BioMed Realty Acquires Buildings in High-Demand San Diego Neighborhood
January 19, 2022
Sorrento Mesa Draws Growing Contingent of Life Sciences-Focused Investors
BioMed Realty acquired a pair of industrial-office flex buildings in San Diego’s Sorrento Mesa enclave for $115 million, the latest deal showing the neighborhood’s prominence among investors looking to address escalating demand for life science space.
The San Diego-based company, one of the nation’s largest owners of biotech real estate, purchased the buildings at 9940 and 9950 Barnes Canyon Road from La Jolla Management Co. and Collins Development Co. of San Diego for a price amounting to approximately $798 per square foot, according to CoStar and public data. The transaction included a debt assumption of approximately $29 million from the sellers.
Officials of BioMed Realty, a portfolio company of New York-based Blackstone Group, declined to discuss the plans for the Sorrento Mesa buildings but said the company is scouting more acquisitions in that and other San Diego neighborhoods.
"The demand for life science lab space is so great that BioMed is actively pursuing new development and lab conversion opportunities in the region to support the ongoing demand from our global tenants," a spokesman said in an email to CoStar News.
The buildings were completed in 1984 and together total approximately 144,000 square feet. Tenants in the buildings include mobile device chipmaker Qualcomm Inc., which renewed its lease in November 2020, according to CoStar data.
Sorrento Mesa has long been the corporate home of Qualcomm. The San Diego region’s largest private employer, it occupies numerous buildings in campuses throughout the neighborhood.
But during the past three years, and especially in 2021, Sorrento Mesa has become the particular focus of investors and developers looking to acquire, convert or redevelop older office and industrial properties to serve skyrocketing demand among life sciences tenants in the nation’s third-largest hub for biotech research and development, following the Boston and San Francisco regions. This has come about as available life science space has dwindled in Torrey Pines and University Town Center, the region’s traditional biotech hubs.
“Sorrento Mesa was front and center in the investment market last year as investors continue to be attracted to San Diego’s life sciences nodes,” said Joshua Ohl, director of market analytics for CoStar Group in San Diego. “There, buyers have the potential to convert older office buildings with developable land into high-end lab space to accommodate the region’s expanding biotech tenants.”
Ohl noted Sorrento Mesa posted $1.3 billion in industrial property sales in 2021, among the highest tallies for San Diego enclaves and helping the region reach a 20-year high of more than $4 billion in sales. Much of Sorrento Mesa’s deal activity was spurred by large national investors looking to serve future biotech tenants with big purchases of mostly older buildings and adjacent land.
The same trend also led investors to spend more than $725 million on Sorrento Mesa office buildings during 2021. The neighborhood accounted for nearly one-quarter of all San Diego office sales during 2021 and was a major contributor as the region topped $3 billion in office sales during the year. It was only the second time in more than 20 years that San Diego’s office investments eclipsed $3 billion, Ohl said.
BioMed Realty owns a portfolio spanning 13 million square feet in the U.S. and U.K., with another 3 million square feet in various stages of development, according to its website.