By Jon Peterson
South San Francisco continues to show off why it such a hot market for life science and the biotech industry. Two new projects are in the works for a total of 886,000 square feet. The newest project to have a groundbreaking will be the 550,000 first phase of the Gateway of Pacific development by BioMed Realty. Another project is the 336,000-square-foot phase three of The Cove, which has been started by HCP.
BioMed believes that the timing is right for South San Francisco to have a new speculative project. “The conditions of the life sciences/biotech market now make it open to a new spec development. Within South San Francisco, there is two million square feet of tenant demand for new space and a total of four million square feet of demand in the overall San Francisco Bay Area for biotech and life science. The supply of new space has not kept up with this demand,” says Scott Altick, a vice president and market leader in the San Francisco Bay Area for BioMed.
This demand and supply imbalance has had a major factor of rents for life science and biotech properties in the region. “We have seen rental rates in the region over the past 12 to 24 months increase by 10 percent to 20 percent as there is a lot more of space demand than there is room to meet those requirements,” said Altick.
BioMed will break ground on Gateway Pacific this week. The first phase of this development will be on roughly 6.3 acres and be split up with a 500,000-square-foot lab/office building and a 50,000-square-foot amenities center. The expectation is that the first phase will be completed sometime around the end of 2018. The design is very flexible, so it could become the home of either a single or multiple tenants.
There has been no listing agent hired for the leasing efforts on the project as of yet. This could take place sometime in the near future. The main targeted type of tenants would be biotech. Office tenants will also be considered for the project. The project does have a campus design with amenities like food and dining, sports and recreation, indoor and outdoor meeting areas, dedicated outdoor environments and ample parking.
The long-range plans for Gateway Pacific calls for five buildings totaling 1.3 million square feet. Additional phases of the project will be started once BioMed sees how the leasing demand goes on the first phase. The total amount of land on the entire project is 22.6 acres.
HCP during the first quarter began construction on its Phase III of The Cove in South San Francisco. The total development cost of this phase is $211 million, as stated by the company in its 2017 first quarter earnings report. The first two phases of this project are now 100 percent leased. This became a reality when HCP signed a 10-year lease with Global Blood Therapeutics for 67,000 square feet for Phase I during the first quarter of 2017.