Kilroy Lands Major Life Science Leases in San Diego
The office landlord signed three new leases totaling 330,000 square feet with publicly traded life science and biotech companies.
Kilroy Realty Corp. has completed three major lease transactions in San Diego with publicly traded life science and biotech companies. The lease deals total 330,000 square feet, and will involve the redevelopment of current office space into life science facilities.
Tandem Diabetes Care signed a 182,000-square-foot lease with the Kilroy, DermTech signed a 96,000-square-foot lease and Sorrento Therapeutics took 52,000 square feet. Nelson Ackerly, senior vice president of Kilroy, said the three leases illustrated the quality and flexibility of the firm’s properties, particularly after initial leasing.
Kilroy is actively expanding its life science portfolio. The firm is currently planning construction on Santa Fe Summit, a 600,000-square-foot life science facility in San Diego that it says will meet the growing demand in the market. The development is located in the 56 Corridor. In June, the company also started construction on the second phase at Oyster Point, a premier life science campus on 50 acres in South San Francisco. One of five, the second phase will feature thee buildings totaling 860,000 square feet and represents an investment of $940 million.
Other investors are also showing up to take advantage of the life science growth in San Diego. In August, City Office REIT entered into definitive agreements to sell all of its life science holdings in the Sorrento Mesa submarket of San Diego for $576 million. The properties are trading unencumbered by debt to an unnamed buyer. And in June, Healthpeak Properties started construction on a new life science property in San Diego. Known as Sorrento Gateway, it is a 163,000-square-foot class-A life science property in Sorrento Mesa. This is Healthpeak’s third ground-up development in the market since 2020.
While the life science industry—along with technology—is driving office leasing activity in San Diego, the market’s office sector is struggling. In the second quarter, the market’s office availability rate grew again, up 30 basis points to 20.7%. Now, the rate is the highest on record since 2011, according to the latest research from Savills.