News
San Diego's Recession Hero
December 7, 2012
| You don't need an avocado to conk you on the head to realize the gravitational pull that San Diego has on high-tech companies. The sector makes up nearly 10% of our office-using employment, and JLL VP Tim Olson says it "helped pull San Diego's commercial real estate through the recession.? | |
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| Sorrento Mesa and UTC have been the biggest beneficiaries, with strong absorption, decreased vacancy, and increased rental rates in recent quarters. JLL says our diverse intellectual capital base, universities, and opportunity to rub elbows with large, multinational tech HQs makes the industry a powerhouse for job expansion. With most of the available space over 40k SF snapped up, adjacent submarkets such as Kearny Mesa and Scripps Ranch will benefit. Tim says high-tech growth from large users like Qualcomm and ServiceNow to startups and mid-tier firms will "spur the next commercial real estate development cycle in San Diego over the next couple of years." | |
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| Biotech also is moving the needle in hubs like Torrey Pines, UTC, Sorrento Mesa, and Sorrento Valley. (That's probably why you haven't seen any outbreaks of plague, polio, or whooping cough in those areas.) Recently we spoke to Brian Starck in Cassidy Turley San Diego's life sciences division, who says there are very few vacant lab spaces on the market. He pegs the vacancy at 7%—a healthy market is under 10% to 12%. While biotech encompasses numerous different industries and institutes, many are working off of NIH grant money, Brian says. | |
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| A lot of biotech developers are going in and either constructing new buildings from the ground-up or redeveloping old, dated facilities—tearing them down to the steel frame and then building these ?beautiful Class-A projects.? One of the most active groups,Alexandria Real Estate Equities, will have half a dozen developments, including the Illumina campus, as well as the redevelopment of Merck?s old campus in Torrey Pines, now called Nautilus (above). Brian and his colleagues at Cassidy Turley didfour large leases that leased up the entire project. Alexandria is in the demolition process on its third redevelopment in Torrey Pines—The Spectrum, 170k SF previously occupied by L3—which Brian says will have a similar look and feel to Nautilus. The developer is also under construction on Arenisca, the former Metabasis building, where Cassidy Turley has signed two leases and has two others in negotiation that would take occupancy to 100%. |
