By Meghan Hall
South San Francisco life sciences market is expanding steadily and competition for large amounts of both research and development office space remains high, making the news of Kilroy Realty’s preparations to go vertical on its Kilroy Oyster Point development exciting for potential tenants eagerly awaiting a place to expand. Kilroy recently applied for a building permit for the fully-entitled site, signaling that formal preparations to build are underway.
The nearly 40-acre waterfront site has changed hands several times since Shorenstein Properties and SKS Partners submitted their initial plans for development in 2015. Kilroy acquired the site, located in South San Francisco at the intersection of Oyster Point and Marina Blvds., for $308 million in June 2018. While Kilroy bought the property from Oyster Point Development LLC, an entity associated with China’s Greenland USA, Oyster Point Development paid $171 million for the fully-entitled site from Shorenstein Properties and SKS Partners in August 2016.
The project is entitled for a total of 2.5 million square feet of space; currently, there is 150,000 square feet of existing office space. The project will include 14 buildings and be constructed in five phases, according to the Kilroy Oyster Point website. Kilroy is investing about $2 billion into the property to complete the project.
No tenants have been announced for the property yet, but the site sits at the nexus of life sciences development in South San Francisco. The three-building Oyster Point Tech Center sits adjacent to the site, while other major projects such as HCP’s the Cove at Oyster Point and BioMed Realty’s Gateway of Pacific are well under way with development thanks to leasing from major companies such as AstraZeneca and Abbvie Inc., respectively.
Over the course of the last few years, the Bay Area’s biotech market has grown to more than 12 million square feet of office and laboratory space, spurred on by both access to public transportation and strong talent pools from major universities such as U.C. San Francisco, U.C. Berkeley and Stanford University. According to a report released in March 2019 by CBRE, the Bay Area’s life sciences industry has grown faster than most markets in the country; employment in life sciences jumped 13.3 percent, compared to 2.9 percent nationally. The rapid growth in employment has manifested itself in a construction boom particularly in hot submarkets like South San Francisco, the report states, where lab vacancy is below two percent.
That growth, said CBRE, is expected to continue as venture capital funding, and an active IPO market, in addition to the factors listed above, continue to drive growth and expansion, throughout not just San Francisco but also the greater Bay Area, as well.
Kilroy Realty declined The Registry’s request for comment.