The speculative development pipeline in the San Francisco Bay Area's life science market is lengthening even further as developers — and their lenders — prove unfazed by a slowing economy and mounting uncertainty.
Longfellow Real Estate Partners is spearheading the latest addition to the region's biotech development pool after securing $310 million to finance the construction of Avia, its 315,000-square-foot lab and research project in Millbrae, California.
The Boston developer has broken ground on the project at 210 Adrian Road without a tenant commitment in hand, a sign that strong biotech leasing and a backlog of demand across the Silicon Valley area is more than enough to bolster real estate firms' confidence in ongoing demand for that type of space.
The life science-focused developer secured the construction loan through Canadian lender Oltera Capital. JLL arranged the financing on Longfellow's behalf.
“The Bay Area remains one of the crucial global hubs for life science innovation within our international portfolio," Longfellow CEO Adam Sichol said in a statement to CoStar News, adding that the developer remains on the hunt for additional lab and research projects aimed at meeting robust demand in the specialty real estate sector.
Scaling Up Property Purchases
Longfellow is among several national biotech developers, including Alexandria Real Estate Equities and IQHQ, that have scaled up their property purchases and development pipelines over the past five years to meet rising demand for life science space in the San Francisco Bay Area, the nation’s second-largest biotech hub after Boston.
With access to multiple transit lines and its proximity to world-class research institutions such as Stanford University; the University of California, Berkeley; as well as the University of California, San Francisco, the area surrounding the future Avia campus is "extremely undersupplied" with a life science vacancy rate of less than 2%, according to JLL research.
The Boston developer purchased the roughly 2-acre Adrian Road site for $80 million in October 2021 with plans to convert the existing self-storage facility into a high-profile biotech asset.
Plans for the project — which the developer claims will be the first all-electric lab facility in California — call for a six-story building complete with a fitness center, cafe and two levels of underground parking, and were approved in May 2021.
Longfellow, the largest private life science real estate services firm in the United States, has a portfolio that spans more than 12 million square feet of laboratory and technology space. Much of that is concentrated in top biotech markets such as the San Francisco Bay Area, where the firm already has projects underway in Redwood City, Palo Alto and San Francisco’s Mission Bay neighborhood.