As demolition work ramps up on the massive remake of Horton Plaza into a mixed-use campus, developers have begun touting the project as a potential home for life science companies — a growing industry that’s traditionally shunned downtown.
Los Angeles-based Stockdale Capital Partners, which bought Horton Plaza two years ago for $175 million, recently commissioned a feasibility study by a global engineering/design firm that found the 10-acre site contains the necessary infrastructure to be suitable for life science tenants.
Up until now, Stockdale has focused its marketing efforts on luring big technology firms to the project, which includes 770,000 square feet of office space and 300,000 square feet of specialty retail in its first phase.
The turn toward life sciences isn’t a new idea, said Daniel Michaels, a managing director at Stockdale. It recognizes, however, the strength of the sector in the COVID-19 era, especially compared with tenant demand for retail, traditional office and other real estate categories that have been hit hard by the pandemic.
“It is definitely not a pivot,” said Michaels. “We always had an intention to do life sciences. We promoted tech, and we still think there is tech tenancy to be had. But there is no other site that can offer this kind of for life science tenants downtown. And we want people to know that we are going to be actively pursuing this, along with tech.”
To date, no tenants have been announced for the project, though Michaels said there are ongoing discussions. In March, Stockdale Capital closed a $330 million construction loan, which paved the way for demolition to begin. The project is on track for completion in early- to mid-2022.
Horton Plaza’s remake comes as downtown’s available office space spiked up to 25 percent this quarter, the highest level in a decade, according to CoStar, a real estate research and analytics firm.
“The large tech firms have yet to choose downtown over the UC San Diego area or the freeway corridors to this point,” said CoStar Analyst Ryan Theige in a research report. “Instead, more traditional office s are still dominant.”
San Diego is home to one of the nation’s top life science clusters, with some 1,750 firms concentrated in Torrey Pines Mesa/University City near UC San Diego and various research institutes. The region pulled in more than $1 billion in National Institutes of Health funding last year.
As with tech firms, downtown landlords have yet to successfully lure science tenants away from Torrey Pines Mesa, in part because much of the industry’s workforce lives in central and north San Diego, said David Marino, a principal at commercial tenant broker Hughes-Marino.
“I respect that (Stockdale Capital) is trying to cast a bigger net,” said Marino. “Could the building be adapted to life science use? I think it could. The question then becomes is there demand? Does the life sciences industry have any interest in being downtown? I think that is unknown.”
Industry trade group Biocom lists only one San Diego biotech member that’s based downtown.
Michaels contends UTC/Torrey Pines Mesa is running short of available buildings and land. Moreover, he said the Horton Plaza project has advantages over existing downtown landlords.
While most city center buildings have vacancy in relatively small chunks, the Horton project can offer large footprints of contiguous space — with 40,000-square-foot floor plates spanning multiple stories.
The project also features high ceilings for ventilation equipment, as well as heavy-duty electrical and plumbing infrastructure often required by labs. The site has access to nearly 10,000 tons of chilled water, a large subterranean delivery tunnel and 2,200 parking spaces.
“For the foreseeable future, these life sciences companies are going to have bigger and bigger needs and the scope and scale of our project uniquely allows us to meet those needs,” said Michaels.
