17Jun
Photo by National Cancer Institute on Unsplash
By: Ryan Ponce On: June 17, 2024 In: Advice, Downtown San Diego, Market Update Comments: 0

The Biotech Office Environment in San Diego

San Diego’s biotech sector, once bustling with activity and competition for office space, has experienced a significant shift. Currently, the vacancy rate for lab and office spaces in the region has surged to 14.3%, a notable increase from the previous year’s 5.7%. This rise in vacancies is attributed to various factors, including downsizing and closures of companies like Locano Bio and Illumina, which vacated substantial spaces to cut costs. The current market has approximately 1.2 million square feet of available sublease space, nearly double from a year ago.

The trend reflects a broader cooling in the venture capital market, where investors are becoming more selective, opting to fund fewer companies with larger checks. This cautious approach has led life science firms to be more deliberate about their real estate investments, preferring newer buildings offering better deals. While tenants have a plethora of options now, this shift has turned the market from a landlord’s to a tenant’s market.

Despite the current high vacancy rates, the biotech office environment in San Diego remains cautiously optimistic for the long term. Several projects, including the Genesis building in East Village, are slowly finding tenants and contributing to a gradual but steady growth. The sector continues to attract significant investments, with San Diego startups securing $1.57 billion in venture capital in the first quarter of 2024, indicating a potential rebound in the future.

IQHQ’s RaDD:

  • Occupies 6 Blocks
  • More than 8 Acres
  • 5 Buildings
  • Approximately 1,700,000 sq ft
  • Lab, Office, and Retail Space
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The Campus at Horton:

  • Occupies 7 Blocks
  • 10 Acres
  • Net Zero Carbon Footprint
  • Over 1,000,000 sq ft
  • Lab, Office, and Retail Space
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What This Means for Downtown San Diego

Downtown San Diego has embarked on an ambitious journey to establish itself as a hub for biotech and life science companies. Major developments like IQHQ’s RaDD and The Campus at Horton are central to this vision, offering state-of-the-art facilities and prime locations. However, these projects have yet to secure significant biotech tenants, a challenge that highlights the current hesitancy in the market.

The Genesis building in East Village has shown some promise, managing to fill about 50% of its space with biotech tenants. This indicates that while there is interest, the downtown area faces stiff competition from established life science clusters in regions like Sorrento Valley and Torrey Pines. These areas are preferred due to their proximity to major research institutes and a well-established biotech ecosystem.

In the short term, Downtown San Diego might struggle to attract and retain biotech companies. However, the long-term outlook remains positive. The unique urban environment, coupled with ongoing investments and developments, promises to transform downtown into a vibrant biotech hub. As the market stabilizes and companies seek new opportunities, downtown’s strategic location and mixed-use facilities could become a significant draw.

Overall, while the current market conditions pose challenges, the continued development and strategic investments in Downtown San Diego’s biotech infrastructure hold the potential for significant growth and success over the next 3-5 years.

Search Properties near IQHQ’s RaDD and The Campus at Horton

And Always Remember, It Matters Who You Work With!

Give me a call today at (619) 228-6790 or email me at Ryan@livingthesandiegolife.com for more information or to schedule a tour of the neighborhood!