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Vacancy rates for life science space are at record highs, and a few firms are capitalizing on the downturn.
The region’s core cluster vacancy rate is a record 31.2%, up from 20.4% a year ago, according to a report by commercial real estate firm Jones Lang LaSalle. Vying to fill vacant buildings, landlords are offering incentives like free rent and renovation subsidies. Meanwhile, pharmaceutical giants are leveraging the historically high rates, snapping up thousands of square feet.
Mike Krenn, managing director of Prebys Ventures and former CEO of Connect, put it simply: Big Pharma is buoying the market as startups scrounge for cash.
The largest lab lease last quarter was signed by Novartis for over 466,000 square feet in University City with Alexandria Real Estate Equities. Altogether, the company leased more than 700,000 square feet of lab space during the quarter.
Novartis’ latest deals are part of its $1.1 billion investment in San Diego. While life science companies have been cutting back, the Swiss drugmaker announced in April that it’s planning to create up to 1,000 new jobs at its new research hub here.
Also during the quarter, Craig Venter — the biologist who helped lead the Human Genome Project, the first “blueprint” of human DNA — decided to take his La Jolla lab to IQHQ’s Research and Development District, the $1.9 billion project that’s delivered 1.7 million square feet of waterfront lab, office, and retail space downtown.
“Downtown wasn’t initially on our radar,” said Heather Kowalski, chief operating officer at JCVI.
In San Diego, vacancy rates rise as one heads south. The most sought-after space for biotech is historically in Torrey Pines, University City and Sorrento Mesa. Downtown, direct vacancy rates are north of 90% for life science spaces, according to the most recent JLL report.
The exterior shell of RaDD was completed in 2024. While the district successfully leased around 100,000 square feet of retail and amenity space, the office and lab campus has only one tenant — JCVI signed for 50,000 square feet.
Today, over a million square feet of the new downtown waterfront campus sits empty.
“We were able to negotiate favorable terms,” said Kowalski, without disclosing details of the deal. “It was beneficial for both of us.” The lab, currently under construction, is slated to open in August.
“It’s supply and demand,” explained Grant Schoneman, vice chairman of JLL’s Life Sciences Group.
“VCs have pulled back significantly,” he said. Five years ago, interest rates were low, money was cheap, and life science technology was hot.
Then, life science companies were scrambling for space — industrial vacancy rates dipped to as low as 2%. Deep‑pocketed developers from Silicon Valley and Boston came and spent millions speculating on continued growth. Venture capital rounds reached record highs in 2021 while developers were deploying construction crews.
“We had development peaking at almost 5 million square feet under construction,” said Joshua Ohl, director of market analytics for CoStar Group. “All of that inventory started delivering just as the brakes were applied.”
Schoneman summed it up in a single data point: biotechs trading below their cash balances have fallen from over 200 companies in 2022-2023 to approximately 50 today.
While VC spending easily oscillates, “the real estate market is inelastic,” said Schoneman. The JLL report shows that asking prices for rent have declined for 13 consecutive quarters.
But despite declining rents, most new developments remain unoccupied.
“Concessions are up across the board,” said Brett Ward, vice chairman at Cushman & Wakefield, who oversees lab and office space at RaDD. “Whether that be in the form of outsized tenant improvement allowances or free rent.”
Today, IQHQ is negotiating leases with five or six other tenants in the professional services and financial sectors, according to Ward, but has yet to sign another tenant.
“It will be a long road,” said Krenn, of the market. “I heard it will be around nine years until we are at 70-80% occupancy again.”







