Genentech leased a 229,000-square-foot project in South San Francisco, highlighting the intense demand and limited supply of available property in the Bay Area’s life science real estate market.
The South San Francisco-based biotech firm agreed to rent the entire project at 751 Gateway Boulevard, according to the San Francisco Business Times. The development is about a mile from the firm’s corporate headquarters, which totals about 4.7 million square feet, the Business Times reported.
The project, a joint venture between Boston Properties and Alexandria Real Estate Equities, is under construction and slated for initial occupancy in early 2024, Boston Properties said in a news release. The REIT, which specializes in building, owning, and managing Class A offices, will own 49 percent of the development upon completion, and Alexandria will own the rest.
South San Francisco “continues to be the location of choice for leading life science companies,” Bob Pester, Boston Properties’ executive vice president for the San Francisco region, said in the release. The San Mateo County city, home to more than 200 biotech companies, touts itself as the birthplace of the industry and says it’s the largest biotech cluster in the world.
The Gateway Boulevard development is the first phase of a multi-phase life science project at the site of an existing office and lab campus named Gateway Commons. Boston Properties and Alexandria have the option to develop at least another 411,000 square feet of life science property there across two projects, assuming they get the city’s approval.
Genentech’s decision to lease almost two years before it can move in reflects the industry’s local supply-demand imbalance. Companies are building more than 3 million square feet of lab space in the Bay Area, compared with more than 4.5 million square feet of active tenant requirements, according to third-quarter data from Kidder Mathews.
The vacancy rate for such space, meanwhile, was less than 3 percent at the end of last quarter, relatively flat compared with the previous three months, Kidder Mathews says.
[San Francisco Business Times] — Matthew Niksa