An affiliate of Alexandria Real Estate Equities has paid a JV of Walton Street Capital and SteelWave $182.5M for the 291,799 SF Torrey Ridge Science Center, CBRE reports. The three-building, Class-A life sciences campus was 87% leased at the time of sale, but many of the leases were long term and at rents below market.

Torrey Ridge Science Center was built in 2004, and the JV had invested $55M in base building and tenant improvements since 2012. Common areas, signage and landscaping were upgraded, and a new dedicated central plant and chilled water systems were added in each building. The campus has newly built tenant amenities, including a fitness center, a conference center and Wich Addiction café.

“Torrey Ridge Science Center is one of the premier life science campuses in the region,” said CBRE EVP Louay Alsadek, who along with associate Hunter Rowe, served as investment adviser to the buyer. “SteelWave and Walton Street’s extensive, relevant renovations enhanced the campus even further, resulting in considerable interest from large institutional national and international buyers.” CBRE SVPs Rich Danesi and Ryan Egli repped the seller.

“This was a highly strategic acquisition for Alexandria in Torrey Pines, one of our core San Diego submarkets,” said Alexandria San Diego EVP and regional market director Daniel J. Ryan. “The Torrey Ridge Science Center campus provides us with the opportunity to achieve significant cash flow growth as leases are renewed or rolled over, given that many of the in-place leases are below market. The campus also gives us the flexibility to convert traditional office space, which is approximately 22% of the project, to wet lab research space in order to respond to strong demand from leading biotech entities in San Diego."

One of the top three life sciences clusters in the nation, San Diego is experiencing upward pressure on rents for this product type, due to lack of new lab space development. Over the last year, availability of lab space has declined due to growth in the life sciences sector, causing rental rates secured in 2015 to experience double-digit increases, according to a JLL report, peaking at $3.75/SF to $4/SF in the Torrey Pines and University Towne Center submarkets, and plateauing during the first half of 2016.