In the heart of San Diego’s bustling biotech scene, a notable shift is underway. QuidelOrtho, a renowned diagnostic company, is putting its Sorrento Mesa manufacturing facility on the market in a sign of a broader shift in the life sciences industry in San Diego County.
The company has been navigating challenging waters recently, with the decline in COVID-19-related product sales putting a significant dent in its revenue. As a result, QuidelOrtho has embarked on a series of cost-saving measures, including layoffs and a reevaluation of its real estate holdings, all geared toward saving over $100 million. The sale of the Sorrento Mesa facility, along with another in New Jersey, is expected to generate much-needed cash and reduce ongoing operating expenses.
The decision to sell the Sorrento Mesa facility is not without its drawbacks. The company is set to incur a non-accounting book loss of $57 million due to the sale of both properties. This is partly attributed to the current state of the San Diego commercial real estate market, which is grappling with excess capacity and declining demand for life science spaces.
The firm has retained JLL to help sell the 76,609-square-foot property located at 10165 McKellar Court in San Diego’s Sorrento Mesa submarket. JLL’s website states that the building will be offered as vacant with a potential short-term sale-leaseback. JLL’s marketing pitch focuses on the facility’s location in the heart of Sorrento Mesa, San Diego’s fastest-growing life sciences submarket, offering an exceptional opportunity to acquire a specialized property significantly below replacement cost. The building features a lab, warehouse, and office uses, as well as views of Los Penasquitos Canyon. It is surrounded by one of the nation’s strongest STEM worker demographics.
The San Diego life science industry, a renowned global hub for innovation, faced significant headwinds in early 2024. Following a period of over-exuberant growth fueled by the pandemic, the industry grappled with a surplus of lab and office space, leading to record-high vacancy rates. This oversupply, coupled with a pullback in venture capital funding, forced many companies to downsize and sublease their spaces.
Despite these challenges, the sector continued to attract substantial investment, with startups securing billions in funding during the first quarter. However, the funding landscape remained significantly tighter compared to the record highs of 2021, posing ongoing challenges for smaller companies seeking to raise capital. While the industry’s long-term prospects remain strong, the early months of 2024 underscored the need for adaptation and resilience in the face of evolving market dynamics.
