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Life Sciences Real Estate’s Biggest Deals Of 2022

Context is crucial in understanding the movement of any market, especially one as dynamic as life sciences.

The $6B in total funding raised by life sciences and biotech startups in the U.S. in the third quarter of 2022 — the third straight quarter of declines — could be perceived as an indicator of waning interest, caution in the face of uncertainty and a sign that the real estate demand for labs may be taking a hit. But that staggering amount, if you discount the pandemic-fueled boom of the last 18 months, represents the most flush quarter in history before 2021

While billion-dollar megadeals remained off the table in this year of belt-tightening, reappraisals and rapprochement, lab real estate was still a sought-after commodity. Between nine-figure deals for conversion sites and campuses-in-the-making, life sciences developers still poured billions into new projects and new markets. 

How many analysts had a $625M Colorado life sciences BioMed buy on their 2022 bingo card?

With 37.4M SF under construction, per CBRE figures, 88% of which was on spec, any talk of a crash or conservatism seems premature. Life sciences saw a correction in 2022, and while deals didn’t reach their 2021 peaks, they continued to point to a steady, if slower, upward climb for asset values and lab prices.

The 18-acre Ionis Pharmaceuticals campus in San Diego, which Oxford bought earlier this year.

IQHQ Hotel Pickup Perpetuates San Diego Lab Surge

Buyer: IQHQ

Seller: GAW Capital Partners

Price: $216M

Market: San Diego

Hospitality wasn’t likely the end goal when San Diego-based biotech investment group IQHQ shelled out nearly a quarter of a billion dollars in August for a local Hyatt, nearly double what the owner paid for the property a few years ago (an astounding $500 per key). While the exact plans for The Hyatt Regency La Jolla Aventine weren’t disclosed at the time of sale, it seems significant that IQHQ has an existing life sciences play, Avertine on University Center Lane, next door and proximity to the new trolley line that links the site with downtown and other life sciences corridors up the coast. (The firm also bought a Boston hotel in 2021 with similar plans).

San Diego stood out this year as a burgeoning biotech market with crowded, popular neighborhoods, a series of megadevelopments inching forward, and a push to redevelop downtown sites with life sciences in mind. The Horton Plaza mall megaproject, now the Campus at Horton, should be finished early next year. Even as the Hyatt hotel continues taking bookings, it’s likely this becomes a long-term play for extremely valuable, and rare, lab space in San Diego. 

San Diego Life Sciences Deal Sees Capital Clamoring After Campus

Buyer: Oxford Properties Group

Seller: Ionis Pharmaceuticals 

Price: $258M 

Market: Carlsbad, California

Oxford Properties saw this deal as part of its expanding foothold to break into the competitive San Diego market. Their second acquisition in the area, a sale-leaseback deal, will see them pick up Ionis’s build-to-suit HQ, an 18.4-acre, 250K SF campus. The pharma firm, which sought the deal to further scale and invest in its own growth, also plans to expand into a 165K SF new facility across the street.

During a time when San Diego’s life sciences market has seen “exponential growth,” according to CBRE, low availability of lab and research space has pushed up rental rates, making the properties attractive investment targets, even in a challenging market where capital costs continue to rise. 

Jersey Pharma HQ Trades For Top Dollar

Buyer: AVG Partners

Seller: American Finance Trust

Price: $261M

Market: New Jersey

Like some unorthodox player who works better on a fantasy sports team than with their real-life teammates, New Jersey’s performance as a life sciences leader is due to some statistical anomalies. The most pertinent is the region’s history as a chemical and pharmaceutical leader, which means huge ready-made campuses, perfect for HQs and big sales figures, are just waiting for interested parties to make big-money acquisitions. In this case, a Beverly Hills-based investment group took control of the Sanofi headquarters, which will be home to the namesake tenant through sale-leaseback until 2032. Long-term, New Jersey’s strength has been seen by many analysts as a key building block for a strong Tri-State life sciences market, with the state’s huge campuses becoming headquarters for growing biotech concerns as startups continue creating breakthroughs across the Hudson River.

Alloy Acquires Suburban Boston Campus From ARE

Buyer: Alloy Properties and Anchor Line Partners

Seller: Alexandria Real Estate Equities

Price: $275M

Market: Boston

This deal represents a testament to both the growth of Boston-area biotech real estate and Alexandria’s overstuffed regional portfolio. This collection of lab buildings in Bedford, Lexington and Waltham, comprising nine properties and 370K SF, was once the jewel in the crown of the influential REIT, known as Alexandra Park at 128. But now, these buildings, which will be operated as Alloy property going forward, are dwarfed by Alexandria's other properties in this corridor: 2.5M SF including large-scale projects in Norwood and Woburn. The latter, as ARE Chairman Joel Marcus told Bisnow earlier this year when the property was purchased from Raytheon for $125M, will be a “​​life science MEGA CAMPUS.”

7000 Shoreline, one of the Peninsula Lab Collection properties GI Partners bought from ARE.

Old Navy Sells HQ For Lab Conversion, Doesn’t Do Deep Discount

Buyer: DivcoWest

Seller: Old Navy

Price: $356M 

Market: San Francisco

The May sale of the clothing retailer’s Class-A Mission Bay headquarters, later reported to be worth $356M, continued a trend of converting flagship office property to meet the needs of San Francisco’s supply-constrained life sciences market. Dropbox’s former home at 1800 Owens St. is being converted into lab space after the tenant paid to end its lease, part of KKR’s massive $1B deal last year for what it’s calling ​​Icona: Labs at Mission Bay, and conversions throughout the Bay Area are on the rise, despite the inherent challenges in such rehabs. 

The purchase also shows how DivcoWest continues to expand its West Coast life sciences investments, such as the Shoreline Boulevard South San Francisco conversion pickup and an assemblage of properties in Burlingame that it's planning to turn into a nearly 1.5M SF collection of high-rises called Peninsula Crossing with partner Woodstock.

With Peninsula Buy, ARE Unloads Trio Of Trophy Assets In South SF  

Buyer: GI Partners 

Seller: Alexandria Real Estate Equities 

Price: $388M 

Market: South San Francisco

Private equity firm GI Partners went on a biotech buying spree, picking up the Blackstone Science Square in Cambridge as well as a trio of Bay Area buildings. Dubbed the Peninsula Lab Collection by seller ARE, which has sought to diversify its holdings away from San Francisco, the Class-A, fully leased properties included 7000 Shoreline Court and 341 Oyster Point Blvd. in South San Francisco and 75 Shoreway Road in San Carlos. 

A host of new developments sprouted up in San Carlos, including a $190M deal earlier this year by BentallGreenOak and Graymark Capital to buy up a biomanufacturing site. Others include the Alexandria District for Science and Technology, which leased up its first phase and will continue to grow, with a partnership between Premia Capital and Prince Street Partners planning a 174K SF life sciences project. Presidio Bay also has a second life sciences investment in the city, a $34M purchase of a redevelopment site for a future life sciences campus.

Pharma firm Biogen’s loss, the 125 Broadway building in Cambridge, was BXP’s gain.

Alexandria’s Silicon Valley Addition Adds Megacampus Potential In Key Market

Buyer: Alexandria Real Estate Equities

Seller: Morgan Stanley 

Price: $446M 

Market: Palo Alto, California

Coming in at $1,527 per SF for a combined 292K SF of Stanford-area real estate, this Valley pickup was both a nice profit for seller Morgan Stanley, which acquired the buildings for $330M in 2015, and another example of the ARE strategy in action. The 17.5-acre collection of buildings on Hillview Avenue is adjacent to two other Hillview Avenue purchases the firm made in the last few years. ARE’s actions, including a mall conversion investment in San Bruno, show the firm establishing beachheads across the peninsula, looking past the city of San Francisco to other regional hot spots. 

BXP’s Grabs Key Cambridge Property As Biogen Stumbles

Buyer: BXP

Seller: Biogen 

Price: $592M 

Market: Cambridge, Massachusetts

One of the bigger storylines across biotech last year was the failure of the once-celebrated ​​Alzheimer’s drug Aduhelm, an assumed flagship product by Biogen that ended up flopping, with lower effectiveness than a competing medication and controversy over its approval. But that loss for Biogen, which sought to cut $1B in expenses in a hybrid world, ended up being BXP’s gain. 

The acquisition of 125 Broadway, a six-story, 271K SF lab property, was a big deal in itself, but it also stands adjacent to BXP’s 2.2M SF Kendall Center property. In addition, Biogen will also stay on as a tenant through 2028, offering stability and certainty. Expanding your footprint in the heart of Kendall Square is certainly a big deal for any property owner, and it adds to Biogen’s expanding 6M SF (and growing) Boston-area portfolio of labs and land primed for development.

BioMed Realty 1M SF life science campus in Boulder, Colorado, is a game-changer for Colorado.

Rocky Mountain High: BioMed Buys 1M SF Boulder Lab Campus

Buyer: BioMed Realty

Seller: Crescent Real Estate, Goldman Sachs Asset Management’s Real Estate Business and Lionstone Investments joint venture

Price: $625M 

Market: Boulder, Colorado

Many markets around the country have strived to become the next up-and-coming life sciences market, but arguably, it was Boulder that saw its fortunes improve the most in 2022. This monster deal for the 1M SF Flatiron Park, a 22-building campus near University of Colorado Boulder’s BioFrontiers Institute, in which BioMed plans to invest $200M for redevelopment, will become a premier campus in what looks to be a booming market. 

Breakthrough Properties announced plans to build its own Boulder campus in April, the 9.3-acre Boulder 38 project. More and more biotech firms, and developers, have bet on Boulder and Denver as more affordable relocations targets to escape high costs on the West Coast. There’s a reason the area cracked Newmark’s Top 10 market list in mid-2022.

Mammoth Seaport Sale Shows Boston Submarket Hitting Stride

Buyer: GI Partners

Seller: Related Fund Management 

Price: $770M 

Market: Boston

The sale of this renovated, nine-story, 479K SF building underlines the importance of Boston’s Seaport as a continually expanding innovation hub. A series of large-scale office-to-lab conversions, as well as new developments such as Seaport Circle, have, and continue to, transform the former industrial neighborhood. 

Related picked up the asset for $276M in 2018, so even after factoring in renovation costs, it showed significant appreciation. Current tenants include biotech firms such as Silicon Therapeutics, Elektrofi, BT, Inozyme Pharma, Cellink, Stevanato Group Pharmaceutical Systems, Joyn Bio and Dewpoint Therapeutics, among others.