Joint Venture Secures $33M for Life Science Conversion in San Diego

Luminous Capital Management and Virtus Real Estate Capital have formed a joint venture to convert an industrial warehouse into a life science facility. The joint venture has secured $33 million in equity capital for the project.

Located at 10225 Willow Creek Rd. in the Scripps Ranch area of San Diego, the 71,168-square-foot property is largely obsolete as warehouse space. Built in 1979, it features only 14- to 16-foot clear heights, three roll-up doors, six platform docks, heavy power capabilities and ample parking.

The joint venture plans to renovate the property into a facility that will be suitable as a high-image industrial asset for life sciences manufacturing uses, ideally for the production of pharmaceuticals and other therapeutics. To accomplish this, the joint venture will create 28-foot clear heights.

Once complete, the facility will be located in a premier life science hub with strong demand along the I-15 corridor. According to research from JLL, San Diego is the third largest life science hub in the country, although there has been growth for the asset class in several new emerging markets.

As a result of the strong demand, life science product in San Diego commands both strong asset pricing as well as an active development market and strong leasing demand. There have been a handful or major transactions in all three categories. City Office REIT, for example, has entered into definitive agreements to sell all of its life science holdings in the Sorrento Mesa submarket of San Diego for $576 million. Kilroy Realty Corp. 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.

On the development side, Healthpeak Properties started construction on Sorrento Gateway, 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. The developers at the time of groundbreaking noted that the development was reflective of the strong demand.

Managing director John Chun and senior director John Marshall on JLL’s capital market’s debt team represented the joint venture in securing the equity capital, and JLL’s senior managing director Tim Olson and market lead for San Diego and managing director Tony Russell are leading leasing efforts for the property.