A commercial developer has raised $124 million in financing to redevelop a shoreline office building in South San Francisco into a life sciences complex.
DivcoWest, based in San Francisco, got the financing after paying $164.5 million for the 138,400-square-foot building at 5000 Shoreline Ct. in January, the Mercury News reported.
The company plans to revamp the three-story building to respond to a hot market for life sciences in the Bay Area, according to CBRE. CBRE brokers Mike Walker and Brad Zampa arranged financing for its purchase in addition to its upgrade.
“The fundamentals in the Bay Area life sciences market are incredibly strong,” said Walker, a CBRE executive vice president. “This location is central to the top biotech and pharma companies in the region.”
DivcoWest wants to convert the waterfront structure into an office building suitable for life science, biotech or pharmaceutical companies. Improvements will include office spaces and laboratory suites turnkey ready to lease to life science firms.
The firm also intends to install a new generator system, lab-quality heating, ventilation and air conditioning, and to renovate its main entryway, common areas and elevator lobbies. Occupancy could begin as early as the first quarter of next year.
The building, which stands on 8.6 acres, is one of the few left in South San Francisco suitable for conversion to life sciences suits and research labs. DivcoWest purchased it from Johnson & Johnson in a major regional life science cluster called Sierra Point.
The biotech, life science and pharmaceutical sectors are so hungry for space that the demand has outpaced supply. At the end of 2021, Bay Area life sciences buildings had a vacancy rate of 2 percent.
More than 50 tenants now seek to lease a combined total of 2.6 million square feet of life science space, according to CBRE research.
As a result, “multiple” banks have competed to finance the DivcoWest project. Deutsche Bank, a Germany-based investment bank, won the battle to provide the funds, county documents show.
DivcoWest, a private multidisciplinary investment firm based in The East Cut district of San Francisco, has six offices nationwide, including Cambridge, New York, Los Angeles, Menlo Park and Washington, D.C. The firm, founded in 1993 with a focus on tech and life sciences, has 18 million square feet and $16.2 billion in assets under management, according to its website.
In December, the firm signed a long-term lease with Procept Biorobotics to move its headquarters into two buildings containing 158,000 square feet in North San Jose.
At the same time, the firm bought a 100,000-square-foot industrial facility in Fremont for $72 million. A majority of the building is leased to Alexza Pharmaceuticals, and DivcoWest plans to fill the rest with life science and research-related businesses.
[Mercury News] – Dana Bartholomew
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