By Meghan Hall
Biotech and life science interest in the small town of San Carlos has taken off over the past couple of years, and now tenants and developers alike are looking for ways to break into the submarket. In a recent pre-lease, Redwood City-based firm Allakos Inc. has agreed to take 98,133 square feet at 825 Industrial Road. The lease, according to an SEC filing dating to December of 2019, is expected to begin in mid-2021.
The filing states that the lease agreement with Alexandria Real Estate—the property’s developer—is anticipated to last 123 months, or just over 10 years. The lease provides a 90-day rent free period following its commencement date. Alexandria is contributing about $14.7 million towards tenant improvement costs for the project. Allakos will pay around $5.75 per rentable square foot per month.
The two-building, 556,000 square foot campus is expected to be available in late 2020, and floorplates within the building average around 46,000 square feet, according to a leasing brochure obtained by The Registry. Campus amenities include 3.5 acres of landscaped outdoor space, a restaurant, gym, conference center and collaborative work spaces. 1,500 parking spots and full infrastructure to accommodate for lab and offices uses is also denoted in the plans.
ChemoCentryx, Inc., a clinical stage biopharmaceutical firm, has also signed up to take space at the development. According to an SEC filing, ChemoCentryx and Alexandria Real Estate solidified their lease agreement on July 31, 2019 and will take 96,463 square feet. The purpose fo the lease, states the filing is to replace ChemoCentryx’s current headquarters on Maude Ave. in Mountain View, Calif., which expires in April of 2021. The initial lease term is expected to start August 1st of this year. The company will pay a base rent of $5.60 per month; Alexandria is expected to contribute $15.4 million towards tenant improvements.
Alexandria originally purchased the property, originally called “Meridian 25” and fully entitled, from Windy Hill Property Ventures in the June of 2017 for $85 million. At the time of the acquisition, the property includes six buildings totaling 134,000 square feet.
In the coming years, Alexandria plans to expand in San Carlos, and in October submitted plans for a 1.6 million square foot office development at 900-980 Industrial Road, 900-1098 Commercial Street and 1000-1065 Old County Road. The development will include six buildings that will be constructed in over the course of several phases.
San Carlos has become an increasingly popular place for companies looking to land as they look for space along the San Francisco Peninsula. At the end of the first quarter, San Carlos had about 514,000 square feet of office inventory and a direct vacancy rate of 4.2 percent. Average asking rates at the end of Q1, according to brokerage firm JLL, hovered around $6.72 per square foot. The market, like many, remained strong during the first quarter due to momentum created by pre-leasing activity, and some of that momentum will remain. Along the peninsula as a whole, there is 2.7 million square feet of development under construction, of which 63 percent is pre-leased.