Since the 1980s – after the discovery of recombinant DNA technology by two California scientists, the establishment of Scripps and UC San Diego research institutions, and city zoning of the Torrey Pines sub-market for scientific research – the San Diego region has been on the frontier of biotech innovation.
Today, San Diego County is one of the leading life sciences markets in the nation with over 1,200 local companies.
The county ranks third in the state of California in industry employment – behind the San Francisco Bay Area and Los Angeles County, but ahead of Orange County for the first time – according to a 2018 report from the California Life Sciences Association (CLSA). In fact, San Diego County has surpassed the state’s growth rate by a wide margin. The report also states that San Diego County’s life sciences employees earn an average wage of $115,000, which is almost $60,000 more than the average wage for all jobs in the county based on numbers from the California Employment Development Department.
According to a JLL Research report, San Diego County ranks third in the nation in U.S. life sciences cluster ranking, with Torrey Pines at the heart. The report identifies UTC as the fastest growing submarket, Sorrento Mesa as the highest occupancy submarket, Sorrento Valley as an incubator hub, and North County as a leader in delivering new industrial and R&D product in the current cycle.
The JLL Research report finds the life sciences market continuing to see national demand for facilities. Specifically recognizing The Alexandria at Torrey Pines, the report praises the San Diego region, stating that, “supplemented by best-in-class landlords, San Diego is redefining the future of suburban lab campuses,” and:
At The Alexandria at Torrey Pines, the REIT has built out a life science campus centered around a shared amenity center that is accessible to all tenants. In addition to shared conference rooms, it boasts a fitness center, a restaurant and bar, as well as an outdoor patio area. This fosters an innovative and collaborative environment and promotes a communal atmosphere that goes beyond your standard 9-5 campus.
Across the U.S., investors in tight clusters are attempting to convert office space to lab space as a solution to high demand. Of San Diego UTC’s 1.1 million square feet of new inventory in 2017, the majority is converted office space. Overall, JLL Research expects life sciences industry sales to rise over the next few years, and with continued growth the number of jobs and space will need to grow as well.
Last year, San Diego County generated $33.6 billion in economic activity, and was awarded $833 million for new research by the National Institute of Health, according to a report from Biocom. The CLSA report tracked NIH funding by congressional district with the 49th District, represented by Rep. Darrell Issa (R-Vista), coming in first at $722 million in awards.
CLSA’s report projects the region to attract $668 million in life sciences venture funding. However, the Biocom report forecasts a tapering off of employment growth in the sector over the next several years, due to “virtual” companies with fewer workers and more outsourced services, such as contract research organizations (CROs). To this view, the JLL Research report asserts that for companies seeking to remain in top tier clusters, access to talent is a top priority for life sciences tenants.