Life Sciences Boom in San Diego: Why More Medical Space Is Essential

Sand Diego is emerging as a hotbed for the life sciences industry, with rapid growth in funding, talent, and innovation. Over the past five years, venture capital funding for life sciences in the region has surged by a staggering 566%, far outpacing the national average of 345%. Alongside this, San Diego boasts the second-highest number of biological and biomedical sciences graduates in the nation, fueling its ascent in the field.

A Thriving Ecosystem for Life Sciences

According to a national report by CBRE, the San Diego-Orange County region ranks seventh in the country for research talent. The area produces 4.5% of all biological and biomedical sciences PhDs in the U.S., thanks to powerhouse institutions like UCLA, UC Irvine, and USC. This academic infrastructure is a key driver of talent supply, enabling the region to house the fifth-largest pool of life sciences researchers nationwide.

Industry leaders attribute much of the region’s success to its diversity and entrepreneurial spirit. “Particularly over the past five years, this region has had some phenomenal success stories in the startup space,” says Jeff Pion, vice chairman at CBRE. Visionaries like Arie Belldegrun and Patrick Soon-Shiong have attracted significant venture capital and talent, while the local university system bolsters the pipeline of innovation.

The Talent Advantage

One of the distinguishing factors of the San Diego life sciences market is its robust talent pool. However, this strength is also a challenge. Unlike compact hubs such as San Diego or the Bay Area, San Diego’s talent is dispersed across a wide geographic area, making infrastructure and investment more critical.

Despite these challenges, the region’s life sciences sector has grown rapidly. From 2015 to 2020, San Diego achieved the fifth-highest growth rate in life sciences researchers, positioning it as a major contender in the industry.

The Push for Infrastructure

With demand for medical space on the rise, San Diego is facing a critical need to expand its infrastructure. medical vacancy rates are tight nationwide, even with robust construction activity, and the life sciences sector’s unemployment rate is at a historic low — less than 1% as of April 2023.

“The quality and availability of labor are key considerations for any expanding industry,” notes Ian Anderson, CBRE’s head of life science and healthcare research. “Expanding life sciences companies can choose from dozens of U.S. markets depending on their labor and real estate needs.”

Beyond the Medical

The growth of life sciences isn’t limited to drug development. The industry is also expanding into personalized treatments, advanced materials, and even future foods, making San Diego a key player in addressing global challenges.

As the life sciences sector continues to flourish, San Diego has the potential to solidify its position as a leading hub — provided it invests in the necessary infrastructure and medical space to support this momentum. With venture capital flowing and talent thriving, the city is on the cusp of a breakthrough that could redefine its role in the global life sciences landscape.

Tips For Renting Medical Office Space In San Diego

Leasing San Diego Medical Office Space

There are many choices when it comes to renting medical office space in the greater San Diego area.

San Diego can be one of the most expensive counties in California if not the country to rent or lease commercial office space in.

Medical office space has its own set of special circumstances so doing your homework with your agent or broker can save you both time and money.

Below are a few things to consider when renting Medical office Space in the greater San Diego area.

 

san diego tenant rep

Why Hire a tenant rep

Tenants reps usually have access to more listings than what is out there.

We can negotiate 10-20 % off the list price at times, depending on your terms.

Many times we can negotiate a few months of free rent as a bonus.

The service is free for  our clients looking to rent medical office space.

The building or management company is the party that pays all fees to the tenant rep.

So getting a tenant rep when looking for medical office space in San Diego County is an ideal way to find the perfect medical office to lease.

 

How Many Square feet Do I Need

Making the wrong decision about square footage can be a costly proposition.

Too many square feet or exam rooms will be wasted overhead.

Not enough can cause you valuable revenue.

The rule of thumb is generally a general practitioner needs three exam rooms and one procedure room.

That is the general rule, but that can vary depending on the amount of doctors and equipment needed like imaging equipment.

Generally a medical practice is 1200-1500 square feet for the first doctor and 1000-1200 for each additional doctor.

Again knowing the exact square feet needed can save you time and money.

 

 

Determine the Average Rates in the Area

Take a look around the San Diego area to determine what the general cost per square foot in the neighborhood is.

Leasing agents may post rent prices in different forms, but when looking around they should all be priced per square foot so you’re comparing apples to apples when getting a sense of the neighborhood prices.

 

 

Understand the difference between Rentable Space and Useable Space

Let’s say you find a great 2000 square foot location in the desired San Diego neighborhood of your choice.

Just remember the 2000 square foot space does not mean you actually get 2000 square feet.

The 2000 square feet also will include common areas such as lobbies, atriums, stairwells, electrical rooms, storage rooms, elevators etc.

The is commonly referred to as the ‘ Building Load Factor”.

The building load factor can be as low as 5% for first floor tenants with outside entrances, to 15%-20% for multi story , multi tenant office buildings.

You should always check with the broker or the prosperity manager regarding the building Load factor.

 

 

learn about fees

Understand What additional Fees you will be incurring

It should go without saying that rent is not the only thing you will pay for your office space in San Diego.

You will incur other monthly expenses based on your leasing agreement.

There are basically three types of leases.
Triple Net Lease or NNN lease– this is the most common lease agreement.

This means in addition to your rent you will pay a prorated share of the property tax, insurance, maintenance, management costs and repair fees.

However you will pay a separate electric bill for the electric company
Modified gross Lease- This lease will include malot of what is not covered in the NNN lease but you’ll still pay your electricity and janitorial fees.

Every Modified Gross Lease is Different so check with your property manager or broker for the details.
Full Service Gross Lease-  This lease will include everything including electrical and janitorial.
So when comparing lease options you should compare apples to apples again.

This can save you a lot of money over the time of your lease.

 

 

Ask about an improvement allowance

Most commercial space provides for a tenant improvement allowance to modify the existing space to your specifications.

Find out how much it is.

This is usually based on 4 factors:

  • Age and condition of current build out
  • the length of lease
  • rental amount
  • and the credit or personal guarantee of the entity signing the lease.

 

Ask if the space is accessible

All office space must meet ADA and OSHA requirements.

You’ll need to establish that your space meets the requirements and if they do not the building owner must bring them up to code.

This can be a costly proposition if not handled by the owner prior to signing the lease.

 

Find out about Biohazard Waste

Medical offices experience medical or biohazard waste that must be disposed of in a certain manner.

You will need to find out if the building you want to lease from has a medical waste disposal program, or a place to hold medical waste until it can be disposed of properly.

Most regular office buildings won’t have this option.

 

Check on After-Hours Access and Heating Cooling

Will you have access to the building after hours to see emergency patients?

You will most likely have access to the building but this should be established before you sign the lease.

Also something else to consider is the after hours heating and cooling schedule.

This also needs to be established especially if you’re signing a full service gross lease where all the utilities are included.

These heating and cooling after hours settings can disrupt patients and physicians during operating hours.

 

Check Security Issues

Medical offices handle drugs and protect sensitive information.

You should know what security is already in place and what security you are allowed to add to your leased space.

Does the building have an after hours security company, video surveillance?

 

Learn About Parking

Where do we park?

In San Diego this is a continued issue.

Is there a parking garage?

Where do the employees, where does the staff park?

These are all questions that need to be answered before you sign your lease.

Lack of Parking can make it difficult to attract new patients.

 

Consider Sharing Medical office Space

Since it will already be set up for medical use, it’s something to consider.

If you are just starting out this might be the route for you.

All front desk, security, and medical office waste is all set up for you and you are just renting a portion of the medical building.

As you can see there’s a lot to consider when renting a Medical Space in San Diego.

Follow these simple guidelines and save you time and money.

Call us today.