IQHQ has closed on a majority of Manchester’s long-awaited development in San Diego’s Marina District, Pacific Gate. Once marketed as a grand mixed-use office/retail/hotel project with public space component, the project is perhaps the biggest development derailed by recessionary fears & Covid to-date. In steps Alan Gold and his new life science real estate investment group, IQHQ. Gold is no stranger to the Life Science facilities, he co-founded BioMed Realty trust, a life science facility development company he sold to Blackstone Group for a reported $8 billion in 2016. With this acquisition, IQHQ shifts the vision of the project to become San Diego’s first urban life science center. Dubbed RaDD, the San Diego Research and Development District will have unmatched views, open space, and retail amenities aimed at attracting top 50 life science companies. Manchester will retain two of the site’s eight blocks and continue developing one of the two planned hotels and 1.9-acre plaza, although the firm did not share a timeline for construction.
At the moment, construction isn’t scheduled to commence until 2021, with the district’s first phase complete in Q3 2023. Plans include a series of mid-rise structures and one 17-story tower, a museum, 3 acres of public green space and rooftop decks. The Navy’s 372,000 SF office on-site is complete and move-in ready.
The question on everyone’s lips is ‘why’.
Based on San Diego’s standing as the number 3 life science hub in the nation, with demand still driving development and an increasing number of existing pieces of industrial product being converted to satisfy their needs; new supply is needed. Existing life science hubs in Sorrento Valley, Torrey Pines and Carlsbad are achieving high rents and show no signs of stopping even through the recession and pandemic. So then, why downtown which is a minimum of 13 miles from any of these hubs? Downtown San Diego recently attracted UCSD’s expansion campus, paving the way for a more research-oriented business and resident mix. Downtown San Diego offers accessibility to a myriad of public transportation services including the new San Diego Trolley Blue Line which will connect Downtown to San Diego’s Life Science Hub in Torrey Pines near UCSD, the Green Line which connects it to SDSU, and also a half-hour train ride to the Solana Beach area. The Marina district also has a planned redevelopment of Seaport Village which would add even greater retail offerings as well as public space to the area. Add to all that the numerous multi-family developments in the area and the project suddenly makes more sense.
But isn’t downtown mainly an office hub?
Today the answer is ‘yes’. The roughly 1.5 million square feet of new office construction in the submarket may be tough to lease given the pandemic/recession In fact, multi-tenant office leasing is off over 50% year over year in the submarket, and new deliveries have yet to do any substantial pre-leasing. An urban waterfront science park could be a big draw for the Pfizer/Alexion/Roche/Merck of the world, and smaller companies would be sure to follow when large anchors are landed. Amongst the commercial real estate community there are rumors both Parallel Capital Partner’s current redevelopment of Horton Plaza is shifting to a life science use, and the recently sold Thomas Jefferson School of Law building as downtown's office market now appears over-built. All factors included, you can see why a more diverse tenant mix is needed.
Jamal Brown is the CEO of The Ocean Company, an exclusive tenant representation firm with offices in San Diego, Orange County and Los Angeles focusing on the leasing and acquisition of commercial real estate.
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