Life Science Record leasing activity during the first half of 2015; 20%-25% year-over-year increase in Class “A” rental rates [REPORT]

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By Grant Schoneman
Vice President | Life Sciences Group
JLL San Diego


Leasing activity continued on a record pace during the first half of the year, with a total of 1,117,903 square feet of completed transactions that accounted for 646,183 SF of positive net company growth. To put this into perspective, the average first-half leasing activity over the last five years is 453,197 SF – 2015 recorded a 147% increase above the five year average. Below are some other market highlights from the first half of 2015.

  • Record leasing activity continues
    • The life sciences cluster recorded 37 lease transactions during the first half of the year, a 3% increase compared to the first half of 2014 and a 42% increase compared to average over the last five years
    • Companies that signed leases during the first half of the year included: Eli Lilly (304,326 SF), Illumina (145,946 SF), Synthetic Genomics (74,629 SF), Otonomy (61,755 SF), Receptos (23,478 SF), Trovagene (22,595 SF)
    • There are over 520,000 square feet of deals currently under negotiation and another 545,000 square feet of active requirement in the market
  • Rental rates continue to surge to new heights
    • Asking rental rates for Class “A” vacancies in Torrey Pines and UTC are now in the high $3 to low-to-mid $4 range
    • Asking rental rates for Class “A” vacancies in Sorrento Mesa and Sorrento Valley are now in the low $3 psf/month range
    • Starting rental rates for Class “A” space have seen a year-over-year growth of 20%-25%, with further growth expected during 2015
  • VC activity is weak, but IPO activity stays strong
    • $3.8 billion of VC dollars were invested into the national biotech sector during the first half of the year, on pace to surpass the 2007 record of $6.0 billion
    • San Diego had 8 VC deals completed in Q2-2015, totaling only $55 million in capital raised.  This accounted for a 63% decrease in dollars invested from Q1-2015
    • San Diego had 4 companies IPO during the first half of the year – Tracon Pharmaceuticals ($36M); Cidara Therapeutics ($77M); aTyr Pharma ($75M) and NantKwest ($207M). The NantKwest IPO gave the company a $2.6 billion market cap and represented the largest ever biotech valuation for a company with no approved drug.

Click here to request a complete version of the Summer/Fall 2015 San Diego Life Sciences Outlook.

Post on LinkedIn: The San Diego life sciences market continues to be a major player both nationally and globally. The region is home to more than 600 life sciences companies and over 80 research institutes that employee around 50,000 people. Share on LinkedIn

Tweet this: There are 520K SF of leases under negotiation & 545K SF of active tenants in the #SanDiego market. #lifescience.

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