By Meghan Hall
Irvine, Calif.-based Healthpeak Properties is executing on an ambitious plan to create several interconnected life science properties that when complete, could total more than one million square feet. According to the company’s third-quarter earnings report released last week, Healthpeak has entered a definitive agreement to acquire 12 acres of land in South San Francisco for $128 million. The off-market transaction is expected to close during the first half of 2021.
The triangular site is situated on Forbes Boulevard between Allerton Avenue and East Grand Avenue. The property is currently utilized as an industrial site subject to short-term leases.
The asset’s location is pivotal for Healthpeak, since it will connect two of the firm’s future projects: the Forbes Research Center and Modular Labs III. The Forbes Research Center is expected to include 350,000 square feet spread across two buildings, while Modular Labs III will total 115,000 square feet. Healthpeak’s plans for its newest parcel include at least 500,000 square feet of space to create a “multiphase, scalable development campus.”
“The future developments will strengthen Healthpeak’s leading market position in South San Francisco and provide an opportunity to build another campus of significant scale to meet the growth needs of Healthpeak’s existing and potential tenants,” said Healthpeak in a statement.
Healthpeak also owns the 628,000 square foot Britannia Pointe Grand and the Oyster Point on Oyster Point Boulevard and The Cove, which total 973,000 square feet. Currently, the company has 5.2 million square feet of lab space and 1.6 million square feet of entitlements, making it one of the largest life science developers in the San Francisco Bay Area. Healthpeak is also California’s largest life science REIT, with more than 118 properties in its portfolio.
The life science industry has proven to be one of the most stable over the last six months, as much of the work that the industry does has been deemed essential. Recent rankings by brokerage firm CBRE has the San Francisco Bay Area as one of the top markets in the nation for life sciences, thanks to its highly educated workforce, innovation and abundance of venture capital funding.
The region has the lowest vacancy rate of life sciences and R&D space in the nation, at just 1.5 percent. Currently, there are 66 tenants in the market searching for 2.4 million square feet of lab space, an increase of 10 percent and 13.8 percent, respectively, over the past 18 months. Because demand is so high, rent has increased by 11.3 percent over the past year, and further rent growth is expected to grow with the market. To date, there is 4.2 million square feet of lab space under construction, 3 million of which is new construction and 1.2 million square feet is conversions—a sign that the industry is still gaining momentum.