A real estate firm based in New York City and a family office out of Boston have again teamed up to acquire an industrial property in South San Francisco, paying more than $1,000 a square foot to purchase a vacant warehouse that they’ll likely try to redevelop into a life science facility, The Real Deal has learned.
A partnership of Vigilant Real Estate Holdings and Boston-based Breed’s Hill Capital paid about $41 million to purchase the 41,000-square-foot, 1960s-era building at 439 Eccles Avenue, according to property records. It’s Vigilant and Breed’s second acquisition of an industrial building in South San Francisco this year, following their purchase of a nearly 34,000-square-foot warehouse at 573 Forbes Boulevard in May. The pair paid nearly $900 a square foot for that site, a relatively high price on a per-square-foot basis for an industrial building — but not outlandish if the new owners plan to redevelop it.
Commercial brokerage Colliers said in a July report that the Forbes Boulevard building’s new owners would likely redevelop it into life science. That assumption was confirmed on Dec. 15, when Vigilant and Breed’s Hill filed plans to demolish the single-story building and construct a seven-story, 245,000-square-foot office and lab structure and an adjacent five-story garage.
Representatives for Vigilant and Breed’s Hill didn’t respond to requests for comment. Cushman & Wakefield’s Matt Squires represented them in the acquisition of the Eccles Avenue warehouse, which closed on Dec. 9, while property management and brokerage firm Bitterlin Companies represented seller Allan & Henry Inc., a real estate investment corporation. Squires didn’t respond to questions about the buyers’ plans for the property, but people with knowledge of them said the partnership will likely attempt to raze the site and build a life science project there.
The city doesn’t have any redevelopment proposals on file for 439 Eccles Avenue, according to South San Francisco’s online permit portal.
Breed’s Hill and Vigilant’s two industrial building purchases over the past seven months and their plans for the Forbes Boulevard site illustrate their confidence in the Bay Area’s life science real estate market, which is seeing a record number of under-construction projects even though venture capital firms have invested less money into the industry this year compared with the previous two, according to a third-quarter report from brokerage Newmark.
South San Francisco, the single largest life science submarket out of 22 analyzed in Newmark’s report, had a 4 percent lab vacancy rate at the end of the third quarter. Three of the Bay Area sector’s four largest new lease deals — including renewals, expansions and subleases — took place in the city last quarter, according to Newmark data.
Newmark classified Breed’s Hill as an emerging life science investor and developer in the Bay Area in a report from earlier this year. Online details about it and Vigilant are scarce, as their respective websites don’t have any information about active projects or property portfolios. That isn’t surprising in Vigilant’s case, as it was founded in 2020, according to Google search results. David Fowler, formerly an investment sales broker at CBRE, leads the firm, which owned more than 1 million square feet of life science developments on both coasts as of August, search results show.
In addition to their projects, Vigilant and Breed’s Hill share a common interest: SmartLabs, the Boston-based “lab-as-a-service” company. Breed’s Hill is one of the company’s investors, while Vigilant is co-developing a lab facility in Philadelphia with Gattuso Development Partners that SmartLabs partially pre-leased earlier this year.
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