As the biotech sector is heating up, San Mateo County showed no signs of cooling down. Life science users have been flocking to find any available space on the San Francisco Peninsula, taking any office and research and development (R&D) space that they can find. The two leading R&D transactions and many of the major office transactions included life science users. This perhaps is a sign that the trend is not stopping any time soon. Due to high demand, average asking rates are reaching critical levels with office ending at $5.08 fully serviced, industrial at $1.36 NNN, and R&D at $3.60 NNN this quarter.
Even though the life science sector continues to dominate the San Francisco Peninsula, the largest transaction this quarter was in the industrial sector due to a large warehouse acquisition in San Carlos. Windy Hill Ventures sold their entitled office development project Meridian25 on Industrial Road to Alexandria Real Estate Equities. Once construction begins to convert the industrial/warehouse space to office, the already dwindling industrial supply will be at an all-time low while the office market will continue to thrive.