Alexandria Real Estate Sells 500 Forbes in South San Francisco to Clarion Partners for $139.5MM

By Meghan Hall

Alexandria Real Estate Equities has sold off 500 Forbes, a 155,685 square foot office and research building on 6.7 acres at the heart of South San Francisco’s life sciences cluster. Alexandria’s third quarter financial and operating results, released yesterday, the property sold for $139.5 million, or about $895 per square foot. Currently, the building is leased to Genentech, who occupies multiple other properties in the immediate vicinity.

The transaction closed on August 1st, 2019, according to the documents; the buyer of the property was New York-based Clarion Properties. Upon closing, Alexandria will retain a 10 percent ownership interest in the property. The sale was the largest of the quarter on the San Francisco Peninsula, according to a third quarter report released by Colliers International, who states that the transaction’s structure is reflective of the appeal of life sciences assets to institutional buyers.

Clarion Partners has been active throughout the Bay Area over the past year, purchasing assets across a wide variety of submarkets and property types. In February, Clarion purchased 215 Fremont — formerly known as the Charles Schwab Building — in San Francisco for $335 million from Jack Resnick & Sons. In May, Clarion and Seefried Industrial Properties acquired 970  McLaughlin in San Jose for $15.15 million, where they plan to build a 223,000 square foot logistics and manufacturing facility. Most recently, in July, Clarion also bought the 185-unit Artist Walk apartment complex in Fremont for $110.25 million. The property also includes 30,000 square feet of retail with tenants such as Orange Theory Fitness. 

The San Francisco Peninsula continues to be one of the top markets for biotechnology and life sciences companies, where the office and research and development space is limited. Combined, South San Francisco and San Bruno have just under 7.9 million square feet of research and development space, and South San Francisco has about 4.6 million square feet of office space. Vacancy across San Mateo County, which encompasses most of the Peninsula, hovered at around 3.2 percent, and the development pipeline remains packed as major investors and developers such as Kilroy Realty, BioMed Realty and Tarlton Properties are all looking to add new inventory to the market.

And, while South San Francisco is often considered the “Birthplace of Biotechnology,” biotechnology companies are also increasingly moving beyond South San Francisco to developments in San Carlos and Menlo Park, where preleasing activity is steadily increasing,  a positive sign for property owners and investors.

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