm acquired a two-building life science portfolio in San Diego for approximately $60 million and took a majority stake in four other buildings, underscoring strong demand in one of the nation’s largest biotech cluster regions.

GI Partners purchased the properties totaling approximately 81,000 square feet, at 7330 and 7360 Carroll Road in the Mira Mesa neighborhood from Alexandria Real Estate Equities of Pasadena, California, according to the buyer and public data.

The buildings were constructed in 1982 and 1983 and renovated in 2007, with current tenants including biotech firm Catalent and DEC Engineers. CoStar and public data show Alexandria paid approximately $23.3 million for the 7330 building in July 2010 and $6.3 million for the 7360 building in August 2021.

In a separate deal, GI Partners said it also acquired a 70% interest in a four-building Sorrento Mesa portfolio owned by Alexandria at 9965-9995 Summers Ridge Road, totaling approximately 316,000 square feet. The price was not disclosed, but Alexandria paid approximately $148.6 million for the portfolio in January 2018, according to public data.

In a statement, GI Partners Managing Director John Sheputis said fundamentals in the San Diego neighborhoods remain robust, “with steady demand and tightening supply as tenants seek access to the highly skilled San Diego workforce and its concentration of intellectual capital.”

Mira Mesa and the adjacent Sorrento Mesa neighborhood of central San Diego have long been hubs for technology and life science firms, and Sorrento Mesa in particular has seen a wave of property purchases and redevelopments geared to the biotech industry over the past three years.

A second-quarter report from brokerage CBRE noted that San Diego’s biotech vacancy rate was 3.6%, well below the national biotech vacancy rate of 5.2%. The brokerage said space being sought by San Diego biotech tenants at the end of the quarter totaled approximately 1.5 million square feet, with 4.7 million square feet of new and converted space under construction. Nearly a quarter of space under construction was preleased.

A September national life science report from brokerage JLL reaffirmed San Diego’s status as the third-largest hub for biotech real estate supply and demand after Boston and San Francisco, a spot it has held for several years. While falling below year-earlier levels, venture funding for the biotech industry remained historically high in the second quarter, totaling about $8 billion for the three top cluster markets, including about $1 billion in San Diego.

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