San Francisco Bay Area's Largest Ready-to-Build Site Up for SaleBy
Shorenstein, SKS hire JLL to market waterfront parcel
Biotech companies, foreign investors targeted as buyers
The largest entitled development site in the San Francisco Bay area is up for sale, providing a construction option for technology companies seeking space in a tight market and foreign buyers eager to invest in U.S. property.
Shorenstein Properties and SKS, two San Francisco-based real estate companies, hired Jones Lang LaSalle Inc. to find buyers or joint venture partners for about 50 acres (20 hectares) of waterfront land at Oyster Point in South San Francisco. The parcel is next to the headquarters of Genentech Inc., the biotechnology pioneer, and about 5 miles (8 kilometers) north of San Francisco’s airport.
A big site for development is an opportunity for expansion in one of the most heated U.S. office markets. Biotech and technology companies are aggressively leasing or buying space, driving up rents and property values. Foreign investors, meantime, have been plowing money into U.S. real estate, from trophy office towers to land for construction.
The South San Francisco land and entitlements has development potential of 2.25 million square feet (209,000 square meters), according to JLL. The space is approved for office and life-science space, and a parking garage.
JLL plans to market the site to institutions worldwide, including Chinese, Korean and Middle Eastern investors.
“The San Francisco Bay Area is one the top markets in the world from a global investor interest” standpoint, said Michel Seifer, a managing director in JLL’s capital-markets group. “Despite some near-term price volatility, biotech is a huge growth sector and it’s not going away.”
Shorenstein and SKS acquired the property starting in 2008 with plans to prepare it for commercial development. They paid $84 million for 375-389 Oyster Point Blvd., which included industrial buildings and a marina, and then acquired the adjacent leasehold to assemble the full 50 acres. The approvals and permits were received in 2011, when real estate was still depressed after the financial crisis. Now, office demand from tech and biotech tenants has come back.
“The timing is right,” said Russell Cooper, a managing director at Shorenstein.
Biotech growth in areas such as San Francisco and Seattle has benefited property companies. Alexandria Real Estate Equities Inc., a real estate investment trust that specializes in science and technology campuses, had record leasing in the second quarter. BioMed Realty Trust Inc. is exploring a sale and has lured interest from Blackstone Group LP, according to people with knowledge of the matter.
“There’s a really, really tight supply and pretty aggressive demand for additional space,” said Chris Rivera, president and chief executive officer of the Washington Biotechnology and Biomedical Association.
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