Alexandria Real Estate Equities, a major landlord in the Bay Area’s life sciences sector, is shifting its strategy due to declining demand for laboratory and biotech space. The company plans for up to 35 percent of its $2.9 billion in asset sales this year to be land, much of which could be used for housing development, according to the San Francisco Business Times.
The Pasadena-based firm has already started marketing some of its regional properties for sale. Alexandria expects to list its 88 Bluxome Street site in San Francisco during the first half of the year and has begun seeking buyers for sites near Stanford University in Palo Alto, also intended for potential housing projects. These land sales are expected within the next year.
Alexandria reported almost $1.9 billion in write-downs last year, a significant increase from 2024. The oversupply of life sciences space has contributed to this trend, with many developers now hesitant to pursue new biotech projects after the sector’s pre-pandemic boom. Vacancy rates in Bay Area life sciences buildings have reached about 24 percent, according to data from Savills cited by the Business Times.
Despite signs that leasing activity is improving and some demand remains, Alexandria executives say recovery is not happening quickly enough to address excess supply. As a result, more buyers are considering surplus land purchases at lower prices with plans to develop housing instead of laboratory facilities.
Peter Moglia, CEO and CIO of Alexandria Real Estate Equities, said: “An increasing portion of Alexandria’s land and aging properties are now being positioned for housing upon sale.” Marc Binda, Alexandria’s CFO, added: “Much of Alexandria’s recent write-downs were linked to land, a direct result of oversupply in the Bay Area and other parts of the country.”
In addition to selling property for future residential use, some Alexandria-owned sites are being prepared for housing without changing ownership. Last month, Strada Investment Group proposed demolishing four office buildings on Alexandria-owned land in Palo Alto to construct 145 residential units.
— Chris Malone Méndez
