Two private equity firms are partnering in a $33 million venture to convert a vacant industrial building into high-demand biotech space, targeting a San Diego neighborhood not previously well known as a life science hub.

Brokers at JLL, which arranged the acquisition and renovation financing on behalf of Irvine, California-based Luminous Capital Management, said the firm and its equity partner, Austin, Texas-based Virtus Real Estate Capital, plan to spend more than $20 million to convert a newly purchased, 71,166-square-foot building at 10225 Willow Creek Road in the city’s Scripps Ranch neighborhood.

CoStar data shows the two-story building was constructed in 1979 and renovated in 2014, and formerly housed electronics maker LG. It was purchased last month for $12.6 million from the U.S. division of South Korea-based LG, which had occupied the property since 1996.

JLL said in a statement the new owners plan to reposition the property “into a high-image industrial asset for life sciences manufacturing uses.” Planned renovations include creating 28-foot clear heights to better facilitate production of pharmaceuticals and related products.

“Luminous principals have both the track record and relationships to execute opportunistic business plans in a niche space that has been dominated by large institutions,” said JLL Managing Director John Chun.
Scripps Ranch, in northeastern San Diego, has long been a hub for the defense, electronics and logistics industries due to its proximity to local freeways, including Interstate 15. Other San Diego neighborhoods, such as University Town Center and Sorrento Mesa, have been filling up with new biotech-related projects over the past decade as space has been running out in the Torrey Pines area of La Jolla, home of the region’s core life science cluster since the 1950s.

JLL and other brokerages rank San Diego third in the nation, after Boston and San Francisco, for its quantity of life science real estate and related industry support infrastructure, including research institutions and trained worker pool.

“Demand for lab space is anticipated to grow, as funding flows, talent and lab space supply grows, and the San Diego area stands to benefit from this influx,” said a September life science report from JLL.

Tenants have not been announced for the Scripps Ranch industrial redevelopment. Luminous and Virtus officials did not immediately respond to CoStar News’ requests for comment.