East Bay mall to morph into life science campus

Redevelopment coming despite 91% occupancy at Bayfair Center

Trac Bledsoe from B3 Commercial Management and 15555 East 14th Street in San Leandro (B3CRE, Google Maps, iStock)
Trac Bledsoe from B3 Commercial Management and 15555 East 14th Street in San Leandro (B3CRE, Google Maps, iStock)

Two investment firms have formed a joint venture to acquire a 42-acre retail center in San Leandro with plans to redevelop the site into a life science mixed-use campus.

B3 Commercial Management and GAWCapital Partners purchased the property from Madison Marquette for $57 million last month.

Located at 15555 East 14th Street, the Bayfair Center mall was 91 percent leased at the time of sale. Tenants include Target, Century Theaters, Macy’s, 24-Hour Fitness and PetSmart. The property features one main mall building and five outparcel buildings with a total of 816,771 leasable square feet.

But the buyers are looking to capitalize on the boom of life science developments in the Bay Area. The decision could be as a result of consumers prioritizing essential spending over discretionary due to inflation, according to a report from brokerage Marcus and Millichap. DJM Capital recently acquired a daily needs shopping center in Alameda for $543 per square-foot, which was above the average sale price of retail properties on the East Bay of $374 per square-foot, according to a report by Kidder. In contrast, Bayfair Center sold for $71 per square foot.

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“Bayfair Center represents one of only a handful of sites in the Bay Area that offer this type of scale and connectivity, making it one of the best covered land play opportunities on the West Coast,” Nicolas Bicardo, who brokered the deal and is Newmark’s Vice Chair of Capital Markets for Northern California, said. “Over the next five years, the buyer has the opportunity to unlock significant value through reconfiguring the existing improvements and incorporating alternative uses on the site.”

The Bay Area is one of the top life science markets in the country. With nearly 34 million square feet of life science properties, the region has the largest inventory of life science space compared with 10 other U.S. submarkets, according to a new Colliers report.

The market for lab offices has been hot, due to its employees being required to work on-site, while many other employees continue to work remotely.

There have been multiple projects to add life science inventory in the Bay Area this year. San Diego-based IQHQ recently purchased a 263,000-square-foot office building in Redwood City and plans to redevelop it into a 634,000-square-foot life science campus. Presidio Bay Ventures started construction on a 147,000-square-foot Class A project in San Carlos earlier this year and wants to build a 410,000-square-foot complex elsewhere in the city. Trammell Crow also plans to build a 202,000-square-foot office and lab structure in Redwood City, near ISHQ’s proposed campus.