Lane Partners plans to go vertical on the first of six approved office and research buildings straddling South San Francisco and San Bruno early next year — and it’s prepared to build without a tenant in tow.
The Menlo Park-based developer wants to see the six-story, 370,000-square-foot structure start going up in the first quarter of next year, Lane’s Marcus Gilmour told the San Francisco Business Times. If it does, construction would wrap up in the third quarter of 2024, Gilmour told the publication. Lane plans for a building with a fitness center, a ground-floor restaurant, and retail as well as a standalone parking garage to go vertical at the same time as the commercial space.
The pair of buildings and parking garage are part of a larger project that envisions nearly 29 acres of vacant lots and warehouses being redeveloped into a 3-million-square-foot campus for office and life science companies. The development, called Southline, cleared the last remaining hurdle in the entitlement process at the end of last month, when the 30-day period to appeal South San Francisco’s unanimous decision to approve it expired. It comprises six office and research buildings totaling 2.8 million square feet, up to 7 acres of open space, and three parking garages.
Lane’s Gilmour said Southline will be attractive to more mature life science companies with stable balance sheets, which have been better insulated from the sharp year-over-year drop in venture capital funding into the sector than their earlier-stage counterparts. While the project’s commercial component can accommodate tech tenants, San Francisco, San Jose, and other large Bay Area cities continue to lag behind other major U.S. metro areas in return-to-office numbers.
Even so, Lane’s decision to go spec isn’t that surprising considering the Peninsula’s office and research real estate markets have performed well over the past several quarters. The latter has expanded for eight consecutive quarters, while the office vacancy rate was 9.2 percent at the end of June, the lowest since the start of the pandemic, according to Colliers data. The market for research space in the region has been particularly hot, with average asking rents at $5.90 a square foot, the highest on record, Colliers wrote in its second-quarter Peninsula report.
Other members of the team behind Southline include Goldman Sachs Asset Management’s real estate arm, an investment partner on the project; DES Architects + Engineers; Newmark, its commercial portion’s listing agent; and DPR Construction.
— Matt Niksa
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San Francisco
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