Four years ago, with the COVID-19 pandemic still in full swing, Oxford Properties paid $31 million for two parcels in the growing life sciences hotbed of Emeryville, California.
With investors scrambling to get a piece of the biotech boom, the life sciences vacancy rate was then hovering at around 2% in the Bay Area, one of the nation’s key life science markets. Oxford Properties planned to get in on the action by redeveloping the sites into a life science and housing project.
Now the picture is quite different, with the market facing a glut of life sciences properties and the vacancy rate approaching 47%, according to recent research from CBRE.
The Toronto-based developer is offloading the 3.74-acre site at 5801 Christie Ave., according to a recent LinkedIn posting from CBRE vice president Kati Thabit.
The Emeryville site is the latest to join a wave of abandoned life sciences projects in the region, as demand for research and development space in the San Francisco Bay Area came to a halt over the past two years amid an oversaturated market.
CBRE described 5801 Christie Ave. in marketing materials posted by Thabit as “primed for immediate redevelopment.” She elaborated: “This project will address the Bay Area’s critical housing needs while capitalizing on premium rents afforded by panoramic views, direct access to Downtown Emeryville, and superior transportation connectivity.”
Oxford had previously outlined plans to build a 12-story apartment building and a 13-story commercial tower with lab and office space plus a parking structure and a park at the Christie Avenue site, per public records. It had planned to tear down the old Wells Fargo and Allegro Ballroom buildings on the site.
Development u-turn
As developers scrambled to build R&D space during the COVID-19 pandemic, millions of square feet of new life sciences real estate were delivered starting around 2022, when research funding was shifting away from coronavirus vaccines and treatments.
In Emeryville, a bayfront town with a footprint of not even two square miles, building permit applications were filed for $652 million worth of new development between 2021 and 2023, according to a city report.
“There is just a huge disconnect between the supply and demand right now,” Conor Ranahan, a managing director at Newmark who specializes in life sciences properties, previously told CoStar News.
Emeryville is a former industrial area on the East Bay waterfront that in the early 20th century was notorious for its gambling houses and bordellos. In recent decades, it has transformed into a shopping, technology and biotech hub, thanks to its close proximity to San Francisco and the University of California, Berkeley. It’s home to the headquarters of animation studio Pixar and biotech firms such as Bayer, Novartis and Zymergen, as well as Peet’s Coffee.
Last year, life sciences development giant BioMed Realty sold off the site of a previously proposed 1.3 million-square-foot life sciences campus dubbed Emery Yards that had aimed to boost Emeryville’s profile to another level as a science and technology hub. The new owner of the property, Sutter Health, plans to turn the 12-acre site into a $1 billion flagship medical facility serving the region that will ultimately replace Sutter's 339-bed Alta Bates hospital in Berkeley.
Emeryville officials signed off in 2021 on BioMed’s original plan to capitalize on the Bay Area’s then-accelerating biotech boom by more than tripling a 285,000-square-foot property, adding approximately 910,000 square feet of new lab and office space to what was then called the Emeryville Center of Innovation, which aimed to ultimately accommodate thousands of advanced technology jobs.
Oxford also appears to be considering a pivot from R&D to housing at the Emeryville Public Market, a 148,000-square-foot, mixed-use center that includes a food hall and shops as well as lab and office space. The developer also acquired that property in 2021. It asked the city earlier this year to amend its development agreement for two parcels within the site to give it the option to build homes instead of the 420,000 square feet of lab space it had already entitled there.