Trammell Crow 的南旧金山生命科学项目获得阿拉斯加永久基金公司的支持

Trammell Crow quietly notched a big win at the end of last year: even as investors continue to pull away from new life sciences projects, the Dallas developer (NYSE: CBRE) cinched a $141.5 million equity commitment for a planned research and development campus in South San Francisco for which it has no tenant.

The Alaska Permanent Fund Corp. approved the investment in Trammell Crow’s 500,000-square-foot campus project at 120 E. Grand Ave. in the fourth quarter of 2023, it said in documents released as part of a Feb. 15 board meeting. The commitment was first reported by IPE Real Assets. Trammell Crow secured city approval for 120 E. Grand Ave. last May.

APFC, which is funded by Alaska’s oil and gas reserve revenues, confirmed its commitment to 120 E. Grand Monday but did not respond to a list of emailed questions about the deal. The developer spent nearly $80 million last year to acquire the four parcels that make up the roughly 3.5-acre 120 E. Grand site, property records show.

Investments like APFC’s were fairly commonplace during the pandemic: life sciences leasing activity, bolstered by a flood of new venture funding, hit unprecedented levels, and large-scale projects on the San Francisco Peninsula often leased up as they were being built.

But that dynamic has changed over the last year. Total availability within the 11-million-square-foot Northern San Francisco Peninsula submarket, which includes South San Francisco, hit 19.8% in the final quarter of 2023 — up from 5.3% during the same period in 2022, according to data from CBRE.

That is in part because of the delivery of new space, but also because leasing activity has slowed as investors have cautioned biotechs to reign in their spending. The availability of funding for projects like 120 E. Grand has dropped off as a result.

Even with APFC’s commitment in hand, Trammell Crow says it is proceeding cautiously. Adam Voelker, who heads the firm’s San Francisco office, told the Business Times Tuesday there is no set date for the project’s groundbreaking.

“We are positioning the project to be construction-ready and repeatedly analyzing market dynamics for a groundbreaking,” Voelker said in a prepared statement. He declined further comment.

Trammell Crow isn’t alone in its conservative stance. So far just one of a handful of major life sciences developments approved for the swath of South San Francisco that sits east of Highway 101 between the third quarter of 2022 and the same period last year — a pipeline that spans more than 3 million square feet — has broken ground.

Projects approved for the area are as follows:

The development cluster appeared poised to become a new hotspot for South San Francisco, which is already home to one of the country’s premier biotech clusters. But so far just 580 Dubuque is under construction, and in the absence of the kind of leasing environment that fueled many of the approved development proposals in the first place, it’s not clear what could prompt the remainder to move forward.

Pasadena-based developer Alexandria Real Estate Equities partnered with San Francisco industrial giant Prologis to develop 100 E. Grand before pulling out of the project in August of 2022, citing a changed macroeconomic environment.

“We’re being pretty darn cautious there, and you’ll see that continue,” Alexandria’s founder Joel Marcus told analysts on an earnings call last year. Peter Moglia, the company’s chief investment officer, said on the same call that Alexandria was aware of at least one developer beginning construction on a life sciences project in the city with no tenant in hand — a decision he described as “beyond comprehension.”