FIGURES | SAN FRANCISCO BAY AREA | Q2 2023

FIGURES | SAN FRANCISCO BAY AREA | Q2 2023

San Francisco Bay Area

Life Sciences Figures
11.0% (466K) 9.8M $6.01 153.0K 2.9M
Vacancy Rate SF Net Absorption SF Under Construction NNN / Lease Rate Life Science Industry Employment SF Active and Pending
(includes conversions) Existing Properties San Francisco & San Jose MSA Tenants in the Market
Note: Arrows indicate change from previous quarter.

FIGURE 1: San Francisco Bay Area Vacancy & Net Absorption Trend
MARKET HIGHLIGHTS
3.0 30%
• The total labor force in the San Francisco Bay Area (Bay Area) stood at 3.7 million with 3.5
2.5 Net Absorption (MSF) Vacancy
million employed at the close of Q2 2023. The unemployment rate closed the quarter at
25%
3.22%, a 36-basis-point (bps) increase over the previous quarter. Life sciences firms
2.0
continued to add headcount during the quarter and this sector grew by 1,700 jobs, bringing
the overall employment level to 152,970.

Net Absorption MSF

1.5 20%
• The overall net absorption for Bay Area life sciences ended Q2 2023 at -465,664 sq. ft. the 1.0

Vacancy
ongoing slowdown in venture capital funding, triggered by quantitative tightening by the Fed 15%
over the past twelve months, has been the leading contributor to a contraction in demand. 0.5

• Total Bay Area life sciences tenants in the market ended Q2 2023 at 3.2 million sq. ft., a slight 0.0 10%
improvement over Q1 2023. However, roughly 15% of active requirements were actively
negotiating leases at the close of Q2 2023, which demonstrates the pull-back in momentum -0.5
5%
in the market. -1.0
• Despite the widely felt slowdown across the Bay Area, developers continue to break ground
-1.5 0%
on new, speculative projects as well as existing office to life sciences conversions. In total, 56 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD23
projects were underway (construction / conversion) during Q2 2023, totaling 9.8 million sq. ft.
Source: CBRE Research

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 FIGURES | SAN FRANCISCO BAY AREA | Q2 2023

MARKET OVERVIEW FIGURE 2: San Francisco Bay Area Submarket Statistics

At the close of Q2 2023, the total inventory of life sciences facilities in Net Direct Sublease Total Total Average Qrtly. YTD
the Bay Area stood at 36.3 million sq. ft. with an overall average asking Rentable Vacant Vacant Vacancy Availability Rent Net Net
Submarket Area (Sq. Ft.) (Sq. Ft.) (Sq. Ft.) (%) (%) Overall Abs. Abs.
rate of $6.01 per sq. ft. on a monthly, NNN basis (NNN). The largest
submarket, San Francisco Peninsula (16.8 million sq. ft.), ended the North 880 Corridor 6,602,502 427,286 239,965 10.1% 12.1% $5.97 -59,031 -42,298
quarter with vacancy at 11.7%, up 447 bps from the previous quarter. It Central 880 Corridor 2,096,243 205,094 100,689 14.6% 16.8% $3.74 0 -57,350
also registered the second highest average direct rate in the region at
Oakland 8,698,745 632,380 340,654 11.2% 13.3% $5.19 -59,031 -99,648
$7.23 NNN.
I-680 Corridor 2,456,741 49,353 65,859 4.7% 10.6% $2.41 12,378 6,397
The ongoing challenges in credit and venture capital market,
triggered by the Fed raising its funds rate 350 bps over the past 12 South 880 Corridor 3,828,767 415,693 148,420 14.7% 17.2% $4.60 -44,509 -176,189
months, drew what had been a flood of leasing activity to a mere Central Silicon Valley 2,553,242 90,422 0 3.5% 6.9% $3.87 0 15,112
trickle. Gross leasing activity ended at just 311,000 sq. ft. for the entire
Northern Silicon Valley 1,191,281 164,509 111,524 23.2% 31.8% $4.28 -19,000 -67,614
region in Q2 2023, 42% of the total in Q1 2023 and an even lower, 33%
of the 10-year average. The current economic headwinds also led to Silicon Valley 7,573,290 670,624 259,944 12.3% 16.0% $4.60 -63,509 -228,691
sizable space givebacks during the quarter, resulting in Northern Peninsula 10,123,045 773,163 355,306 11.1% 17.1% $7.26 -99,055 -301,763
-465,664 sq. ft. of net absorption.
Central Peninsula 4,437,426 415,740 186,573 13.6% 19.9% $7.31 -168,941 -178,353
Total projects under construction in Q2 2023 stood at 7.0 million sq. ft. Southern Peninsula 2,234,819 186,611 43,305 10.3% 12.6% $6.84 -87,506 -92,714
for ground up new construction and 2.8 million sq. ft for conversion to
life sciences. As previously noted, prominent life sciences developers San Francisco Peninsula 16,795,290 1,375,514 585,184 11.7% 17.3% $7.23 -355,502 -572,830

have turned to the repositioning of functionally and amenity obsolete San Francisco 971,330 0 36,041 3.7% 14.4% $8.35 0 23,989
office buildings to meet the growing demand of this sector. Two Source: CBRE Research
Total Bay Area Market 36,495,396 2,727,871 1,287,682 11.0% 15.6% $6.01 -465,664 -870,783
construction projects delivered during the quarter including Nexus on
Grand in South San Francisco totaling 149,008 sq. ft. and Brittan West
FIGURE 3: San Francisco Bay Area Notable Projects Under Construction
in San Carlos totaling 174,000 sq. ft. Another 1.4 million sq. ft. was
scheduled to deliver by the end of 2023. In terms of building
conversions, roughly 162,000 sq. ft. was completed in Q2 2023
The Bay Area life sciences market has exhibited resilience in the face
of economic uncertainty and headwinds. Its noteworthy legacy as the
birthplace of life sciences and home to many world-renowned Kilroy Oyster Point Ph. II Genesis Marina Berkeley Commons Elco Yards South City Station
companies in the sector insulate it from much of the volatility Developer: Kilroy Realty Developer: Phase 3 Developer: Lane Partners Developer: IQHQ Developer: IQHQ
experienced in the broader markets to-date. Moreover, its Size: 900,000 SF Size: 594,000 SF Size: 538,826 SF Size: 464,000 SF Size: 340,000 SF
concentration of world renown universities in biology and biomedical Preleased: 0% Preleased: 57% Preleased: 0% Preleased: 0% Preleased: 0%
degrees continues to churn a concentrated talent pool. Delivery: 2024-2025 Delivery: 2023-2024 Delivery: 2024 Delivery: 2025 Delivery: 2024

Source: CBRE Research

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 FIGURES | SAN FRANCISCO BAY AREA | Q2 2023

FIGURE 4: San Francisco Bay Area Life Sciences Construction Deliveries Trend FIGURE 6: San Francisco Bay Area Life Sciences Rental Rate Trend Q1 2023
Million Sq. Ft. NNN
2.0 $9 12.3% 14%
Deliveries Conversions 1.72 11.7%
1.8 11.3%
$8 $8.35 12%
1.6 1.43 1.49
$7 10%
1.4 $7.23
1.2 $6 8%
0.94
1.0 0.86 $5 4.7% 6%
0.71 3.7% $5.08
0.8 0.62 0.65 $4 $4.60 4%
0.58
0.6
0.35 0.32 $3 $2.41 2%
0.4 0.23 0.27 0.26
0.18 0.15
0.2 0.05 0.110.07 0.05 $2 0%
San Francisco San Francisco Oakland Silicon Valley I-680 Corridor
0.0 Peninsula
2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD-23 Direct Rent Vacancy
Source: CBRE Research Source: CBRE Research

FIGURE 5: San Francisco Bay Area Notable Life Sciences Lease Transactions Q1 2023 FIGURE 7: San Francisco Bay Area Top Life Sciences Occupiers

Tenant Submarket SF Leased Type Company Name

Confidential Oakland 121,216 Renewal/Expansion Genentech, Inc. / Roche Zymergen

Abbott Laboratories Bayer
Corcept Therapeutics San Francisco Peninsula 47,021 Renewal
Gilead Sciences, Inc. Merck
Truebinding San Francisco Peninsula 43,958 Renewal
BioMarin Pharmaceutical, Inc Freenome
Ideaya Biosciences San Francisco Peninsula 43,500 New Lease
Bristol Myers Squibb Pacific Biosciences
Confidential Silicon Valley 35,000 Expansion
Amgen Inc. Mylan
Confidential I-680 Corridor 33,559 Renewal
Exelixis Guardant Health
Quanergy Silicon Valley 23,155 New Lease Verily Cytokinetics, Inc.
Mirvie San Francisco Peninsula 22,000 New Lease AbbVie Nektar Therapeutics
Confidential San Francisco Peninsula 20,974 Renewal Penumbra Johnson & Johnson
Source: CBRE Research Source: CBRE Research

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 FIGURES | SAN FRANCISCO BAY AREA | Q2 2023

Market Map (Bay Area Life Sciences Talent Density & Biological / Biomedical Degrees)

Definitions
Life Sciences Methodology: highly specialized facilities with exceptional power, plumbing, ventilation, and extensive laboratory
buildout, which meets current life sciences user needs.

Leasable Inventory SF: specialized life sciences inventory or lab space that is owned by an investor / developer and leased to a life
sciences company, Direct Vacant SF: available vacant space marketed by a landlord of a life sciences facility. Sublease Vacant SF:
available vacant space marketed by a sublessor of a life sciences facility. Vacancy Rate: sum of direct and sublease vacant SF divided
by leasable inventory SF. Availability Rate: total available occupied and vacant space marketed by a landlord or sublessor divided by
leasable inventory SF. Class A Rent NNN: average prime rent for newly constructed life sciences facilities. Market Rent NNN: average
rent achieved for second and third generation life sciences facilities. Under Construction: projects currently under development and
scheduled for completion beyond reporting quarter. Deliveries: projects delivered over a specified timeframe. Net Absorption: change
in previously occupied space, measured in SF and recorded as a positive value for occupancy growth or negative for reduction. Life
science occupations are in pharmaceutical and medicine manufacturing and scientific research and development services. Life
Science Industry Employment: Pharmaceutical and medicine manufacturing; Scientific research and development services; and
navigational, measuring, electromedical, and control instruments manufacturing. Geographies: North 880 Corridor (Richmond,
Berkeley, Emeryville, and Alameda); Central 880 Corridor (San Leandro, Hayward, and Union City); 680 Corridor (Livermore and
Pleasanton); South 880 Corridor (Newark, Fremont, and Milpitas); Central Silicon Valley (San Jose, Santa Clara, Campbell, and Los
Gatos); Northern Silicon Valley (Cupertino, Sunnyvale, and Mountain View); Southern Peninsula (Palo Alto and Menlo Park); Central
Peninsula (San Mateo, Foster City, Redwood City, Belmont, San Carlos); Northern Peninsula (Brisbane, South San Francisco, and
Burlingame); and San Francisco.

Contact
Konrad Knutsen Burlingame Palo Alto
Associate Director 1450 Chapin Ave, Suite 200 400 Hamilton Ave, 4th Floor
Northern CA Burlingame, CA 94010 Palo Alto, CA 94301
+1 916 446 8292
San Francisco Silicon Valley
konrad.knutsen@cbre.com
415 Mission Street, Suite 4600 225 W Santa Clara St, 12th Floor
San Francisco, CA 94105 San Jose, CA 95113

Oakland Walnut Creek

1111 Broadway, Suite 1850 2175 N California Blvd, Suite 300
Source: CBRE Research, Location Intelligence Oakland, CA 94607 Walnut Creek, CA 94596

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