Rob AriasA string of troubling headlines have hit the Emeryville Life Science sector in recent months. In July, the SF Business Times reported that vacancy rates in the sector had skyrocketed to 37% within the city.
On August 9th, the Commercial Real Estate News website Globe St. called Emeryville “the Epicenter of East Bay Life Science Downturn.”
The 37% vacancy rate is more than double the region’s average. Part of the figure can be attributed to a sudden glut of space that has hit the market including SteelWave’s 75,000-square-foot The LAB Emeryville (former Sherwin-Williams commercial space) and 285,000 square feet of BioMed Realty’s massive Emery Yards project. New tenants for either space have not been announced.
A chunk of Emery Yards was slated to be occupied by Zymergen. Zymergen held a successful IPO in 2021 but quickly imploded and they declared bankruptcy in 2023. The company recently settled a $30 million SEC charge involving the offering’s alleged misleading claims.
Another million square feet is still in the development pipeline in the city and when delivered in 2025, could push this vacancy rate much higher.
Other projects facing challenges include Longfellow Real Estate Partner’s “Atrium Labs” (former Ex’pression college space).
The Boston based developer’s plans initially called for a 750,000-square-foot campus but was dramatically scaled back to 125,000 square feet. In June, Swiss Biotech firm Lonza AF pulled out of their lease. In July, after construction began, they began looking to offload a chunk of the project. This under construction project is now undergoing an eviction lawsuit and on the verge of completely collapsing according to a September 9 SFBT report.
Oxford Properties’ Marketplace Parcel B, approved in 2019, remains a vacant lot. The adjacent Parcel A, slated for additional commercial space and elevated parking, remains a surface parking lot.
Oxford’s 5801 Christie Mixed-use project has been in the planning stages since 2022. A demolition permit application for the former Wells Fargo and Allegro Ballroom buildings was issued on August 1, 2022.
The Life Science sector is a critical one in terms of jobs, revenue and growth for the city and one they’ve traditionally been successful at. “We’re in the middle of everything. So it’s relatively easy to get to,” said City of Emeryville Community Development Director Chad Smalley in a friendly recent interview with SFBT.
BioMed Realty CEO Tim Schoen addressed these recent headlines in a September 3rd story with the SF Business Times expressing some optimism. Schoen points out that interest rates are receding and other business activity indicates growth may be around the corner. “Life sciences companies are hiring and looking for space, and BioMed is ready for them,” he told SFBT.
Not sure what to say beyond this was just unlucky timing. Between the zirp era ending and the work on these properties being completed has meant we are in an entirely new funding environment. Biotech is a boom/bust industry that needs significant capital to make happen. Sadly that time isnt now and its going to be a few years before the funding environment evolves to one that can support this.
Hopefully they can be flexible to leasing these spaces to other businesses on a short term basis.