REAL ESTATE NEWS

San Diego's life sciences market is delivering a mix of encouraging and cautionary signals that may surprise investors, according to Grant Schoneman, JLL vice chairman.

Leasing activity remained steady at 283,000 square feet across 22 deals, driven largely by early-stage and growth-phase tenants and capital inflows were exceptionally strong, with over $990 million in major funding rounds—reinforcing confidence in the region's innovation ecosystem, according to JLL's Q4 San Diego Life Sciences report.

However, the core biotech cluster posted negative year-to-date net absorption of 173,189 square feet, with vacancy elevated at 27.5% and Class A rents dipped for the 14th straight quarter to $5.86 per square foot, Schoneman told GlobeSt.com.

"The persistence of landlord competition and generous concessions underscores a tenant-favorable landscape likely to continue into the first half of this year," he said.

"While strong funding signals long-term growth potential, near-term fundamentals suggest investors should expect pressure on income and valuations until demand more fully aligns with available supply."

Area Sees a Change in Investor Conviction

San Diego life sciences leasing activity in Q4 2025 showed sustained movement among early-stage and growth-phase life science tenants. Capital inflows during that time were substantial, supporting a change in investor conviction.

Total leasing during the quarter amounted to 283,000 square feet among 22 completed deals, producing an average deal size of 12,863 square feet.

These tenant-favorable market conditions are expected to persist through the first half of the year, with landlords continuing to offer TI allowances and high concessions in the current supply-rich environment.

Notable transactions include Neomorph's new lease for 83,354 square feet in Sorrento Mesa, ClearNote Health's 17,704 square feet expansion in Torrey Pines and Protego Biopharma's 12,742 square feet relocation to UTC.

The overall leasing tone was characterized by smaller footprints (mostly under 20,000 square feet) and steady renewals from existing occupiers, including Roswell Biotechnologies, Persephone Biome and Centroid Vaccines.

Torrey Pines and Sorrento Mesa are seeing the most funding momentum, according to JLL. These are the same nodes driving most physical leasing, reinforcing landlords' view that these submarkets will remain the most active for life sciences tenants.

New Leases Signed in San Diego

Adding to the deal news, JLL announced on Friday that it secured two new leases at Governor Pointe, Breakthrough Properties' two-building, 231,000-square-foot life science campus located at 6200 Greenwich Drive in San Diego.

Protego Biopharma signed for 12,742 square feet and AcelaBio signed for 7,940 square feet.

These firms will be occupying StudioLabs by Breakthrough space at Governor Pointe, which are fully furnished private lab and office suites that offer a curated plug-and-play solution, saving users time and resources.

Life science tenants demand highly specialized, lab-ready environments that support intensive R&D operations, according to DaJuan Bennett, Bolour Associates' vice president of acquisitions and private lending.

Bolour provided a $13 million, 24-month refinance loan last week for a single-tenant, two-story R&D building in San Diego through its affiliate, BA Debt Fund.

"Our recent loan in San Diego reflects that reality, providing capital for the infrastructure and improvements necessary to meet today's evolving life science requirements," he told GlobeSt.com.

"The transaction positions the property to remain competitive within a leading innovation market and supports an ownership group committed to delivering best-in-class space. We are proud to back sponsors who are building the next generation of life science space."

The property is at 6680 Cobra Way, and the 35,462-square-foot building can accommodate wet labs, R&D and related functions. It also features 25' clear heights, HVAC throughout, 4,000 amps of power and floor-to-ceiling windows with views of Peñasquitos Canyon.

Scott Selke of Cushman & Wakefield represented the borrower.

Source: GlobeSt/ALM