By Gail Kalinoski
San Francisco—Buoyed by the strong leasing activity of the first two phases of The Cove at Oyster Point, HCP said it will soon begin construction of the third phase of its 1 million square-foot life science campus in the Bay Area.
Phase III of the waterfront project calls for HCP to add two new Class A buildings totaling approximately 336,000 square feet at the multi-tenant life science development in South San Francisco. Construction will begin early in 2017 with deliveries planned throughout the second half of 2018. A future fourth phase will add a seventh and final 165,000-square-foot building to the first new life science development of its kind in the South San Francisco market in over a decade. When built out, the Oyster Point Boulevard campus will have seven buildings ranging in size from 115,000 to 182,000 square feet in both single and multi-tenant building configurations.
“We are extremely pleased with the leasing velocity through the first two phases of The Cove, which started construction in the first quarter of 2015,” Jon Bergschneider, executive vice president of HCP Life Science Estates, said in a prepared statement. “We are now 62 percent leased overall and excited to build upon our momentum by initiating Phase III, the next logical step in the development, to provide much needed expansion space for the South San Francisco life science community.”
The first phase, which consists of two buildings totaling 247,000 square feet, was recently completed and is 73 percent leased. Anchor tenants Denali Therapeutics and CytomX Therapeutics arrived in August and October, respectively. Also in October, Foundry & Lux, HCP’s 30,000-square-foot amenity center developed in partnership with Bon Appétit Management Co., opened to the public. It features a café for morning coffee, juices and lighter fare; a large market hall with lunch options; and an evening lounge with a wood-burning pizza oven, bar, bowling lanes, pool table and outdoor fireplace. The center, a gathering spot for The Cove tenants as well as other area workers, also has a fitness center, outdoor sport courts, bocce ball and horseshoe pits.
Phase II is under construction and already 50 percent leased to tenants including AstraZeneca. It consists of two buildings totaling up to 230,000 square feet, a parking structure, and retail space with a restaurant. It should be completed in late 2017. Also scheduled to open next year will be an upscale boutique and business-class hotel.
When Phase II construction was announced earlier this year, Bergschneider said the reception of the project in the marketplace had been “exceptional.”
The Cove, which will be a pre-certified LEED Silver project, adds to HCP’s holdings in the region. HCP is already the largest life science property owner in the Bay Area with more than 5 million square feet, including more than 3 million square feet in South San Francisco.
“The Cove has injected a new dynamic into the local market offering an amenity rich, Class A environment catered to the way today’s life science companies work and interact,” said Scott Bohn, vice president of HCP Life Science Estates.
Rick Friday of CBRE Group Inc., who along with his colleague Chris Jacobs represents HCP on leasing the project, noted that the project’s quality and amenity package have made The Cove a “game changer” in the market.
“The feedback from the market has been incredible and is driving significant interest,” Friday said in prepared remarks.
“With overall vacancy below 3 percent and a continued maturation of the life science industry, the number of companies interested in a new ground-up development with the quality and scale The Cove offers has grown significantly,” Jacobs added.