San Diego Life Sciences
Lab / Office Market Report
The inflection quarter. Core cluster vacancy posted its first demand-driven decline of the cycle, Class A rents held flat after fifteen quarters of decline, and the exit environment reopened with $3.2B+ in disclosed San Diego M&A.
The inflection arrives: vacancy falls on broad demand, concessions still hold.
The window for extraordinary tenant economics is still open — but Q2 is what the turn looks like, and it now has a clock on it.
The tenant opportunity
Three years of oversupply have produced market conditions that favor tenants, and Q2 delivered the first evidence that the window has a clock on it. Core cluster vacancy posted its first demand-driven decline of the cycle, falling to 26.6% on the first quarter of broad-based positive absorption. The only prior dip, in late 2025, was the mechanical effect of a single delivery and reversed within a quarter.
Concessions have not moved yet: landlords are still delivering fully built-out, lab-ready space at or near their all-in cost, and free rent packages on multi-year deals still represent 10 to 20% of total lease value.
The submarket picture sharpened
Torrey Pines is tightening fastest, with vacancy down to 12.2%, and Sorrento Mesa posted its first meaningful absorption of the cycle. Sorrento Valley, the bright spot in Q1, softened. Where you sign matters as much as what you negotiate, and the leverage map is shifting quarter to quarter now.
The structural shift
Q2 confirmed the exit environment is functioning again. Nine disclosed San Diego M&A transactions totaled $3.2B+, led by UCB's acquisition of Candid (up to $2.2B) and Biogen's acquisition of RayThera (up to $1.0B). Days after the quarter closed, Vertex agreed to acquire San Diego's Crinetics Pharmaceuticals for roughly $10 billion in cash — a post-quarter deal larger than all of Q2's disclosed total combined.
Structural advantages remain intact
San Diego directly employed 61,866 life science workers contributing $54.1B in economic output in 2025, with nearly 2,000 companies in the ecosystem. With Novartis' 466,592 SF Campus Point project the only active construction, new supply is effectively capped through 2027 — San Diego will tighten faster than Boston or the Bay Area.
If you have a lease expiring in the next 18 months, a funding event behind you, or a footprint decision in front of you, this is the market to move in. Q2 was the first quarter of the turn: vacancy is compressing but concessions have not repriced yet. That gap between market conditions and deal terms is where you win — and it narrows from here.
Availability, submarket overview, fundamentals, and rent trends.
Four submarkets, one cluster of 20.5M SF across 338 buildings — and a leverage map that now shifts quarter to quarter.
Submarket overview
| Submarket | Inventory (SF) | Bldgs | Q2 net absorb. | 2026 YTD net absorb. | Direct vac. | Total vac. | Total avail. | Asking rent (NNN) | Under constr. |
|---|---|---|---|---|---|---|---|---|---|
| Sorrento Mesa | 8,492,840 | 161 | 73,346 | 4,725 | 33.6% | 38.8% | 44.4% | $5.00–$6.50 | – |
| Sorrento Valley | 1,833,197 | 68 | (1,373) | 16,607 | 30.0% | 36.6% | 38.0% | $4.25–$5.75 | – |
| Torrey Pines | 6,203,207 | 75 | 41,694 | (5,592) | 10.3% | 12.2% | 22.2% | $5.25–$6.50 | – |
| UTC | 3,995,392 | 35 | 5,971 | 699 | 18.6% | 18.6% | 18.0% | $5.00–$5.85 | 466,592 |
| Core Cluster | 20,519,979 | 338 | 119,638 | 16,439 | 23.3% | 26.6% | 31.6% | – | 466,592 |
Fundamentals
| Metric | Value | Forecast |
|---|---|---|
| Total vacancy | 26.6% | — |
| Class A avg direct ask rent | $5.75 | ↓ |
| Class B avg direct ask rent | $3.50 | ↓ |
| Sublease avg asking rent | $3.50 | ↓ |
| Under construction | 466,592 SF | — |
Market segmentation by space size
| Size | Properties | Avail. spaces |
|---|---|---|
| < 1k SF | 4 | 36 |
| 1 – 5k SF | 33 | 69 |
| 5 – 10k SF | 48 | 71 |
| 10 – 20k SF | 69 | 114 |
| 20 – 50k SF | 86 | 176 |
| 50k+ SF | 37 | 110 |
Q2 2026 was the inflection quarter.
The first demand-driven vacancy decline of the cycle (+119,638 SF absorbed), on the first broad-based positive net absorption. Vacancy had risen in 14 of the prior 16 quarters.
Why this quarter is different
San Diego has recorded positive quarters during this downturn, but their composition matters. Late 2025's positive print reflected a single build-to-suit delivery that accounted for essentially the entire quarter. Excluding that transaction, the market was flat.
Q2's +119,638 SF is structurally different: it was produced by 16 leases distributed across the core cluster, with three of four submarkets posting positive absorption independently. Excluding the quarter's largest lease, absorption remains positive by more than 65,000 SF. Sixteen transactions across multiple submarkets reflect current demand, negotiated at current terms, from companies actively selecting San Diego lab space today.
Why the turn likely holds
Three conditions suggest Q2 represents a durable turn rather than an isolated quarter. First, supply is effectively capped — the Novartis Campus Point project is the only active construction, and no new space can deliver before 2027. Second, pricing is consistent with a market finding its floor: Class A asking rents held at $5.75 after 15 consecutive quarters of decline. Third, the capital cycle has restarted — venture funding reached $624.7M in Q2, while $3.2B+ in M&A exits is recycling capital toward founders who lease lab space within 12 to 24 months.
Beneath the headline
| Metric | Q1 2026 | Q2 2026 |
|---|---|---|
| Direct vacancy | 24.3% | 23.3% |
| Availability | 31.4% | 31.6% |
| Class A asking rent | $5.75 | $5.75 |
| Sublet availability | 1.18M SF | 1.23M SF |
Submarket divergence
The turn has started, but concessions have not repriced yet. Landlords are still delivering turnkey buildouts and 2 to 3 months of free rent per lease year against a market that just posted its first demand-driven quarter of compression. That gap is your opportunity, and it narrows from here. If your lease expires before 2028, you are negotiating against today's 26.6% vacancy, not the tighter market that follows. The strongest positions will be secured before the repricing, not after it.
Capital is steady, but concentrating.
San Diego venture funding reached $624.7M across 10 rounds — nearly 79% of it in just three deals. Exits functioned, with $3.2B+ in disclosed M&A.
Growth and late-stage companies captured 69% of dollars, while seed rounds accounted for roughly 1%. The pattern is consistent across capital markets this quarter: capital is available for de-risked platforms with clear regulatory paths and scarce for everything earlier. Each exit recycles founder, employee, and investor capital into the ecosystem, funding the next vintage of companies — and those companies lease lab space on a 12 to 24 month lag.
SD life science venture funding by quarter
VC evidence — 10 deals · $624.7M
| # | Company | Amount | Stage · Sector |
|---|---|---|---|
| 1 | Campfield Therapeutics | $180.0M | Series A · Drug Discovery |
| 2 | Element Biosciences | $175.0M | Growth · Therapeutics |
| 3 | Sidewinder Therapeutics | $137.0M | Growth · Therapeutics |
| 4 | ClearNote Health | $52.0M | Growth · Diagnostics |
| 5 | VST Bio | $31.9M | Growth · Therapeutics |
| 6 | Iambic | $27.8M | Growth · Drug Discovery |
| 7 | Rejuvenate Bio | $6.0M | Growth · Therapeutics |
| 8 | Antlia Bioscience | $6.0M | Series A · Therapeutics |
| 9 | Channel Robotics | $4.7M | Seed · Med Device |
| 10 | Acurion Health | $4.3M | Seed · HealthTech |
M&A evidence — 9 deals · $3.2B+
| Transaction | Value | Status | Sector |
|---|---|---|---|
| UCB / Candid Therapeutics | up to $2.2B | Closed Jun 17 | T-Cell Engagers |
| J&J / Atraverse Medical | Undisclosed | Closed May 15 | Med Device |
| OrganaBio / Excellos | Undisclosed | Closed May | Cell-Therapy CDMO |
| Hanmi / Aptose Biosciences | ~$3.5M going-private | Closed Jun 30 | Oncology |
| Biogen / RayThera | up to $1.0B | Closing expected Q3 | Immunology |
| Boundless Bio / Serapha | $230M PIPE | Reverse merger · Q4 | Oncology |
| Rallybio / Avenzo | $215M PIPE | Reverse merger · Q4 | Oncology |
| LEO Pharma / Replay | $50M + milestones | Closing undisclosed | Genomic Medicine |
| InSphero / PhenoVista | Undisclosed | Closing undisclosed | Assay Services |
Today's exits are funding the tenants of 2027 and 2028. If you are raising, the bar is a de-risked story: capital is flowing to later-stage platforms, not broadly. If you have recently raised or exited, you are the demand wave this report describes — and your real estate decision should anticipate the market's turn rather than react to it.
Q2 leasing was broad, and Sorrento Mesa led it.
Sixteen deals, eleven in Sorrento Mesa. Three genuine anchors drove the over-20k share; the rest was a healthy spread of mid-size and small-suite activity.
| Address | Submarket | Sign date | SF leased | Tenant | Lease type |
|---|---|---|---|---|---|
| 9955 Pacific Heights Blvd | Sorrento Mesa | Jun 2026 | 54,374 | Quantum-SI Inc | Direct |
| 9276 Scranton Rd | Sorrento Mesa | Jun 2026 | 26,024 | Sarmal | Direct |
| 10201 Wateridge Cir | Sorrento Mesa | Apr 2026 | 23,272 | n-Lorem Foundation | Direct |
| 5601 Oberlin Dr | Sorrento Mesa | May 2026 | 11,634 | Undisclosed | Sublease |
| 11494 Sorrento Valley Rd | Sorrento Valley | Apr 2026 | 10,790 | Undisclosed | Direct |
| 4930 Directors Pl | Sorrento Valley | May 2026 | 10,174 | Undisclosed | Direct |
| 9310 Athena Cir | Torrey Pines | Jun 2026 | 9,906 | Beyond Therapeutics | Direct |
| 5825 Oberlin Dr | Sorrento Mesa | Apr 2026 | 8,775 | Interfacial Consultants | Direct |
| 6220 Greenwich Dr | UTC | Apr 2026 | 7,500 | Sanguine Biosciences | Direct |
| 6048 Cornerstone Ct W | Sorrento Mesa | May 2026 | 5,896 | Undisclosed | Direct |
| 10945 Vista Sorrento Pky | Sorrento Valley | May 2026 | 5,472 | Undisclosed | Direct |
| 6185 Cornerstone Ct E | Sorrento Mesa | Jun 2026 | 2,277 | Undisclosed | Direct |
| 6185 Cornerstone Ct E | Sorrento Mesa | Jun 2026 | 1,890 | Undisclosed | Direct |
| 6191 Cornerstone Ct E | Sorrento Mesa | Jun 2026 | 1,830 | Undisclosed | Direct |
| 6195 Cornerstone Ct E | Sorrento Mesa | Apr 2026 | 1,240 | Undisclosed | Direct |
| 6181 Cornerstone Ct E | Sorrento Mesa | May 2026 | 1,220 | Undisclosed | Direct |
5–10k SF — 31.3%
10–20k SF — 18.8%
Over 20k SF — 18.8%
Sorrento Valley — 3 deals · 26,436 SF · 15%
Torrey Pines — 1 deal · 9,906 SF · 5%
UTC — 1 deal · 7,500 SF · 4%
NAAG Forensic PC — 12,194 SF · Sorrento Mesa
Satomic — 12,149 SF · Sorrento Valley
Available projects
| Project | Size range | Asking |
|---|---|---|
| Pacific Center | 13,000–174,000 SF | $6.25 + OpEx |
| Vista Sorrento Labs | 8,933–115,761 SF | $6.00 + OpEx |
| Directors Science Park | 10,174–83,944 SF | $5.75 + OpEx |
| TechCenter@TheRidge | 4,955–18,924 SF | $3.50 + OpEx |
| Cornerstone Research Ctr | 1,174–7,337 SF | $3.15 + OpEx |
Tenant opportunity snapshot
Recent Voit representation resulted in a concession package including a turnkey buildout, 85-month term, roughly 12 months of base rent abatement, and a 20% discount on the asking rate.
Current availability plus tenant-favorable concessions is the window, and it is open now. If you are weighing a move, an expansion, or a renewal, you are negotiating in a market that just turned but has not yet repriced. We have live comps and deal intelligence across all four submarkets, and we represent tenants in exactly these negotiations.
Structure the lease around your milestones, not the landlord's form.
The way to capture today's gap is not a standard 5-to-7-year lease — it is structuring the deal so the real estate works like non-dilutive financing.
The 18-Month Clean Break
A one-time termination right at month 18 or 24, matched to your funding cycle, so a missed raise does not trap you in space you cannot use. If you expect Series B capital 18 months after a regulatory milestone, set the break to land just after that date, so the option expires only once the risk has.
The Rip and Replace Expansion
Replace your current lease with a new one when you expand into adjacent space, resetting your concession package instead of stacking two leases with two expiration dates. This lets you re-open the entire concession conversation at the moment your leverage is highest.
The Rolling Security Deposit
A milestone-based burndown returning 25 to 50 percent of the deposit when you hit a funding raise or on-time payment milestones, freeing trapped cash. A $20M+ raise or 18 months of on-time payments are the standard triggers; the returned cash can also be applied toward expansion rent.
Letter of Credit Over Cash
An LC instead of a cash deposit, keeping venture dollars available for R&D while still giving the landlord the security they need. In a tight fundraising environment, months of trapped deposit cash is runway; an LC delivers the same landlord security at a fraction of the cash cost.
Where your leverage is strongest
Sorrento Mesa
Deepest concessions, but it just posted its first absorption of the cycle, so this window now has a clock. Push for the full package: turnkey buildout, stacked abatement, and termination rights. Landlords here are competing on total concession value.
Sorrento Valley
Softened in Q2 after being the Q1 bright spot; landlord motivation is increasing quarter over quarter. Anchor negotiations to the submarket's softening, not last quarter's comps.
UTC
Steady; for growth-stage tenants wanting institutional proximity. Concessions are more competitive here — trade term length for TI quality rather than chasing abatement.
Torrey Pines
Tightening fastest; for Series B-plus tenants with clinical or partnership validation who need UCSD and Scripps proximity. Leverage is thinnest — win on speed and credibility rather than price, and secure expansion rights early.
Match your stage to a submarket
Every one of these four structures is achievable in today's market, and none of them will be once concessions reprice. The leverage is real, but the repricing has started: the strongest deals of this cycle will be signed before it finishes. If your lease expires before 2028, that decision window is now.
Where we are in the cycle.
The setup that was forming last quarter is now inflecting. Vacancy compressed for the first time this cycle on broad-based demand, supply is capped, and the capital cycle has restarted. San Diego has moved off the trough.
San Diego has moved off the trough. Vacancy compressed for the first time this cycle on broad-based demand, supply is capped, and the capital cycle has restarted.
How we got here
Boom
Vacancy near 6%, rents peaking around $6.50.
Correction
Vacancy climbed past 14% as oversupply and a funding pullback took hold.
Trough
Vacancy reached the mid-20s; absorption stayed negative.
Inflection
First demand-driven vacancy decline of the cycle.
San Diego in context — top U.S. life science clusters (Q1 2026)
| Market | Total vacancy | Class A asking rent | Net absorption | Under construction |
|---|---|---|---|---|
| San Diego (core cluster) | 26.6% | $5.75 | (103,199) SF | 466,592 SF |
| Greater Boston | 27.9% | $6.78 | (117,186) SF | 2.7M SF |
| SF Bay Area | 30.7% | $5.60 | (455,000) SF | 0.9M SF |
The four forces shaping 2026 through 2028.
Strategic buyers keep paying full valuations for differentiated San Diego platforms. Vertex agreed, in July 2026, to acquire Crinetics for $10 billion at a 102 percent premium — one of five San Diego acquisitions announced in 2026.
A looming patent cliff is forcing large pharma to replenish pipelines through acquisition, and San Diego's density of validated, clinical-stage assets makes it a preferred hunting ground.
The premium is selective, not broad. Companies with de-risked science and clear regulatory paths command full value, and each exit recycles capital and talent back into the local ecosystem.
The market has split by submarket quality, and Q2 quantified the gap. Torrey Pines vacancy fell to 12.2 percent while Sorrento Mesa sits near 38.8 percent — a spread of more than 26 points.
Tenants concentrate demand in the best buildings and locations, prioritizing proximity to UCSD and Scripps, move-in-ready lab space, and institutional credibility over headline rent savings.
Premier submarkets will tighten first and fastest. Tenants who need quality space should expect it to get scarcer, while oversupplied submarkets still offer a closing window of aggressive economics.
Federal research funding is the single factor that could slow the recovery. Congress and the courts eased the worst-case cuts, but grant execution deteriorated, with San Diego NIH awards falling from 665 to 531 year over year.
Risk shifted from budget cuts to grant-flow disruption. San Diego NIH awards fell year over year, and federal sources fund 61 percent of UC San Diego's research budget, so the region's anchor institution is heavily exposed.
The disruption is already removing planned supply. UC San Diego froze hiring and indefinitely delayed a new life sciences building, so prolonged funding uncertainty constrains both institutional demand and the future development pipeline.
Today's funding and exits are building tomorrow's leasing demand. San Diego venture funding and $3.2 billion-plus in Q2 M&A are seeding the companies that will need lab space as they scale.
Capital converts to space on a lag. JLL estimates every $1 million raised historically generates about 224 square feet of leasing demand, and CBRE expects improved valuations and venture access to drive lab demand through 2026.
With supply capped through 2027, the demand now forming will meet a constrained market. Tenants and investors who position ahead of that conversion capture today's economics before the wave arrives.
These four forces point the same direction. Big pharma is validating San Diego science through record acquisitions, demand is concentrating in quality space, and today's funding is seeding the tenants of 2027 and 2028 — while federal research uncertainty remains the one genuine risk to watch. For a founder or an investor, the signal is timing: the capital forming now becomes the space demand of the next two years, and it will meet a market with supply capped through 2027. The tenants who position ahead of that conversion capture today's economics. If a lease, an expansion, or a headquarters decision is on your horizon, this is the quarter to move.