Biotech Developer IQHQ Buys Offices in One of Biggest San Diego Deals of 2021

Lou Hirsh

October 29, 2021

Office Conversion Planned After $205 Million Deal As Investors Look To Meet Rising Life Science Space Demand

Biotech-focused IQHQ has purchased a San Diego office complex in one of the region’s biggest commercial property deals of 2021, as developers expand their nationwide holdings to meet tenant demand for life science space.

The San Diego-based investor and developer purchased the property known as The Aventine, an 11-story office building and adjacent retail structure in the city’s University Town Center neighborhood, for $205 million, or $827.17 per square foot, from Boston-based investment firm Rockpoint Group, according to public records and CoStar data.

An IQHQ spokeman confirmed the acquisition but declined to provide further details, including its timetable for converting the property to biotech uses and the extent of future renovation or redevelopment.

Tenants in the property, at 8910 University Center Lane, include shared office space provider WeWork, brokerage JLL and CoStar Group. The new owner plans to convert the general-office property, built in 1990 and spanning nearly 220,000 square feet, into a biotech-focused complex to host life science office and laboratory space amid burgeoning nationwide demand for new facilities in that industry.
The transaction also includes an adjacent 27,845-square-foot retail building with tenants including Orangetheory Fitness and Fleming's Prime Steakhouse. It was not immediately clear how the retail component would play into future redevelopment.

The UTC area, often referred to locally as San Diego’s second downtown, has added numerous biotech companies to its tenant base over the past decade, including an expanded headquarters campus of prominent gene-sequencing technology developer Illumina. It has also seen expansion by major tech companies including Amazon and Apple during the past five years.

San Diego is the nation’s third-largest hub for life science supply and demand after Boston and San Francisco. The city’s Sorrento Mesa neighborhood, north of UTC, is seeing significant leasing, investment and development activity geared to that sector this year.

Redevelopment timetables and other details about The Aventine project were not available, and representatives of the buyer and seller did not immediately respond to CoStar News’ requests for comment. The seller was represented by Eastdil Secured. The buyer represented itself.

A representative of brokerage CBRE Group, which took over management of the building after the sale closed on Oct. 25, told CoStar News that IQHQ has not finalized plans for the building but will share information with tenants as it becomes available.

Projects Nationwide

IQHQ, which also has a Boston regional office, is a nationwide life science developer. It is building a $1.6 billion research and development complex on the downtown San Diego waterfront and has started construction on Fenway Center, a $1 billion life science development in Boston.
CoStar data shows Rockpoint paid $105 million, or $605.25 per square foot, for the property in June 2015, purchasing it from New York-based Blackstone Group. The latest Aventine deal is the largest single-property office sale to close in the San Diego region during 2021 based on total price, according to CoStar data. The per-square-foot price is also well above the average $351 paid for office properties during the past 12 months.

The Aventine, east of Interstate 5 and across the street from University of California San Diego, is in what has long been among San Diego’s most in-demand office neighborhoods.

In addition to The Aventine, UTC is the site of pending projects including a major overhaul of an aging shopping center by biotech developer Alexandria Real Estate Equities and retail property owner Regency Centers, which are planning a mixed-use life science campus.

Joshua Ohl, director of market analytics for CoStar Group in San Diego, said The Aventine is the first large office property to change hands since 2019 in UTC, where big sales remain rare as owners hold properties for the long term.

“IQHQ will likely convert the building for biotech use, and it will join a long list of inventory in the University of California San Diego’s life science core,” Ohl said. “It could also be one of the tallest biotech buildings in the area, which will likely become a trend for developers and owners to go vertical in this geographically constrained region.”

Preliminary CoStar data indicates San Diego has seen nearly $900 million in biotech-related lab and office sales activity this year. Depending on closing dates for pending sales, some of which are expected to close after 2021, Ohl noted the region may this year reach the $1.2 billion seen in 2019, the prior period of high demand for such deals in the local market.