San Diego’s Life Sciences Activity Mixed in 2024, Including With Some Optimism
Leasing was 88 percent higher than in 2023 despite vacancy and availability rates also reaching even higher records
By Nick Trombola January 30, 2025 12:10 pm
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Investment and leasing activity for life sciences assets nationwide is still finding its footing after a major market correction last year, and 2024 year-end data from JLL (JLL) for the San Diego submarket presents a similar mixed bag.
About 450,000 square feet worth of leases were signed in the San Diego region in the fourth quarter of last year, bringing the 2024 total to 2.4 million square feet — a figure 88 percent higher than 2023’s total and 37 percent higher than the pre-COVID total in 2019, per JLL’s report. Total venture capital funds throughout the year by life sciences companies were also the third-highest total on record, reaching $3.63 billion.
Many of the new leases in 2024 were expansions or renewals. That includes Vividion Therapeutics‘ 127,382-square-foot June signing for new R&D and headquarters space in San Diego’s Sorrento Mesa neighborhood, and Avidity Biosciences’ 105,511-square-foot lease in May at the Callan Ridge campus in Torrey Pines. Pfizer signed the largest lease of the year by far, with its 230,133-square-foot deal in February at the Torrey Heights By Breakthrough campus in Torrey Hills, though the lease was a downsize, per JLL.
The good news largely ends there, as the sheer amount of new space added within the past few years, alongside elevated interest rates and political uncertainty, has taken a toll on demand. Overall absorption in 2024 was negative 545,717 square feet, which, combined with 857,000 square feet of fresh space delivered in the fourth quarter alone, drove total vacancy and availability rates to record highs of 23.1 percent and 27.2 percent, respectively.
Some 6.9 million square feet of lab space is available across San Diego, one of the U.S.’s top life sciences hotbeds. Such an abundance of options for tenants caused average monthly rents to dip, albeit slightly, to $5.95 per square foot triple-net in the fourth quarter, a decrease of 1 percent quarter-over-quarter and 4 percent year-over-year, per JLL. The end of 2024 was the 10th consecutive quarter of declining rent prices in the region.
Funding trends are expected to continue through 2025, per JLL, though with big life sciences firms likely pulling in the majority of the cash while smaller firms struggle to find capital. Scarcity of cash will also likely make firms more conservative with their hiring and expansion plans, further chilling real estate activity.
But that’s not to say that the outlook for this year is all doom and gloom. The second half of 2025 looks more encouraging due to some key policy and technological advancements predicted for the near future, JLL notes in its report.
“Promising developments could contradict these expectations [of low expansion activity], including deregulation, lower interest rates, scientific advancements from AI platforms, and a proliferation of obesity drug derivatives,” the report said. “All of which could lead to increased capital flows to early-stage companies.”
Nick Trombola can be reached at ntrombola@commercialobserver.com.
