BioDirt's 4Q Recap 🧬

Happy New Year. And welcome to your 4th quarter and year-end life science/commercial real estate world review. I also included some pieces on what the new year and new President may bring us.

Let’s go!

-Ted Simpson

REAL ESTATE HIGHLIGHTS

In its latest string of real estate acquisitions, UCLA Health has purchased a $55 million life sciences property near El Segundo and may spend $90 million more on renovations to accommodate UCLA Health Sports Medicine Institute, according to a request for qualifications tenant improvement submittal posted in July by UCLA Capital Programs.

The building, located at 5210 Pacific Concourse Drive in South Bay’s Del Aire, is a 170,000-square-foot site that includes a partial lab build-out and surface parking. UCLA will occupy the building’s entirety.

The two-story building was originally constructed in 2002 and renovated in 2020. According to public records, UCLA plans to spend approximately $90 million undergoing tenant improvements to the space in order to accommodate UCLA Health Sports Medicine Institute, which may include an ambulatory surgery center, sterile processing, a medical clinic, advanced imaging, a clinical laboratory and a specialty pharmacy.

The El Segundo building is not the only purchase UCLA Health has made recently. Earlier last year, UCLA Health acquired the 260-bed West Hills Hospital and Medical Center from HCA Healthcare. The transaction, which was finalized in March, will help address hospital inpatient capacity needs, allowing UCLA to expand its reach, according to the health care provider. The building has since been renamed UCLA West Valley Medical Center. (source: LA Business Journal)

CSL Behring shuts down California cell and gene therapy R&D site amid group pivot. As CSL closes its Pasadena operations by the end of January 2025, the company will move its cell and gene therapy R&D activities to Waltham, Massachusetts, a spokesperson said. The decision was made after a strategic evaluation of CSL’s R&D footprint identified synergy opportunities between the company’s self-amplifying mRNA and lipid nanoparticle capabilities, according to the spokesperson. CSL Behring gained the Pasadena lab and office space in 2017 as part of the acquisition of ex vivo hematopoietic stem cell gene therapy specialist Calimmune. CSL later added cell manufacturing capabilities and additional lab facilities to the site. (source: Fierce Biotech)

AstraZeneca is increasing its investment into U.S. manufacturing by $2B and now plans to spend $3.5B by the end of 2026 to build R&D facilities around the U.S. It’s hitting the obvious spots, like building a new R&D center in Cambridge, Massachusetts, but it’s also looking at specialty manufacturing in Texas, a state that has been pushing hard to raise its life sciences caliber but still lags the major markets. Other manufacturing facilities are on the docket, including for cell therapy, from coast to coast. (source: Bisnow)

LIFE SCIENCE OPPORTUNITIES

In late October, I attended Gray Matter and CBRE’s ribbon cutting on Greymark Capital’s and money partner, Argosy Real Estate Partner’s new 98,776 RSF life science building at 120 Via Merida in Westlake Village. World-class science architect, BAM Creative, thoughtfully built out 35,320 RSF of turnkey lab and office space along with benches, safety cabinets, and clean rooms. 

The topography of the site creates incredible views of woodsy hills looking out through the stunning reception and common areas, which feature an all-hands space, kitchen, and break-out rooms.

Given that there is almost zero available lab space in Los Angeles (this is Ventura County), we believe that this space will move quickly. An observer of the US lab space markets will find this comment curious, as Boston, San Francisco, and San Diego have massive amounts of available space. 

Similarly interesting is that the developers are very focused and hands-on in their leasing and management efforts. In fact, Gray Matter exec Rick Lafranchi from SF was at the luncheon and personally walked me through the building. Even though he likely roots for the Giants, he is part Angeleno as he graduated from UCLA. Rick’s a bright real estate deal maker.  

Lastly, the building has 4000 Amps of power, which should be more than enough for the intended use, and the power is backed up by a diesel generator left over from the previous user, Anthem.

LOS ANGELES MARKET UPDATE

Los Angeles' Life Science Market Is Defying National Declines

Tight supply, high tenant demand drives rental growth in 2024

Los Angeles and nearby Orange County are standing in contrast to other regions when it comes to the life science industry, leasing demand shows, as low supply and a growing need contribute to notable rent gains in the first half of the year.

Life science rents grew 6% in the market that includes Los Angeles and Orange counties, according to brokerage JLL’s Life Sciences Real Estate Perspective and Cluster Analysis report. During the same six months, national rents have fallen 9%, led by losses for the three largest U.S. biotech clusters: San Francisco, Boston and San Diego.

“Other markets have had their challenges. We’re the exact opposite because we have a significant supply imbalance,” said Patrick Church, managing director of JLL and lead of the company’s Los Angeles life science practice group. “We're trying to educate, to bring the developers into the city to get some of this stuff built, which is what we need.”

Across the country, life science landlords are facing slowing demand caused by reduced levels of venture funding and a pullback from pharmaceutical firms in the wake of pandemic-fueled growth. Research funding has also been shifting away from coronavirus vaccines and treatments that fueled a surge in real estate demand in the first two years of the COVID-19 pandemic.

High supply and low demand have contributed to life science availability rates topping 30% in Boston and San Francisco and 26% in San Diego, according to JLL. In comparison, the greater LA region, including Orange County, has just a 3% availability rate, representing some 306,000 square feet of space.

To be clear, LA's life science property sector has not been immune from the national headwinds of high interest rates and reduced funding, with tenants giving back 158,000 square feet more than they leased during the period, according to JLL. Still, tenants have leased 300,000 square feet of life science space in the region over the past six months.

LA Standout

The LA and Orange County market has 12 million square feet of life science inventory, with no new construction underway. Meanwhile, Boston has 49.5 million square feet of inventory, representing six times more supply than demand, according to JLL.

Tenant interest is high in Los Angeles, however, with more than 1 million square feet of active demand from life science firms. Smaller firms seeking space in the 5,000- to 15,000-square-foot range are particularly active, JLL's Church said.

In one of the larger examples of life science projects in the pipeline, UCLA is converting the former Westside Pavilion mall into a 700,000-square-foot research hub designed to house the California Institute for Immunology and Immunotherapy when it opens in May 2027.

Among biotech property landlords, tenant retention is top of mind as vacancies continue to increase well above historical standards, reaching 24% in San Francisco, 27% in Boston and 17% in San Diego, according to a life science report from brokerage Cushman & Wakefield.

Alexandria Real Estate Equities, one of the largest biotech property owners, is ramping up sales of older single-tenant properties to invest more into large, self-contained multitenant campuses with added on-site services — a property type that accounts for about 70% of the company's annual rental revenue — to lure in loyal tenants, CoStar News reported.

“Softer demand and an increase in vacant sublease space has translated to lower asking rents in some markets. However, the strong appetite for highly amenitized, newly constructed Class A space is expected to push asking rents higher as a significant amount of new space delivers in the sector through 2025,” Sandy Romero, Cushman & Wakefield's global research manager, said in the report.

Among the major life science clusters, Boston led rent declines in the first half of the year with an 8.2% drop, followed by a 4.7% decline in San Diego and a 1.9% dip in San Francisco, according to JLL.

The potential future interest rate declines, coupled with growing venture funding, is providing a bright spot for the industry heading into 2025, JLL says. Last year marked an all-time high for FDA approvals, and biotechnology patent innovation was up 22% compared to a decade prior. (source: Costar)

BIOTECH IPOs

Biotech IPOs, By Year And Proceeds

BioPharma Dive’s IPO chart was updated this week to reflect the latest biotech IPOs. Overall, 2024 was better than 2023, with 23 total IPOS versus 20.

For more IPO breakdowns, head on over to BioPharma Dive.

VC LIFE SCIENCES FUNDING GRAPHS

Total venture investment, by year, in biotechs developing drugs of each type.

According to these graphs, the investment in biologic drugmakers has noticeably jumped year over year and has been trending positively. Updated January 13, 2025.

Number of funding rounds involving each venture firm by year

RA Capital, Arch, and OrbiMed are among the most active biotech investors.

NOTABLE LA-BASED FUNDINGS + HIGHLIGHTS

Terray Therapeutics announced Series B funding of $120 million. The funding will progress internal programs into clinical trials and further enhance Terray’s integrated AI platform, tNova, which it uses to power both internal and partnered programs. The round was led by new investor Bedford Ridge Capital and existing investor NVentures (NVIDIA’s venture capital arm), with participation from new and existing investors, including Maverick Capital, Goldcrest Capital, Madrona Ventures, Two Sigma Ventures, XTX Ventures, Digitalis Ventures, and Alexandria Ventures. Sid Shenai, who partnered with Bedford Ridge Capital on this financing, will join Terray’s Board of Directors. (source: Business Wire)

Agoura Hills-based A2 Biotherapeutics (A2 Bio) has secured $80 million in funding to advance its pipeline of chimeric antigen receptor (CAR)-T cell therapies for solid tumor cancers. The Series C financing, backed by investors such as The Column Group and Samsara BioCapital, will support the company’s three clinical programs and further development of its proprietary Imod platform technology. (source: Pharmaceutical Technology)

Notable 4Q Fundings

Aadi Bioscience - Aadi Bioscience develops a potential mTOR inhibitor for targeted patient populations in oncology and cardiovascular diseases.
Funding Date: 12/20/24
Funding Amount: $100,000,000 (Post IPO Equity)
Address: 17383 W Sunset Blvd, Los Angeles, CA 90272

A2 Biotherapeutics - A2 Biotherapeutics develops T-cell therapies targeting solid tumors precisely.
Funding Date: 1/10/25
Funding Amount: $80,000,000 in a Series C round
Address: 30301 Agoura Road #210, Agoura Hills

Turn Therapeutics - Turn Therapeutics is a pharmaceutical company that is dedicated to reducing the human and economic costs of infection and skin disease.
Funding Date: 12/12/24
Funding Amount: $75,000,000 (Private Equity)
Address: 250 North Westlake Boulevard, Suite 210, Westlake Village, CA 91362

Arrowhead Pharmaceuticals - Arrowhead Pharmaceuticals is a biotechnology company that focuses on the development of medicine to treat diseases of a genetic origin.
Funding Date: 11/26/24
Funding Amount: $325,000,000
Address: 177 East Colorado Boulevard, Ste 700, Pasadena, CA 91105

Mimikai – Mimikai develops natural, non-toxic insect repellents. They aim to replace chemical repellents with bioinspired, biodegradable options.
Funding Date: 11/26/24
Funding Amount: $4,000,000 (Unknown Funding Round)
Address: Los Angeles

Invizyne - Invizyne specializes in enzyme design and the development of cell-free enzymatic pathways.
Funding Date: 11/19/24
Funding Amount: $2,000,000 (Grant from US Department of Defense)
Address: 750 Royal Oaks Dr, Ste 106, Monrovia, CA 91016

Capricor Therapeutics - Capricor Therapeutics is a biotechnology company focusing on cell and exosome-based therapeutics.
Funding Date: 10/17/24
Funding Amount: $75,000,000 (Post Ipo Equity)
Address: 8840 Wilshire Blvd., 2nd Floor, Beverly Hills, California, AND 8700 Beverly Blvd., Davis Building, Los Angeles, California

Synedgen - Synedgen develops novel therapies and products to reduce infection and inflammation of dermal, oral, mucosal, and ophthalmic surfaces.
Funding Date: 10/1/24
Funding Amount: $1,750,000 (Debt Financing)
Address: 1420 N. Claremont Blvd., Suite 105 D, Claremont, CA 91711

(source: CrunchBase)

INCUBATOR SPACE

BioLabs at The Lundquist Institute is excited to announce a new opportunity at the Torrance location. A private lab suite is available, offering approximately 450 square feet of secure badge access space. This fully furnished lab features a private Biosafety Cabinet (BSC), 8 lab benches, and access to shared amenities, including over $2 million worth of equipment, cold storage, BSCs, chemical fume hoods, and a fully stocked café.

WHAT I’M CONSUMING AND ENJOYING

🇺🇸 How will a Trump presidency affect pharma? Fierce Pharma has some thoughts.

🤔 5 questions facing emerging biotech in 2025. Competition from China and a barely open “IPO window” are among the challenges confronting young drugmakers this year.

Thanks for reading. If you want me to look into something or have some ideas for the newsletter, reach out, and I’ll get right back to you.

And, as always, we're here to help you with your real estate needs.

Ted Simpson
Founder and CEO
Commercial Real Estate Advisors
(c) +1 310.384.6512
(e) [email protected]
CA DRE License #0109718

P.S. Whenever you’re ready, here are 3 ways I can help you with your real estate.

1. A new home for your business. So, you want to move, but you don’t know the market. I can help.

2. Time to renew your lease? Don’t quite trust your landlord? Consider me your personal polygraph. BTW, I recommend starting the lease renewal process six months out at a minimum.

3. Sublease your space. You’ve outgrown your space and need to move but don’t want to pay two rents? I got you.