Life Science Investment Hits $500M in Q2
Life science capital investment in San Diego hit half a billion dollars in the second quarter with the biggest deals coming from
GlobeSt.com: What is driving this tremendous growth in life science investment?
Michael Combs: It is important to highlight that we have seen more investment into life sciences nationally. We are seeing the volume shift that way, and there could be a lot of national and global reasons for that. San Diego is capitalizing on that because it has really been on the cutting edge of some of the key areas of interest, like genomics and new bio-pharmaceutical treatments. Those are areas where a lot of investors are focusing their interest. They are technologies that have the opportunity for huge multiple growth in terms of return but also where larger corporate entities are looking to invest in research and development. San Diego has always been a great place for a lot of the R&D to turn into an acquisition to a larger firm or an agreement or partnership with a larger firm.
GlobeSt.com: While life science investment grew, tech investment slowed. Why is there less venture capital interest in tech in San Diego?
Combs: San Diego is positioned a little better around life sciences, particularly as it relates to venture capital investments. We also have a lot more of those cutting edge and innovative companies in the life sciences space that are quickly growing. I am not saying that we don’t have that in tech, but it is at more of a mature level when you have that in life sciences. Our tech has been focused on hardware engineering and computer hardware sciences, and not spinning out of our history as a communication technology hub. I think that we are starting to see interest in investment shift back toward that, and we saw a lot of companies capitalize on that that last year. As it relates to robotics and AI, San Diego has a lot of opportunity to be a leader and receive investment. However, those investments come in large waves or in one or two investments that skew the numbers. It looks like a decline in investment, but it is more consistent with what we have seen historically. Last year, there was a big influx of investment into a lot of cutting edge tech, particularly around robotics AI. That is not typical of what we have seen historically.
GlobeSt.com: The largest transactions were in the biotech and pharmaceutical industries. Is that typical?
Combs: Typically, investment is more in the biotech and pharmaceutical space than it is in, say, medical and therapeutic devices. However, we will occasionally see a large deal in that space, so when you look at total numbers, it can look like there is a shift; however, it is often characterized by one or two large deals. We pretty steadily over the past 10 years have had a pretty consistent flow of investment towards biotech and pharmaceutical.
GlobeSt.com: How does this venture capital investment affect real estate?
Combs: Companies that are taking up large spaces in the market and that are expanding are often the companies that are receiving this investment, particularly the ones that are getting further in their life cycle as a start-up. A lot of times these companies are at a point where they are looking to add employees or expand their space. That is always going to come back to their real estate. Right now we are in a tight market in terms of what is available, so there is going to be an opportunity for new development or repositioning assets to cater to some of these companies and industries that are growing.
GlobeSt.com: Is industrial the asset classes that is most impacted by venture capital investment in life science?
Combs: In the life science space, that is mostly true. It really depends on the stage where these companies are. If they are at a stage where they need to start hiring more administrative people, they might need more traditional office space. Early on, these companies are heavily focused in their scientific talents. As they mature, they are often looking for administrative space or a satellite office. So, it depends on where the company is at.