Sterling Bay, Harrison Street Land $265M Life Sciences Construction Loan
Owners broke ground on the first phase of a $650 million campus
By Greg Cornfield May 25, 2023 10:40 am
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Development firm Sterling Bay and its partner, prominent alternative investor Harrison Street, are adding another major life sciences project to the industry’s growing hub in San Diego.
The joint venture on Wednesday announced a $265 million construction loan from Bank OZK (OZK) to build the first phase of a Gensler-designed campus named Pacific Center. The funds will be used to create 500,000 square feet of research space, a 28,000-square-foot amenity center, and a 1,700-space parking facility.
The first phase, now underway, is set to open in the fourth quarter of next year. The rest of the $650 million campus will be completed over the next four years in the Sorrento Mesa submarket.
“Securing a loan for new construction in today’s economic climate is no small feat,” said Andy Gloor, CEO of Sterling Bay. “San Diego’s life sciences ecosystem is thriving, and the demand for modern, highly amenitized research space is at critical max.”
The full five-structure development at 5975 Pacific Mesa Court will feature three lab buildings around a central plaza and the mass-timber amenity center.
San Diego — one of the top life sciences markets in the nation — posted a 5.6 percent vacancy rate after the first quarter this year, according to CBRE (CBRE). Average asking rents across the market have increased substantially over the last decade, and central San Diego sits at $6.46 per square foot, just below the record high of $6.57, per CBRE’s report.
Sterling Bay and Harrison Street have previously partnered on life sciences projects across the country, including approximately 1 million square feet of recently completed lab space in San Diego and Chicago. And the duo has more planned in Denver, Philadelphia and Raleigh-Durham, N.C.
Bank OZK is also quite familiar with the terrain of life sciences real estate. The firm separately led a $575 million construction loan for a 16-acre life sciences and technology campus north of San Diego last fall, which will be the headquarters for Neurocrine Biosciences.
Sterling also invests in creative office, industrial and residential real estate, with a development pipeline of more than $20 billion.
Chicago-based Harrison Street owns more than 8.5 million square feet of lab space across 58 assets. The firm also invests across senior housing, student housing, health care delivery, storage real estate, and social and utility infrastructure, with $50 billion in assets under management.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
