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San Francisco Peninsula Dominates Life Sciences Market with 86% of Q4 Deals

The Bay Area's life sciences sector is booming. A fourth-quarter report from CBRE finds that leasing in the three months through December surged to 1.9 million square feet. That's up 89 percent from the 10-year quarterly average.

But one market in particular is commanding the activity — and that's the San Francisco Peninsula area, which accounted for 86 percent of the deals, according to CBRE. Also, the region saw a 30 basis point decline in vacancy from the previous three months and held the second highest rents in the Bay Area, at $6.98 NNN.

Vaxcyte and Genentech secured the largest leases, taking 258,581 and 230,592 square feet in the San Francisco Peninsula submarket, respectively.

While net absorption was in the negative category for the full year, it was positive in the last three months at 350,590 square feet for the entire Bay Area region. Also, CBRE said that construction projects slowed after seeing "large swaths of new product in recent years." In the fourth quarter, just 13 projects were under construction.

CBRE spoke further on the foundations of the market that make it an attractive investment opportunity.

"The Bay Area life sciences market’s intrinsic value, rooted in being birthplace of the life sciences sector, has made it home to scores of industry-leading companies," it highlighted.

"These companies benefit from a deep talent pool, replenished by leading universities specializing in the biology and biomedical fields."

Despite elevated interest rates, CBRE noted that access to capital should remain strong in 2025, adding that sidelined funds could start flowing in the Bay Area.

"The sector’s renewed expansion will be met by an abundance of premier lab space, which has seen exponential growth through 2024," the CRE firm predicted.

Reprinted with permission from the Friday, 31 January 2025 06:12:18 EST online edition of GlobeSt © 2025 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or reprints@alm.com.