Developers Announce First Biotech Tenant at Law School-Turned-Lab in Downtown San Diego
July 23, 2022
Downtown Has Historically Lagged Behind Other Neighborhoods Attracting Life Sciences Tenants
A partnership between global investment firms Barings and Bain Capital and biotech-focused Phase 3 Real Estate Partners has signed the first tenant at its law school-turned-lab space in downtown San Diego.
It's only the second biotech company to set up major operations downtown, a neighborhood that has long lagged behind others bidding for life sciences tenants in San Diego, the nation’s third-largest region for biotech real estate after Boston and San Francisco.
Executives of Barings, Bain and Phase 3 said the partnership signed an undisclosed tenant to a full-floor lease at the eight-floor 1155 Island Ave. property, constructed in 2011 to house the Thomas Jefferson School of Law, which relocated to another building downtown in 2014.
The building has since been rebranded as Genesis after it was converted to lab and office space.
“While the tenant has requested that we not disclose their name at this time, they are relocating from Torrey Pines to 1155 Island and highly value the unique work/live/play fundamentals of this downtown San Diego location in combination with a high-quality, cutting-edge life science space fit for their needs and requirements,” Joe Gorin, managing director and head of U.S. acquisitions for Charlotte, North Carolina-based Barings, said in an email to CoStar News Wednesday.
San Diego’s biotech industry has for decades been concentrated in the Torrey Pines neighborhood of coastal La Jolla. During the past decade, industry growth has spurred office and lab demand to spill over into neighboring enclaves such as University Town Center and Sorrento Mesa, where multiple developers have new construction or redevelopment projects underway.
Downtown San Diego historically has been a relative nonplayer in biotech, though several developers including IQHQ and Stockdale Capital Partners have multimillion-dollar projects underway with the intent of luring lucrative life sciences tenants.
The only notable downtown life science leasing of the past few years was last August, when brokerage CBRE announced that Ireland-based Mainstay Medical leased approximately 23,000 square feet for its planned new U.S. headquarters at developer H.G. Fenton’s mixed-use property at 2171 India St. in Little Italy.
Downtown property owners are now looking to capitalize on a trend that created one of San Diego’s most active years in its history for biotech leasing in 2021. The year saw 160 transactions totaling 4.4 million square feet, according to brokerage and CoStar data.
An April report from CBRE noted that San Diego is second to Boston for in-progress conversions of conventional offices into biotech lab space, with 1.6 million square feet underway as of this year’s first quarter.
CoStar and public data show the current owners acquired the East Village Genesis building in November 2020 in a $43.5 million recapitalization deal, taking a 50% stake from a prior partnership consisting of Barings and Denver-based Miller Global Properties. The new owner group announced plans at that time for an extensive renovation geared to biotech lab and office tenants, announcing it had signed its first tenant this week, though no company information, financial terms or move-in timetables were disclosed.
Barings’ Gorin said the company and its development partners “continue to hear from life science leaders interested in a downtown, urban destination.” The developers said they have made significant biotech-focused changes to the former law school building.
Those include upgrading its ventilation and plumbing, adding exhaust fans, and installing air purification systems, washing equipment, high-load service elevators and other components geared specifically to laboratory use. There is also a new top-floor lounge, event space and customizable “spec suites” split evenly between lab and office areas of various sizes.