Life Science Firm DermTech Leases Full Building From Kilroy in San Diego
July 8, 2021
Transaction in High-Demand Enclave Reflects Rising Demand for Biotech Space
DermTech has leased the entirety of this office building owned by Kilroy Realty in San Diego's Del Mar Heights neighborhood.
Life science firm DermTech plans to move into a building in an office campus owned by Kilroy Realty Corp. in San Diego’s Del Mar Heights neighborhood, the latest sign of growing regional demand for space among biotech companies.
DermTech, which develops technologies geared to early detection of skin cancer, leased all 95,997 square feet in the building owned by Los Angeles-based developer Kilroy at 12340 El Camino Real, according to a filing by the life science company with the Securities and Exchange Commission.
The firm, which entered into the 10-and-a-half-year lease on July 1, plans to occupy the space starting Jan. 1, 2023, after the landlord completes planned improvements. The location is meant to serve as DermTech’s principal office, and the company has right of first refusal to lease additional space in another nearby building owned by Kilroy at 12390 El Camino Real.
Representatives of DermTech and Kilroy did not immediately respond to requests from CoStar News for comment. Further financial details on the new lease were not available.
DermTech is now headquartered at 11099 N. Torrey Pines Road in San Diego’s Torrey Pines neighborhood. That enclave has been the hub of the region’s biotech industry for several decades, but rising demand amid tightening space has spurred life sciences tenants to seek out locations in other San Diego neighborhoods including University Town Center, Sorrento Mesa and most recently Del Mar Heights.
Del Mar Heights, part of a larger region known as Carmel Valley where Interstate 5 meets state Route 56 in northwestern San Diego, has long been among the city’s most expensive office markets and traditionally home to law and financial services firms.
That has recently been changing as Kilroy and other landlords have brought in technology and life sciences tenants. For instance, Kilroy’s recently completed, mixed-use One Paseo in Del Mar Heights, is home to the headquarters of biotech firm Acadia Pharmaceuticals.
CoStar data shows the Del Mar Heights-Carmel Valley office market was not immune to the pandemic but still has among the region’s highest average office asking rents, at $4.23 per square foot a month, well above the regional average of $2.92, though the vacancy rate is above average at 15.6%.
Properties rarely go up for sale in the neighborhood. The most recent new office developments, including One Paseo and developer Lincoln Property’s under-construction Aperture Del Mar, have so far commanded asking rents well above the neighborhood average, according to a CoStar Market Analytics report.