Harvest Properties Pauses R&D Campus Amid Shaky Market

Harvest Properties is pressing pause on its proposed research and development campus expansion in Emeryville.

The Oakland-based developer said in a letter to the city that it needs more time to build its six-story, 210,000-square-foot lab building at 6425-6475 Christie Avenue amid delicate market conditions, high interest rates and construction costs, and crickets on the tenant front, the San Francisco Business Times reported.

Harvest gained final approvals to grow the Bay Center Emeryville complex from three buildings to five in 2023. If completed, it would add 210,000-square-foot lab facilities as well as a seven-story parking garage. The Bay Center campus currently houses a three-story, 84,000-square-foot lab building and two five-story, 128,500-square-foot office buildings.

The company has owned the waterfront parcel since 2007 and first proposed the expansion in 2022.

As more life science spaces hit the market while demand and venture capital funding dropped, vacancy rates increased notably, throwing projects such as Harvest’s in jeopardy.

“We had originally anticipated commencing development shortly after receiving entitlements, but the dramatic change in the economy, including the high interest rate environment, rapidly escalating construction costs, and more importantly, the lack of any tenant activity we were not able to commence the project,” Tom Wagner, partner at Harvest Properties, told the city in the company’s letter.

While Harvest and other life sciences companies are weathering the storm for now, Wagner believes that VC funding to potential tenants will increase over the next few months, in turn driving up tenant activity.

In recent months, the life sciences market has been in a holding pattern as companies and researchers wrestle with questions about the future as funding cuts spread across the country. Lab leasing in several markets nationwide fell sharply in the first quarter of this year, including in research-heavy regions like Boston and the Bay Area. In a report on the state of the life sciences market, JLL attributed the drop to “a cautious approach by life sciences companies in their real estate decisions, influenced by macroeconomic, policy and funding uncertainties.”

— Chris Malone Méndez