Breakthrough Properties Launches Life Science Flex Space Program

Breakthrough Properties, a joint venture between Tishman Speyer and Bellco Capital, has launched StudioLabs by Breakthrough, a flex lab and office space program for high-growth life science companies. The program will offer private lab and office suites range in size from 4,000 to 15,000, featuring dedicated offices and huddle rooms; fully-functional wet lab spaces with lab support rooms; lab utilities and starter lab equipment packages.

The first StudioLabs property is under construction in San Diego, with plans to open this summer as part of Torrey Plaza campus in San Diego, which Breakthrough is redeveloping. The 28,000-square-foot StudioLabs property has already been fully leased to Protego Biopharma, Velia, Inc. and Actio Biosciences. The space is fully customizable in terms of the services provided and the length of the lease term, which appeals to new and growing life science companies looking to quickly scale.

The concept is no doubt a response to the booming life science industry, which is expanding rapidly across the country and has led to a dearth of supply in many mature markets, like San Diego. The County is among the most sought-after life science markets, and last year, life science activity broke new records. In 2021, there were 139 life science leases completed in the San Diego market, representing a total of four million square feet, a 51% increase in transactions and an 80% increase in square footage from 2020.

In the fourth quarter alone, life science rents grew 34% with more than 1 million square feet of leasing activity in both the third and fourth quarter. This is thanks largely to strong leasing activity, which totaled 1.2 million square feet in 33 leases and representing nearly 75,000 square feet of absorption. This was the second consecutive quarter where leasing activity surpasses 1 million square feet. While leasing activity was down a nominal 3% quarter-over-quarter, it was up a staggering 155% year-over-year.

The strong market fundamentals have attracted investment capital. For example, at the end of last year, City Office REIT completed the sale of its Sorrento Mesa life science holdings for $576 million. Net proceeds from the sale, after closing costs, total $543 million, but the overall investment generated a gain of $425 million, according James Farrar, City Office REIT CEO. Developers are also responding to the call for more supply, with players like Healthpeak Properties breaking ground on a new life science property in San Diego. The property, known as 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.