SAN DIEGO – Alexandria Real Estate Equities is building a 466,598-square-foot lab and office building in its UTC Campus Point in what has been a downturn in the market for life science property. Leased to Novartis, the project is part of a trend in which big pharma continues to invest in San Diego. \"The deals of scale are pharma companies, and that’s where we’re seeing activity,\" said Chad Urie, vice chairman of JLL. \"What we’re seeing across the country is pharma making those real estate plays,\" Urie said. \"Most of those large pharma companies have made their play. I don’t anticipate that we’re going to see a lot more of them, maybe one of two.\"\n\nTed Jacobs, vice chairman of CBRE, said that big pharma’s investments in San Diego life science real estate \"is a really good sign.\" \"These are long-term commitments, over $1 billion in infrastructure that they’re going to be investing,\" Jacobs said. \"When you see these big pharmas making bets on San Diego, it shows their confidence in the region long-term.\"\n\nAccording to Alexandria, the Campus Point project is the largest life science lease in the company’s history. \"Campus Point is a crown jewel of Alexandria’s mega campus platform, and we are honored that one of our long-standing, highly innovative tenants has selected the site for a new R&D hub,\" said Daniel Ryn, Alexandria co-president and San Diego regional market director.\n\nAs of June, Campus Point had 1.3 million square feet of space with an occupancy rate of 98.8%, according to Alexandria. Construction of the newest building in Campus Point is slated to start in 2026 and finish in 2028.\n\nUrie said that property investments by big pharma have exacerbated the overall life science vacancy rate in the region because they’re moving into new buildings, leaving their former offices and labs empty. \"We have somewhere between a five- and seven-year anticipated supply of space to get back to a 9% or 10% (vacancy) equilibrium,\" Urie said. The county-wide vacancy rate at the end of the second quarter of 2025 shot up to 30.6%, according to JLL, and rose to 21.7% in UTC. Funding challenges for life science companies has led some companies to downsize, a trend that’s likely to continue through the rest of the year, according to JLL. \"Many existing life science assets, especially those bought during the height of the market, are underperforming and could face distress in coming quarters,\" JLL reported in its Q2 review. With so many vacancies, some property owners are instead marketing life science for redevelopment to residential use, according to JLL. Jacobs of CBRE said that’s already happening with some older lab buildings in Sorrento Mesa and UTC. \"We have the same amount of demand as pre-pandemic, but we have three times the supply. This is not just in San Diego, but all over the country,\" Jacobs said. \"The newer buildings will lease first. There are some dated buildings that could sit vacant for some time.\"\n\nAlexandria Real Estate Equities FOUNDED: 1994 HEADQUARTERS: Pasadena CEO & CIO: Peter Moglia BUSINESS: real estate investment specializing in life science property STOCK: ARE (NYSE) ANNUAL REVENUE: $3.12 billion in 2024 WEBSITE: www.are.com CONTACT: 626-578-0777 NOTABLE: Alexandria Real Estate Equities was named after the Egyptian city of Alexandria, which was the scientific capital of the ancient world.

Big Pharma a Bright Spot in Life Science Real Estate

Big pharmaceutical companies are investing in life science real estate, particularly in San Diego, despite a broader market downturn. Alexandria Real Estate Equities is developing a 466,598-square-foot lab and office building at its UTC Campus Point campus, leased to Novartis. This project is the largest life science lease in the company's history and reflects long-term confidence from pharma firms in the region. However, these large-scale investments are contributing to increased vacancy rates due to pharma companies moving into new facilities and vacating older ones. As of June 2025, the UTC area vacancy rate stood at 21.7%, with the county-wide rate at 30.6%. JLL and CBRE report that supply has outpaced demand, with three times the supply compared to pre-pandemic levels, leading some property owners to consider redeveloping older lab buildings for residential use.