San Diego’s lab vacancy rate is sitting near all-time highs.
Now, with 31% of lab space sitting empty, a handful of companies — some international — are swooping in on declining rents and rising landlord concessions.
The latest real estate report from Jones Lang LaSalle for the first quarter of the year painted a mixed picture. While venture capital funding is slowly returning to San Diego and investor indexes show an uptick in optimism, total leasing activity has been cut in half this quarter from a year prior.
“The real estate side is still in recovery mode,” said Grant Schoneman, vice chairman of the life sciences group at JLL.
As asking rents decline for the 15th consecutive quarter to $5.55 per square foot, some companies are seizing the moment.
Industry insiders call it the “flight to quality trend.” Bigger biotechs are moving into newly constructed buildings in premier locations, like Torrey Pines, Del Mar Heights and University Town Center.
In March, Iambic Therapeutics grew its footprint, expanding into a Class A building in Torrey Pines. In the same month, SciThera relocated from La Jolla to a Class A building in Torrey Pines.
“That shift toward bigger users really shows the improving health of the sector,” Schoneman said. “These biotechs are moving from pure cost preservation to taking advantage of the market, upgrading their space, and planning for growth.”
Torrey Heights, a new 10-acre life science research campus in Del Mar Heights reached 100% occupancy in the first quarter. The Alexandria Real Estate Tech Center, a 47-acre, 14-building campus in Sorrento Mesa, also hit 100% occupancy.
Other companies are crossing oceans to plant their flag in San Diego, drawn by local talent and alluring prices of premium lab space, said Schoneman.
Beijing-based drug innovator Biocytogen announced in March it is opening a new office in Sorrento Valley, across from Qualcomm.
In January, Bora Biologics, based in Taipei, Taiwan, opened their $30 million manufacturing facility in Sorrento Valley.
But despite a few bright spots, the broader lab space landscape remains bleak.
Total leasing activity dropped significantly in the first quarter, with volume falling to 223,000 square feet — almost 50% less than the 2025 quarterly average of 450,000 square feet and the 10-year average of 580,000 square feet.
In San Diego, 30% of labs are empty, driven by vacancy downtown, where only 10% of lab spaces are occupied.
Much of that vacant space sits in new buildings that went up during the building frenzy of 2021 and 2022, when developers, both local and national, built quickly to meet surging market demand.
“As Warren Buffett says, unfortunately, the hangover is in proportion to the binge,” Schoneman said.