The property owner is believed to be Shelton Investments of Honolulu, HI, which reportedly contracts out property management to AMB Property Corp., a San Francisco-based industrial REIT. A tenant roster was not immediately available. Discovery Partners International in 2006 transferred a 52,000-sf leasehold interest in one of the buildings to BioFocus, according to SEC filings. The lease expires at the end of November 2008, according to SEC documents. BioFocus uses the space to provide "compound management services" for its clients. Some of the space has been subleased for use as a small molecule repository for the National Institutes of Health Roadmap Initiative, according to SEC documents.

The 42.8 million-sf Peninsula office market that runs between San Francisco and the Silicon Valley was flat through the first three months of the year on an overall basis. CB Richard Ellis is reporting that net absorption for the first quarter was nominally positive, resulting in direct vacancy rate of 9.0% and an overall vacancy rate (including sublease space) of 11.2%.

The Peninsula-wide weighted-average asking office lease rate also was largely unchanged at $4.24 per sf per month but is up 33% from this time last year. The Northern Peninsula, which includes the South San Francisco, Brisbane and San Bruno submarkets, saw average asking rates fall 3% to $3.12. The market rate for life sciences office space, which typically requires a more expensive build-out that traditional office, is approximately $4.00 Net, according to NAI BT.

The South San Francisco market specifically has a total of 2.52 million sf of office space, a direct vacancy of 7.6% and an overall vacancy of 8.7% as of the end of March. The asking lease rate for class A space in South San Francisco is $3.50, according to CBRE. Net absorption in the first quarter was negative at approximately 40,000 sf. Just over 300,000 sf was under construction.