Longfellow Real Estate Partners has paid $156 million for a Bay Area office campus that the company plans to convert into a life science property. Rubicon Point Partners sold the two-building asset in San Mateo, Calif., which totals nearly 250,000 square feet.
A Newmark Knight Frank team of Steven Golubchik, Edmund Najera, Jonathan Schaefler, Darren Hollak and Jack Phipps represented the seller in the deal. Located at 901 and 951 Mariners Island, San Mateo Bay Center was built in 1984 and was acquired by Rubicon Point in September 2016, according to CommercialEdge.
Longfellow plans to convert the entire campus, noted Hollack, a director in Newmark’s San Francisco office, to Commercial Property Executive. He added that there are no existing life science tenants in either building. San Mateo Bay Center is currently 88 percent leased, and the campus has lease rollover of 198,060 square feet in the first three years.
The project has also benefited from $17 million in capital investment since 2015 to upgrade the campus environment. Key improvements include new outdoor amenity spaces, an on-site fitness center and ground-floor café, HVAC renovations and lobby upgrades. The campus has on-site parking and quick access to Highways 101, 92, and 280.
Longfellow, a Boston-based real estate investment and development firm that specializes in the life sciences sector, has a history of pursuing office-to-biotech conversions. Last October the company purchased The Foundry, a 280,365-square-foot office campus in San Diego, from Shorenstein Properties with plans to immediately begin transforming it into a lab project.
The next month, Longfellow scored a $52.76 million loan for the acquisition and repositioning of Perimeter’s Edge, a 341,547-square-foot flex/office portfolio in Morrisville, N.C., that is slated to become a life science asset.
Longfellow’s newly acquired asset in San Mateo is located amid 2 million square feet of life science tenants across the city, including major users such as Gilead and Illumina, Newmark noted.
A booming life sciences industry led the recovery in the surrounding San Francisco Peninsula’s research and development market in the first quarter, with net absorption topping 429,000 square feet—the second quarter in a row for occupancy gains, according to a report by Colliers.
That contrasted with the Peninsula’s office market, which saw vacancy continue to climb amid the pandemic. The Greater Peninsula’s office vacancy rate stood at 11.4 percent at the end of the first quarter, up from 6.2 percent a year ago. San Mateo County’s current vacancy is higher at 12.1 percent, rising from 6.5 percent at the same time last year.