SAN DIEGO, CALIF. — Oxford Properties Group has acquired a nine-property, 13-building life sciences portfolio in San Diego. Oxford acquired the portfolio for $464 million. The seller was San Diego-based BioMed Realty, according to The San Diego Union-Tribune.
The portfolio includes 650,000 square feet of space, with 12 of the 13 buildings centrally located within San Diego’s Sorrento Valley and Sorrento Mesa submarkets. The properties are 98 percent leased.
The portfolio features mainly one- to two-story buildings and a 60/40 life sciences-to-office ratio. The buildings’ features include modern mechanical, electrical and plumbing (MEP) systems and ample tenant parking.
According to Oxford Properties, Sorrento Valley and Sorrento Mesa have emerged as epicenters of life sciences growth within San Diego. The firm reports that San Diego recorded over 4 million square feet of leasing volume in 2021, which is an all-time high and 80 percent higher than in 2020. Because of record high demand and limited vacancy, asking rents in San Diego’s life sciences market have increased by 34 percent.
The life sciences market in the area is anchored by research institutions and non-profits including San Diego State University, UC San Diego, Scripps Research and the Sanford Burnham Prebys Medical Discovery Institute. The San Diego life sciences market is supported by a strong STEM presence, a highly skilled labor force, and research and academic institutions, says Tycho Suter, vice president of investments at Oxford Properties.
“The acquired portfolio gives us a meaningful presence in a market where we have high conviction,” notes Suter. “Furthermore, with over a third of the portfolio’s leases set to expire in the next two years, it provides Oxford the opportunity to utilize our active asset management capabilities to create value via targeted upgrades to lab space, improving the customer experience and offering that these buildings have in the marketplace.”
The acquired portfolio is Oxford Properties’ first acquisition in the San Diego market. As a result of the sales transaction, Oxford Properties’ life sciences portfolio in the United States now spans nine markets.
The Toronto-based firm has a development pipeline that includes new, specialized product across research and development (R&D), incubator and good manufacturing practice (GMP) facilities. The firm started acquiring life sciences properties in 2017. Now, the firm’s growth in its life sciences business includes over $2 billion of acquisitions in over the past 12 months.
“Our team continues to create sustained, yet highly targeted growth against one of our highest conviction global investment strategies to build a dedicated life sciences business of scale,” says Chad Remis, executive vice president, North America at Oxford Properties. “Today’s acquisition adds high-quality, income-producing assets to our growing portfolio and perfectly complements the beginning of our development pipeline in San Diego. Life sciences portfolios of this size rarely trade, so it presents a unique opportunity to add immediate scale in a globally significant life sciences market that is characterized by high barriers to entry.”
— Julia Sanders