How Incubator/Accelerator Space Affects SD CRE

Engle: “By entering into an incubator/accelerator, companies have the ability to preserve capital, be proactive with their real estate and focus on their core business, all while remaining flexible in anticipation of rapid growth.”

SAN DIEGO—With overall life-sciences space vacancy here being below 7%, the incubator/accelerator business model fills a vital role in the market’s life-sciences real estate sector, CBRE associate Jon Engle tells GlobeSt.com. The sector needs places for young companies to get their start and grow, and developers here are responding with the type of affordable space that will get them up and running in no time. We spoke with Engle exclusively about incubator/accelerator space in the life-sciences realm here and how it all works. GlobeSt.com: What is the landscape of life-science incubator/accelerators in San Diego? Engle: There are several life-science incubator/accelerators in San Diego ( JLABS ; Bio, Tech and Beyond ; and Connect ), but the San Diego life-science incubator/accelerator landscape is truly anchored by JLABS: Johnson & Johnson Innovation ‘s flagship facility in Torrey Pines. JLABS’ state of the art, 40,000-square-foot-facility allows companies to rent out space, allowing these companies to focus on their core business. At JLABS, companies have the ability to access office and lab space, as well as rent the necessary equipment. In addition to the physical space needed for emerging companies, JLABS provides support for entrepreneurs, with educational events and access to investors, partners and networking opportunities. GlobeSt.com: What is the typical profile of a company inside a life-science incubator/accelerator? Engle: The typical profile of companies that are attracted to incubator/accelerators (and benefit the most) are companies that are still in their infancy and are laying the foundation for growth in the near future. By entering into an incubator/accelerator, companies have the ability to preserve capital, be proactive with their real estate, and focus on their core business, all while remaining flexible in anticipation of rapid growth. Some companies will enter an incubator/accelerator space immediately after the company’s inception, while others will enter after they have raise Series A or B funding and will continue to raise funds while in the space. Recently, we have seen several companies that did not originate in San Diego choose to join an incubator/accelerator in San Diego rather than their hometown. This is because of the quality of the incubator/accelerator space, as well as the access to talent and venture capital that San Diego provides for growing life-science companies. GlobeSt.com: How does incubator/accelerator space affect commercial real estate in San Diego? Engle: With overall vacancy for life-sciences space in San Diego being just under 7% this quarter (and overall vacancy for Torrey Pines being even tighter at approximately 2%), the incubator/accelerator business model fills a vital role in the San Diego life-sciences real estate market. In addition, to the lack of inventory for available lab space (especially less than 2,500 square feet), the incubator/accelerator facilities are essentially “plug and play”—allowing companies to move quickly with speed to market rather than having to wait for their space to be built out or a tenant to vacate the space. Incubator/accelerator space also allows companies to be located in highly desirable submarkets; for instance, JLABS is located in Torrey Pines. Traditionally in the past, start-ups either couldn’t afford to be located in such desirable locations or there simply wasn’t any small lab space available. By having incubators/accelerators in highly desirable locations, emerging companies can benefit from being in a world-class location, just like an established life-science company. GlobeSt.com:   What do you foresee happening with life-science incubator space in San Diego in the future? Engle: I believe that more and more companies will look to industry-specific incubator/accelerators when looking for space because when you are starting a company, it is cost-effective, flexible and truly resourceful space. Similar to how JLABS is connected to Johnson & Johnson, we will see new incubators/accelerators tied to various entities such as universities, biotech , pharmaceutical , medical device , diagnostic and real estate companies. I also predict, that we will see incubator/accelerators narrow their scope and be very specific in what subset of the life-science market they are catering to—expanding their ability to provide expert advice and guidance. San Diego’s life-science economy has thrived on its innovative and entrepreneurial nature, and providing important tools and resources for entrepreneurs to continue to innovate and start companies benefits San Diego as a whole—not just the life-science real estate market. San Diego CRE is in a solid recovery phase with some creative trends leading the way.   Are You In The Know?  Join us  at RealShare SAN DIEGO on May 17 for impactful information from the leaders in San Diego CRE. Learn more .