IQHQ Wants to Pause South San Francisco Project

An ongoing slump in the biotech sector has developer IQHQ looking for a little more time to build its $1.3 billion project in South San Francisco.

The Solana Beach-based real estate investment trust is seeking a 10-year extension to develop an 857,000-square-foot site at 800 Dubuque Avenue, part of its larger planned Spur district, the San Francisco Business Times reported. The planning entitlements were initially approved in summer 2023 and are currently set to expire next July.

In exchange for the extension, IQHQ would pay the City of South San Francisco several million dollars over the next five years while the site sits undeveloped. The city would get $1 million on the first anniversary of the agreement, $1 million on the third anniversary in 2028, and a little more than $1 million on the fifth anniversary. In total, it would pay $12 million in community benefits fees, in addition to between $40 million and $50 million in park, housing, safety and other impact fees.

IQHQ’s petition arrives as the life science real estate market in the Bay Area — and the country at large — struggles to gain its footing as the industry remains in limbo. Lab leasing in several markets nationwide fell sharply in the first quarter, including the Bay Area. JLL attributed the drop to “a cautious approach by life science companies in their real estate decisions, influenced by macroeconomic, policy and funding uncertainties,” according to a report on the state of the life science market.

The 800 Dubuque project is part of IQHQ’s bigger vision for the Dubuque Avenue corridor, which includes the Spur project for 330,000 square feet of lab buildings at 580 Dubuque Avenue. Construction there is close to completion.

IQHQ’s extension petition comes two weeks after Harvest Properties similarly pressed pause on a research and development campus in Emeryville, also asking for more time to complete the project amid market uncertainty.

“It really is an unprecedented and extended down cycle for this particular product type,” Justine Nielsen, senior vice president of development at IQHQ, told the Business Times. “Again, not specific to anything that is going on here in South City. We’re seeing it nationwide.”

The South San Francisco Planning Commission voted last week to recommend that the City Council approve the agreement next month.— Chris Malone Méndez