The once-hot market for life science development has come to a screeching halt in a Bay Area city that has unabashedly touted itself as developer-friendly.
Longfellow Real Estate Partners has fallen $1 million behind on rent and lost its ground lease at a site in Emeryville where the Boston-based developer had initially planned a 750,000-square-foot life science campus dubbed Atrium Labs, the San Francisco Business Times reports, citing court documents.
The developer had already scaled back its plans to about 125,000 square feet on the site at 1650 65th Street in Emeryville, the East Bay city where land owner PSAI Real Estate Partners wants possession of the site along with back rent, legal fees and damages, according to a filing in Alameda County Superior Court.
Longfellow has meanwhile listed an adjacent property at 6601-6603 Shellmound Street, which was once part of its overall plan in Emeryville, for sale at $36 million.
The developer managed to forestall a similar move by PSAI a month ago, and said at the time the two parties were negotiating new terms for the 40-year ground lease. Representatives of the developer declined to comment on the latest turn in court.
Emeryville enjoyed a run as a hotspot for commercial development in general and life science projects in particular. The city promoted itself aggressively as a business-friendly enclave in the Bay Area, a pitch that melded with a strong flow of venture capital into the life science sector as it ramped up during the pandemic.
The hot streak has clearly ended in the Bay Area, with Emeryville feeling the blow. The life science sector recently logged a vacancy rate of more than 30 percent in the city. That’s up from a years-long track record of single-digit vacancy, and more than twice the national average, according to CBRE.