IQHQ pays $164M to buy 15-acre Redwood City site from Oracle

It’s IQHQ’s second acquisition in the Peninsula city following its recent purchase of the site of a mixed-use project

San Francisco /
Nov.November 12, 2021 10:03 AM
Tracy Murphy, president of IQHQ, and an aerial photo that includes a 15-acre Redwood City site IQHQ acquired from Oracle for $164 million, outlined in red (Julie Belanger of The 111th Aerial Photography, iqhqreit.com)

IQHQ, a life science-focused REIT, bought a second site in Redwood City, paying Oracle $164 million for a vacant office building and an adjacent parking lot in a further sign of booming demand for Bay Area laboratory space.

It paid about $250 a square foot for the 263,000-square-foot building at 10 Twin Dolphin Drive and a parking lot next door, according to two people with knowledge of the transaction, speaking anonymously because they weren’t authorized to talk publicly about it. The deal closed on Wednesday, they said.

“We see potential for the 15-acre site to meet the region’s growing demand for new lab and office space,” IQHQ President Tracy Murphy said in a statement, declining to disclose the price. An Oracle representative declined to comment.

The price exceeded the $171 a square foot BioMed Realty paid Oracle at the end of August for the site of a three-building office complex that straddles the Belmont-Redwood City border and adjacent vacant land. IQHQ paid more even though the Redwood City building is a decade older than the oldest structure BioMed purchased, which was completed in 1990.

San Mateo County, which includes Redwood City, had almost 987,000 square feet of life science leases in the third quarter, including renewals and new deals, more than three times the amount leased in the county in the previous quarter, according to commercial brokerage Kidder Mathews. Yet the county’s vacancy rate for lab space dropped to about 2.5 percent from 3 percent, highlighting the need for new projects to meet the demand.

BioMed has the option to build up to 235,000 square feet of new commercial space on about six acres of vacant land it acquired from Oracle, although life sciences aren’t allowed there now. IQHQ can develop new research-and-development offices or lab space on Twin Dolphin Drive because both are permitted uses. However, it would need the city of Redwood City’s permission to redevelop first.

If IQHQ ends up pursuing a life science redevelopment of the entire site, it could potentially build up to about 655,000 square feet of lab space, according to the site’s offering memorandum. Yet that maximum comes with a caveat: It would need to create public access to the nearby shoreline and San Francisco Bay, whether through new pedestrian and bike paths along the water’s edge or new docks to connect a project to existing marinas, among a handful of other requirements.

If a project doesn’t provide public access, then the most life science space IQHQ could potentially build on the entire site would drop to about 523,000 square feet, according to Redwood City’s zoning ordinance.

Greg Cioth and Nate Jones of Eastdil Secured’s Silicon Valley office led sales efforts for the Twin Dolphin Drive site. Cioth declined to comment on transaction details.





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