NJ Pharma Giant Vacating Bay Area Life Science Campus
Bristol Myers Squibb is closing a 256K SF research campus at Woodside Technology Park and consolidating operations in the Bay Area.
Pharma giant Bristol Myers Squibb (BMS) is closing a 256K SF research campus at Woodside Technology Park and consolidating operations in the Bay Area after reporting a loss of nearly $12B in the first quarter.
The New Jersey-based drugmaker announced it will close the three-building campus, located at 700-740 Bay Road in Redwood City, as part of a corporate-wide plan to cut 2,200 jobs this year and eliminate $1.5B in costs by the end of 2025.
The Redwood City campus, which includes a 133K SF building, two 60K SF buildings and an auditorium, is owned by Blackstone’s BioMed Realty, a REIT based in San Diego.
The Redwood City campus has been a center of cancer immunotherapy operations for BMS, which will move the remaining employees into The Shore at Sierra Point, a four-year-old development in Brisbane where BMS took over a 130K SF lease at after its $13B acquisition in 2020 of drug developer MyoKardia.
A wave of new supply—including conversions as well as ground-up development—is outpacing demand in the Bay Area’s life science sector, pushing the vacancy rate for Q1 2024 up over 20%.
The leasing market slowdown in the Bay Area continued in the first quarter, with gross leasing activity totaling just 394,000 SF for the entire region, a tick down from the previous quarter and 41% below the 10-year quarterly average.
Net absorption for life science space remained in negative territory, totaling minus 648K SF, according to a market report from CBRE. The overall vacancy rate in the Bay Area reached 20.4% in Q1. The life science vacancy rate in the San Francisco Peninsula submarket hit 22.2%, up 460 bps from the fourth quarter.
Nine new projects encompassing almost 1M SF feet were delivered in the first quarter in the Bay Area. The largest delivery, Phase 3′s 561,000-square-foot Genesis Marina project, arrived 60% pre-leased; the largest conversion project, the 52K SF 3600 Bridge building from Longfellow, delivered unleased, the report said.
On the brighter side, CBRE measured demand from prospective life science tenants encompassing 2.3M SF based on 62 requirements in the first quarter, an increase of 500K SF over the Q4 tally. CRBE attributed the demand to a rebound in venture capital and increased NIH funding.
“The rebound in venture capital investment and elevated NIH funding should translate to greater deal certainty through the balance of 2024,” CBRE’s report said.
The life science construction pipeline in the Bay Area is bulging, fueled by projects initiated last year to convert empty offices into lab space. At the end of Q1 2024, there were 33 life science projects encompassing nearly 7.4M SF under construction, including 5.2M SF of ground-up development and 2.1M SF of full building conversions to life sciences.