Tom York on Business: The Growing Life Sciences Sector Faces a Shortage of Lab Space
Demand for leased real estate space in San Diego’s life sciences sector has recently plummeted, according to a quarterly report from a commercial broker CBRE. The result: a tight market for life sciences tenants with limited space available to rent.
This has resulted in record rental rates and spurred a boom in construction activity in the market to catch up with demand.
Other conclusions from the perspective of the report on the first quarter of 2022:
- The vacancy rate was 3.5%, a record level for the region. The inventory of properties exclusive to the laboratories amounts to more than 22 million square feet.
- The lack of space coupled with competition explains the skyrocketing rental rates. Market asking rents climbed to $6.44 per square foot from $6 per square foot since Dec. 31.
- Leasing activity for the first three months of 2022 touched 1.54 million square feet, representing half of total leasing activity for 2021, which was the highest year on record for the rental activity.
- During the quarter, the sector has witnessed the largest transactions ever recorded. Which is not such good news. But the good news for those looking to rent is that competition for lab space is returning to normal, although rates will continue to rise well above historical trend lines.
Meanwhile, the report highlighted several other important points.
- The trend of converting commercial spaces into laboratories continues. Over 6 million square feet of inventory has been added since 2015, with an additional 3.25 million square feet under construction. The CNRE report indicates that we can expect to see another 6.5 million square feet of conversion space hitting the market over the next 2-3 years.
- Venture capital funding in the sector continued at an all-time high in the quarter, which is having a significant impact on the demand for space. Despite a drop in the number of transactions, venture capital activity followed the investments announced in the fourth quarter. Over $620 million was invested during the quarter.
- The number of jobs in the life sciences exceeded 69,4000 at the end of the quarter. These research and development jobs have increased by more than 20%, reflecting growth despite the economic turbulence caused by the Covid-19 pandemic over the past two years.
* * *
Electric Propellerwhich has an office in San Diego, is among the statewide construction companies honored by the California Associate Builders and Contractors.
The ABC said the companies earned top honors in its 2022 National Safety Performance Report.
Step Diamond members are more than six times safer than the industry average, achieving an 84% reduction in incident rates. ABC said the companies earned its coveted diamond status by going “beyond expectations to achieve world-class safety on and off the job site.”
* * *
Carrier Air Canada made its first flight since San Diego International Airport to Montreal recently – the first-ever nonstop service between the two cities.
Flights operate three times a week during the peak summer season with arrivals to San Diego on Wednesdays, Fridays and Sundays and departures from San Diego on Mondays, Thursdays and Saturdays.
* * *
Meanwhile, the carrier WestJet resumed nonstop seasonal service between Vancouver and San Diego. Flights operate twice a week on Thursdays and Sundays until September.
The resumption comes after WestJet suspended service in March 2020 due to the COVID-19 pandemic.
* * *
To help meet the ever-increasing demand for product management professionals here in the region, the University of San Diego has partnered with Fullstack Academy to start a product management bootcamp program.
There are currently over 15,000 product management positions open, with the average starting salary for product managers reaching $79,000.
A new version indicates that the number of product management jobs will increase by 13% over the next decade.
The online bootcamp starts in July. Registrations are open until June 28.
* * *
Award-winning digital marketing agency Interactive Red Door moved to a new building in the Sherman Heights neighborhood of San Diego. The building also has the San Diego Regional EDC and Council Member Vivian Moreno’s office as tenants..
A Red Door spokeswoman said the company hopes its new campus is a step toward increased awareness and investment in Sherman Heights, a so-called “designated opportunity zone.”
“Amid a variety of pandemic-fueled hurdles, construction of the project was carried out entirely by local vendors, including AVRP, Swinerton, Cultureand many more,” the spokeswoman said.
* * *
California tax and commercial law firm Hone Maxwellwhich has an office here in San Diego, opened an office in Tijuana.
“Hone Maxwell began 10 years ago as a California law firm founded by two friends from law school and is now an international firm serving clients in Asia, Mexico and elsewhere,” said the managing partner. Josh Maxwell. “With many clients, attorneys and employees – and my wife – all from Mexico, I am…proud to be able to work more effectively with our clients and partners south of the border.”
* * *
Are you looking for an apartment? Need more living space? Well, apparently a few towns in San Diego County might not be the place to look if you need more elbow room.
This according to the apartment search website Rent a cafe, who recently did a study on the cities where you can get the most space for your rental dollar.
According to the study, Carlsbad is one of the “last strongholds” of great privacy — with the average apartment offering more than 460 square feet of space per tenant.
“Carlsbad is by far the best option for renters looking for a large ‘alone’ space,” according to a spokeswoman. “Tenants get 464 square feet of space, or about 1.43 rooms per person.
However, Carlsbad is still below the national average of 540 square feet per tenant.
Chula Vista renters get the least personal space in San Diego at 322 square feet, which equates to one bedroom per person. Not far behind are the tenants of El Cajon, who only get 327 square feet for themselves.
These two cities, Chula Vista and El Cajon, rank 5th and 6th respectively among the cities with the least personal space per tenant nationally.
* * *
Finally, this bit of news from the beer-making industry in North County.
CoLab Public Housewhich combines brewing, winemaking and culinary concept under one roof, opens its doors at Vista.
The new venture boasts 12,500 square feet, with over 5,000 feet allocated for a tasting room and outdoor patio.
The house will have Barrel and stave brewing, Breakwater brewing and Laguna Beach Beer Co.with Propaganda Wine Co. vinification and aging of the wine on site. The site will also include an in-house kitchen operated by LA Badass Baby Burgers.
CoLab has scheduled a three-day opening weekend from June 10-12.
Tom York is a Carlsbad-based freelance journalist who specializes in business and economics writing. If you have any topical tips you’d like to share, send them to [email protected]