The Gigantic Life Sciences Tenant In Town
We got a whiff of a confidential life sciences tenant looking to eat up 300k SF of space.
We checked in with Kidder Mathews SVP Mary Hines and EVP Gregg Domanico, who rep life science landlord giants Alexandria and Biomed, for a market snapshot. They just brokered a 10k SF lease for Avalanche Biotechnologies in Tarlton's brand new Class-A building at 1035 O’Brien in Menlo Park and will be moving from SoMa a month. Why the desire to leave their city address? Smaller space options are limited, Gregg says. Avalanche also liked the opportunity to build out brand new labs. (And it helps a portion of the executive team lives on the peninsula.)
The duo just scored the job of leasing the remaining 100k SF up for grabs at Principal and Tarlton's 900k SF Menlo Business Park (above). The site never had a listing agent when John Tarlton’s dad developed it 25 years ago; all the leasing was done in house. As part of the recapitalization project, John was able to bring in a listing team on for the first time. (It'll take some time for them to all remember each other's birthdays.) The availability is spread over five buildings, and the largest available block totals about 45k SF connected between two buildings.
Demand on the peninsula is partly coming from Series A startups looking for 2,500 SF or 5k to 7k SF, and he counts about 20 requirements those sizes coming from traditional biotech, medical device and clean tech. One of the buildings in Menlo Business Park that’s being redeveloped will serve that unmet need, he says. While most landlords shudder at the thought of month-to-month or six-month leases (who knew every one was so uptight about short-term flings?)—a popular request amongst startups—he says Tarlton has been able to provide flexibility as tenants grow out of spaces and into others in the project.
Mary is tracking about 35 requirements for 1.3M SF in the marketplace from life sciences companies, which has increased a bit over the past few years. (The demand is right around 1M SF at any given time.) Sources say the 300k SF confidential requirement is coming from a mystery tenant that's zeroing in on Mission Bay and South S.F. Mission Bay tenants are willing to pay 60% more, closer to $4/SF, compared to the mid-$2s/SF rates in Menlo Business Park. She just brokered a deal for an Alexandria property in Mission Bay totaling 25k SF, but she wouldn't disclose further info.