Vacancy Drops in Bay Area Life Sciences Market

The Bay Area’s biotech sector might be showing signs of life after a declining vacancy rate in the fourth quarter.

For the first time in two years, the Bay Area had more life sciences real estate leased than came onto the market, the San Francisco Business Times reported, citing CBRE data. The vacancy rate for the Bay Area’s 43.3 million square feet of biotech space was 30.2 percent in the fourth quarter, down from a third-quarter vacancy rate of 32.8 percent.

It’s part of an ongoing upswing in the regional life sciences market, as the Bay Area led the nation in terms of leasing activity and demand for space in the third quarter, per CBRE. Overall, 14.4 million square feet of life sciences space has been added in the Bay Area since 2020.

Tenants are taking advantage of the glut of space. Earlier this month, University of California, San Francisco Health signed a lease for 280,000 square feet at Kilroy Realty Corporation’s Oyster Point development. UCSF Health plans to move its pharmacy and clinical laboratory groups from their hospital campuses to the new space and open its facilities there in 2029. In San Francisco, biotech firm Nudge doubled its footprint to 62,000 square feet in Mission Bay earlier this month, the San Francisco Business Times reported.

New developments continue to hit the market, including IQHQ’s delivery of The Shop, its fully pre-leased 226,000-square-foot lab and office space at its Elco Yards site in Redwood City.

Still, developers have largely halted advancement of planned projects while the market continues its apparent recovery. Only two large endeavors converting offices for biotech use remain in the pipeline, according to CBRE. Hesitation could be linked to the Trump administration’s slashing of federal funds used in the life sciences sphere.

IQHQ itself looked to hit pause on its $1.3 billion development in South San Francisco as part of its larger planned Spur district, seeking a 10-year extension to transform the 857,000-square-foot site at 800 Dubuque Avenue.

— Chris Malone Méndez