Pfizer, a prominent player in the biotech and pharmaceutical industry, is once again expanding its real estate footprint, this time in the bustling life sciences hub of San Diego. The company’s recent 15-year lease agreement for 230,000 square feet of laboratory space has marked the largest life sciences lease in the city this year, according to a report from Bloomberg.
The lease, valued at approximately $290 million, is dedicated to Pfizer’s oncology division and signifies a move by the company to bolster its research and development capabilities. The leased space is situated within the Torrey View campus at 11202 El Camino Real. The property was developed by Breakthrough Properties, a joint venture between Tishman Speyer and Bellco Capital, along with other partners.
The Torrey View campus, spanning 10 acres and 520,000 square feet, is now fully pre-leased with Pfizer’s agreement, alongside another significant lease by medical technology company Becton, Dickinson and Company. Beyond laboratory facilities, the campus boasts amenities such as a 400-person conference facility, a state-of-the-art fitness center designed by Jay Wright, and even a pickleball court, catering to the diverse needs of its occupants.
Pfizer’s decision to expand its presence in San Diego comes following its $43 billion acquisition last year, merging its oncology arm with Seagen.
The lease agreement by Pfizer not only highlights the company’s confidence in the future of oncology research but also serves as a beacon for investors, signaling strong growth prospects within the life sciences sector, which has seen slower levels of activity in previous quarters.
According to a fourth quarter life science market report from CBRE, the Central San Diego laboratory market experienced a positive turn with 190,000 square feet of net absorption, attributed largely to the completion of the Torrey View campus. This marks a significant shift from four consecutive quarters of negative net absorption, a trend unprecedented in the market’s history. However, leasing activity in Central San Diego saw a notable decline, with only 219,000 square feet leased in the fourth quarter, contrasting sharply with the average of nearly 600,000 square feet per quarter over the past three years. Sublease space remains a concern, totaling over 1 million square feet by the end of the fourth quarter, primarily concentrated in core markets and reflecting a 133 percent increase throughout 2023. Rental rates have stabilized in Central San Diego in recent years, reflecting decreased demand compared to the peak years of the Covid-19 pandemic. Pressure on rental rates persists as concessions rise, with the average asking rental rate remaining relatively unchanged from the previous year at $6.65 NNN, albeit influenced by high rates associated with new construction projects.
