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News release

SAN DIEGO, CA

San Diego’s Life Science M&A Activity Hits Real Estate Hard

Company acquisitions hold space availability at 15 percent according to Jones Lang LaSalle experts


SAN DIEGO, December 16, 2013 – Mergers and acquisitions in the San Diego life sciences sector over the past two years, while positive for the local biotech industry, have had an adverse effect on the commercial real estate market. According to Grant Schoneman, Vice President of Jones Lang LaSalle’s Life Sciences Group, “As San Diego companies grow and mature, acquisition by big pharma is proving to be a more frequent occurrence and often times the need for real estate disappears as the companies are folded into the acquiring company’s portfolio.”

Since June of 2011, 14 companies have been the subject of M&A activity (with two pending). Half of the completed M&A deals resulted in companies relocating out of San Diego or combining local facilities, putting significant amounts of available space onto the leasing market. Details are noted in the chart below.

While some of the vacancy created by M&A activity has been absorbed, large blocks of space still remain, as evidenced by the 363,000 square feet of sublease availability within the former Amylin campus.  Coupled with that, leasing activity throughout 2013 has been exceptionally slow.

“The lack of real estate activity and growth among the region’s more mature life science companies has been noticeably vacant,” states Chad Urie, Executive Vice President of Jones Lang LaSalle’s Life Sciences Group.  “Throughout the first three quarters of 2013 there were only three completed transactions above 20,000 square feet. This lack of large tenant activity has been a large driver behind the total availability rate continuing to hover around 15 percent.”

Looking forward, large tenant activity is on the rise with seven active deals expected to close by the end of the first quarter of 2014.  Together, these pending transactions are expected to aggregate around 300,000 square feet of transaction activity.


M&A deals in yellow resulted in space disposition in San Diego totalling 1,022,000 square feet. This information is modified from Jones Lang LaSalle’s San Diego Life Science Fall 2013 Report.

JLL is a leader in the San Diego commercial real estate market. The firm employs approximately 165 of the area’s most recognized industry experts offering services in brokerage, capital markets, facility management and project development services. In 2012, the San Diego team completed 4.58 million square feet in lease transactions, directed $57 million in project management, and currently leases 10.5 million square feet.

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About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 2.6 billion square feet and completed $63 billion in sales, acquisitions and finance transactions in 2012. Its investment management business, LaSalle Investment Management, has $46.7 billion of real estate assets under management. For further information, visit www.jll.com.