San Diego
San Diego is one of the top life science hubs in the country, and the market dynamics position the market for long-term growth. Today, the market demand already far exceeds the current supply, and in the long run, the life science market is positioned for more growth. These dynamics have made medical office and life science retail a top asset class among investors.
"The demand for quality life sciences space has outstripped supply of existing space for the most part. Larger users of 40,000 square feet plus are having to look at options as far as 12-18 months out," Ted Jacobs, executive managing director at Cushman & Wakefield, tells GlobeSt.com. "The demand for space is reflective of the demand for talent, and company leaders are focused more than ever on leasing quality space that helps recruit and retain valuable talent. The central markets of Torrey Pines and UTC have become unusually tight and the major lab developers are pushing hard into Sorrento Mesa and beyond to provide expansion options for life sciences demand. Rents and constructions costs have pushed up and put unusual pressure on occupancy costs."
While the market is already among the top life science hubs in the country, it is still a discount to other more mature life science hubs. This has helped to position the market for longevity as it is continuing to attract new users. "While costs have risen in San Diego, we are still about 50-80% less expensive 'all in' than other core markets such as Boston, San Francisco, and even Seattle," says Jacobs. However, this could serve to create a more severe supply demand imbalance. "We will also have potential impact by inbound tech and life science companies that flee and/or expand from other impacted primary life sciences markets around the country such as the San Francisco Bay Area, Boston, Seattle, etc., for myriad reasons," Greg Bisconti, executive director at Cushman & Wakefield, tells GlobeSt.com.
San Diego's life science market will continue to grow for the next decade, driven largely by the evolution of the medical and biotech industries. "The trend for personalized medicine will only continue and therapies such as CAR-T and CRISPR with continue to promote new branches of cures and science," says Bisconti. "We expect innovation and diversification of the industry to grow at a faster pace than before."
Over the long-term, life science will likely become the dominant player in the San Diego market, expanding throughout the region. "We believe the San Diego life sciences market will become a larger geographic footprint and a likely more dense as well as potentially more vertical profile with projects also offering on-site housing, hoteling and retail amenities," says Bisconti. "As a result of our ongoing regional growth, driving/commute times will become more problematic, however, which hopefully services like public transportation, self-driving cars, micro mobility and or other advanced technologies will help mitigate."
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Kelsi Maree Borland
