By Jon Peterson
Irvine-based HCP is experiencing a very tight real estate market for life science real estate in South San Francisco and that is why the company is starting phase two of The Cove at Oyster Point.
“We have decided to begin phase two of our development on a spec basis based on the success and interest that we have had with phase one of our project. There is basically no space available in the market now, and we hope to change that with our new [development],” says Jon Bergschneider, executive vice president of HCP Life Science Estates. He works out of the company’s regional office in Foster City.[contextly_sidebar id=”CYMi2fUJUrycats9TPm4aLxMLkK4EEQC”]The planned ground-breaking for the project will happen this week. The life science portion of the new phase with be with two buildings totaling 230,000 square. Occupancy for the second phase is planned for the third quarter next year. The design of the building will allow for either a single- or multi-tenant operation.
The leasing on the project will be handled by the CBRE office in Burlingame. “There has been a significant increase in the average asking rental rates for life science properties in South San Francisco since the end of 2014. The rental rates have increased by 10 percent to 20 percent over that time frame. A good reason for this has been the demand and a lack of new space being constructed,” said Chris Jacobs with CBRE. He and Rick Friday are overseeing the leasing on the entire Cove at Oyster Point project.
HCP has been able to lease up half of the first phase of Cove at Oyster Point. The tenants in this space are CytomX Therapeutics and Denali Therapeutics. Both of the tenants are in the same building. Phase one has two buildings totaling 250,000 square feet. They will be completed by the third quarter of this year.
HCP did state in its 2015 third quarter supplemental report that the total amount invested in the first phase of the project is $176.7 million, or roughly $707 per square foot. The real estate investment trust declined to comment on how much capital it will invest in the second phase of the project. At the same investment level the figure would be just over $160 million.
HCP will be developing some additional real estate in the second phase besides just the life science buildings. It will also have 20,000 square feet of retail space, place for a restaurant and a four-story parking garage.
“Our goal with the entire project was to create a project with amenities that you might see in an urban location in more of a suburban setting. The retail would include some shops, maybe a dry cleaning place, a restaurant and a food service operation. Right now on the east side of 101, there is no retail available, and we hope to change that in the future,” said Bergschneider.