As Banks Limit Finance Alternate Lenders Seek Bargains in Life Sciences RE
 |
6680 Cobra Way |
BLUF (Bottom Line Up Front)
A $13 million refinance transaction for a research facility in San Diego's Peñasquitos neighborhood demonstrates selective private lender confidence in life science properties, even as the sector faces record-high vacancy rates of 26.5% to 31.2% and a challenging refinancing environment that will test the market through 2026.
SAN DIEGO—Private lender Bolour Associates Inc. has closed a $13 million, 24-month refinance loan for a 35,462-square-foot research and development building (the former Canyon Graphics) at 6680 Cobra Way in San Diego, the company announced January 29, 2026. The transaction comes at a pivotal moment for the region's life science sector, which faces both unprecedented challenges and emerging opportunities.
Record Vacancy Rates Create Tenant Market
San Diego's life science vacancy rate reached 26.5% at the close of the third quarter 2025, up from 18.7% one year earlier, according to Cushman & Wakefield market data. The region's core cluster—encompassing Torrey Pines, University City, Sorrento Mesa, Del Mar Heights, Carmel Valley, La Jolla, and Sorrento Valley—faces even higher vacancy at 31.2%, up from 20.4% a year ago, according to Jones Lang LaSalle.
Multiple market research firms report similar trends. Savills placed San Diego's overall life science vacancy at 29.2% in Q3 2025, while Newmark reported the national life science market vacancy at 26.2% across major markets. CBRE data showed the top 13 U.S. life science markets with an overall vacancy rate of 23.4% in Q3 2025.
"In 2021, we were at sub-5 percent overall [lab] availability," said Tim Olson, managing director at JLL, in a July 2025 interview with Commercial Observer. "Now we're approaching 20 percent and climbing. You're probably looking at three to five years before we get back down into that single-digit vacancy range."
The vacant 6680 Cobra Way property entered the market seeking tenants after completing laboratory warm-up work for biology, chemistry, or GMP uses, according to LoopNet listings. The building features 100% HVAC throughout with MERV-14 filtration, up to 25-foot clear heights, 4,000 amps of electrical capacity, and recently completed outdoor patios and café-style break room amenities.
Private Debt Steps Into Traditional Bank Void
The Bolour Associates refinance illustrates a broader trend in commercial real estate financing, where private lenders and debt funds have captured increasing market share as traditional banks pull back.
"Flexibility and speed were critical to this transaction," said Mark Bolour, CEO of BOLOUR, in the company's announcement. "BOLOUR quickly refinanced this maturing loan and set aside tenant improvement funds to support an R&D lab buildout in one of San Diego's most premier research markets."
Nationally, alternative lenders including debt funds and mortgage REITs captured 37% of non-agency commercial real estate loan closings in 2025, surpassing both banks at 31% and life insurance companies at 16%, according to CBRE market analysis. Banks had reclaimed a 34% share in Q1 2025 but alternative lenders continued to dominate overall annual activity.
"Private credit has played a key role in holding the market together," reported CRE Daily in November 2025, noting that since 2020, nonbank lenders raised more than $137 billion through 430-plus closed-end debt funds.
The 24-month term of the Cobra Way refinance aligns with broader industry strategies. Lenders and borrowers across commercial real estate have pursued "extend and pretend" modifications to delay maturities and avoid forced sales during the challenging rate environment, according to multiple market analyses.
Commercial Real Estate Debt Crunch Intensifies
The San Diego transaction occurs against the backdrop of what industry analysts call the "2026 maturity wall"—an estimated $936 billion to $1 trillion in commercial real estate loans coming due this year, following an even larger wave in 2025.
"Between 2024 and 2026, more than $1.5 trillion in commercial real estate loans are set to mature," according to PB Mares industry analysis. Much of this debt originated during ultra-low interest rate periods, with borrowers who locked in 3-4% rates in the mid-2010s now facing refinancing at rates approaching double those levels.
According to S&P Global Market Intelligence data cited by CRE Daily, the average interest rate for commercial real estate loans issued in 2025 was 6.24%, notably higher than the 4.76% average on older debt coming due. By December 2025, the prime rate had settled at 6.75%, down from peaks above 8% in 2023-2024 but still significantly elevated compared to pandemic-era rates.
"Borrowers with near-term maturities could be facing new debt service payments that could jump as high as 75% or 100%," warned a report from the Counselors of Real Estate cited by the National Association of REALTORS.
Big Pharma Capitalizes on Market Correction
While vacancy rates soar, major pharmaceutical companies have seized opportunities in San Diego's softened market. Swiss drugmaker Novartis signed the largest life science lease of Q4 2025, securing more than 466,000 square feet in University City with Alexandria Real Estate Equities—part of the company's overall commitment of more than 700,000 square feet during the quarter.
The leases represent part of Novartis' $1.1 billion investment in San Diego, announced in April 2025, with plans to create up to 1,000 new jobs at a research hub in the region. The announcement came as other life science companies, including Illumina, were announcing layoffs.
"Big Pharma is buoying the market as startups scrounge for cash," Mike Krenn, managing director of Prebys Ventures and former CEO of Connect, told the San Diego Union-Tribune in December 2025.
Other significant Q4 2025 transactions included J. Craig Venter's research institute signing for 50,000 square feet at IQHQ's Research and Development District downtown, a $1.9 billion waterfront project that has delivered 1.7 million square feet of lab, office, and retail space but currently has over a million square feet sitting vacant.
"We were able to negotiate favorable terms," said Heather Kowalski, chief operating officer at the J. Craig Venter Institute, without disclosing specific details. "It was beneficial for both of us."
Venture Capital Drought Compounds Challenges
The life science real estate crisis stems largely from a dramatic pullback in venture capital funding for biotechnology startups. U.S. life sciences venture funding fell to $5.9 billion in Q3 2025, down $2.6 billion year-over-year, according to PitchBook and CBRE Research.
First-round financings for traditional biotech startups plummeted from $2.6 billion in Q1 2025 to $900 million in Q2, the lowest quarterly total in five years, according to HSBC data cited by Research & Development World.
San Diego venture capital funding declined to $2.3 billion for 2025, reflecting a 44.8% decrease from 2024's annual total, while deal volume remained stable, according to Savills' Q4 2025 San Diego life sciences market report.
"Biotechs trading below their cash balances have fallen from over 200 companies in 2022-2023 to approximately 50 today," said Grant Schoneman, vice chairman of JLL's Life Sciences Group, in a December 2025 interview.
The funding drought has hit early-stage companies particularly hard. "In 2025, VC funding is largely expected to continue the trend from 2024, with larger, but fewer, fundraisers," JLL wrote in analysis cited by GlobeSt. "Early-stage companies are expected to continue to struggle raising funds, while more mature companies, that have drugs in the clinical stage of development, will likely capture the bulk of the capital."
Rent Declines and Rising Concessions
The oversupply of life science space has created a tenant-friendly market with declining asking rents for 13 consecutive quarters, according to JLL market reports.
In San Diego's prime life science market, average asking rent dipped 4% year-over-year to $5.95 per square foot per month, according to JLL's fourth quarter 2024 data cited by the San Diego Union-Tribune. Nationally, average triple-net asking rent for life science space fell to $70.42 per square foot from $71.77 in Q2 2025, according to CBRE.
Despite declining rents, life science properties still command significant premiums over traditional office space. Life sciences rents remain 31% higher than office rents across the 12 U.S. markets tracked by Cushman & Wakefield, with San Diego showing a 70% premium—second only to Boston's 75% premium, according to Facilities Dive reporting.
"Concessions are up across the board," said Brett Ward, vice chairman at Cushman & Wakefield overseeing lab and office space at RaDD, in December 2025. "Whether that be in the form of outsized tenant improvement allowances or free rent."
Cushman & Wakefield reported that concessions like free rent, fixtures, furniture, equipment, audio-visual technology allowances, and turnkey tenant improvements have become "the new normal" in the sector.
Construction Pipeline Contracts Sharply
New life science development has contracted dramatically in response to market conditions. Following completion of Alexandria Real Estate's 10300 Campus Point Drive—fully occupied by Bristol Myers Squibb—San Diego currently has no life science development under construction as developers await project approvals, according to Savills' January 2026 market report.
"We won't see any new lab development for quite a while," Tim Olson of JLL told Commercial Observer. "Even if you had a strong market fundamentally, it'd be hard to finance new construction in today's market."
Nationally, the life science construction pipeline sits at its lowest level since 2019, with just under 8 million square feet under construction, according to Cushman & Wakefield. Approximately 16.9 million square feet of laboratory projects have been canceled or repositioned, according to Newmark's Q3 2025 analysis, easing future supply risk.
The slowdown in construction "will help to normalize high vacancy rates in some markets over the longer term," Cushman & Wakefield noted in its September 2025 market report.
Downtown San Diego Struggles Particularly
Geographic disparities within San Diego's life science market remain pronounced. The historically dominant Torrey Pines submarket maintained relatively tight conditions with direct availability at just 10.8% in Q3 2025, while downtown San Diego faces direct vacancy rates north of 90% for life science spaces, according to JLL reports.
IQHQ's $1.9 billion Research and Development District downtown successfully leased around 100,000 square feet of retail and amenity space but has signed only one lab tenant—the J. Craig Venter Institute's 50,000 square feet—leaving over a million square feet of the new waterfront campus empty.
"Downtown wasn't initially on our radar," said Heather Kowalski of the J. Craig Venter Institute, explaining the decision to move from La Jolla.
The geographic pattern reflects broader industry preferences for established life science corridors with proximity to research institutions, specialized labor pools, and ecosystem networks.
Market Recovery Timeline Uncertain
Industry observers offer varied timelines for market recovery. Mike Krenn of Prebys Ventures suggested in December 2025 that "it will be a long road," estimating "around nine years until we are at 70-80% occupancy again."
Others express more cautious optimism. "2025 is probably going to be peak vacancy" for the life science sector, Dominic Bisconti of JLL told the San Diego Union-Tribune in January 2025, though he expected elevated rates to persist for years.
Multiple indicators suggest conditions may be stabilizing. Leasing activity in San Diego improved significantly, with 2.4 million square feet of leases signed in 2024—an 88% improvement from 2023, according to JLL data cited by GlobeSt.
Newmark reported that national life science vacancy rose only 20 basis points to 26.2% in Q3 2025, suggesting conditions may be leveling after several quarters of decline. Absorption turned positive for the first time in 2025 at 938,000 square feet, driven by slight increases in new leases and expansions, according to CBRE.
Private Lending Continues Selectively
Bolour Associates' recent San Diego activity demonstrates continued private lender engagement in carefully selected opportunities. In November 2025, the firm's affiliate provided a $16.5 million loan for acquisition of the former Union Bank building at 530 B Street in downtown San Diego's Civic Center submarket, according to Connect CRE. That transaction supported adaptive reuse plans to convert the 250,181-square-foot office building into 140 condominium units.
"We are excited to support this strong sponsorship group and their vision for this trophy downtown San Diego asset," Mark Bolour said of the 530 B Street transaction. "The acquisition adjusted cost basis allowed us to provide certainty to the sponsor and quickly approve this project as an adaptive reuse project."
Bolour Associates recently restructured its debt platform into an evergreen fund structure, enabling greater speed in closing, flexibility in proceeds and rates, and increased diversification for investors. The firm is currently active in 17 states and the District of Columbia, according to company information.
Scott Selke of Cushman & Wakefield represented the borrower in the 6680 Cobra Way refinance transaction.
Looking Ahead
The 24-month term of the Cobra Way refinance suggests expectations for potential improvement in commercial real estate financing conditions by early 2028. Industry analysts anticipate that Federal Reserve interest rate adjustments and improved clarity around laboratory space demand could create more favorable refinancing conditions within that timeframe.
The allocation of tenant improvement funds as part of the transaction indicates active discussions for full-building occupancy, though the identity of prospective tenants was not disclosed in available public records.
For San Diego's broader life science market, selective transactions like the Cobra Way refinance suggest that well-located, properly equipped facilities with flexible financing continue to attract capital despite sector-wide challenges.
The market's ultimate trajectory will likely depend on multiple factors: venture capital funding recovery, pharmaceutical company expansion plans, interest rate trends, and the broader economic environment affecting life science innovation and commercialization.
Verified Sources and Formal Citations
-
The Registry Southern California Real Estate News - "$13MM Refinance Secured for 35,462 SQFT R&D building in San Diego" (January 29, 2026)
https://theregistryps.com/ -
Cushman & Wakefield - "San Diego MarketBeats Q3 2025"
https://www.cushmanwakefield.com/en/united-states/insights/us-marketbeats/san-diego-marketbeats -
Cushman & Wakefield - "San Diego Life Sciences Market Report Q3 2025" (PDF)
https://assets.cushmanwakefield.com/-/media/cw/marketbeat-pdfs/2025/q3/us-reports/life-sciences/sandiego_americas_marketbeat_lifesciences_q32025.pdf -
Jones Lang LaSalle (JLL) - Q4 2025 Life Science Market Report for San Diego (as cited in San Diego Union-Tribune)
-
Savills USA - "San Diego Q4 2025 Life Sciences Market Report" (January 14, 2026)
https://www.savills.us/research_articles/256536/385788-0/san-diego-q4-2025-life-sciences-market-report -
San Diego Union-Tribune - "Vacancies for life science office space hit record highs. Here's who's taking advantage" by Noelle Harff (December 17, 2025)
https://www.sandiegouniontribune.com/2025/12/17/vacancies-for-life-science-office-space-hit-record-highs-heres-whos-taking-advantage/ -
San Diego Union-Tribune - "San Diego's vacant life science labs and offices continue to grow. Will the glut peak in 2025?" (January 30, 2025)
https://www.sandiegouniontribune.com/2025/01/30/san-diegos-vacant-life-science-labs-and-offices-continue-to-grow-will-the-glut-peak-in-2025/ -
Commercial Observer - "San Diego County's Life Sciences Market Feels the National Slowdown" (July 14, 2025)
https://commercialobserver.com/2025/07/san-diego-county-life-sciences-leasing-2025/ -
LoopNet - "6680 Cobra Way, San Diego, CA 92121 - Flex for Lease"
https://www.loopnet.com/Listing/6680-Cobra-Way-San-Diego-CA/24435053/ -
Cushman & Wakefield - "6680 Cobra Way Life Sciences Property Listings"
https://www.cushmanwakefield.com/en/united-states/properties/for-lease/life-sciences/ca/san-diego/6680-cobra-way/ -
PropertyShark - "6680 Cobra Way, San Diego, CA - Property Records"
https://www.propertyshark.com/mason/Property/54265565/6680-Cobra-Way-San-Diego-CA-92121/ -
CBRE Research - "Q3 U.S. Life Sciences Figures Report" (2025)
https://www.cbre.com/insights/reports/life-sciences-real-estate -
Research & Development World - "Has the life science lab market finally hit bottom? CBRE data offers cautious hope" (November 12, 2025)
https://www.rdworldonline.com/has-the-life-science-lab-market-finally-hit-bottom-cbre-data-offers-cautious-hope/ -
Newmark - "3Q25 U.S. Life Science Market Conditions & Trends" (November 13, 2025)
https://www.nmrk.com/insights/market-report/3q25-u-s-life-science-market-conditions-trends -
Facilities Dive - "Life sciences markets hit vacancy rate highs, deflating rents" by Joe Burns (September 12, 2025)
https://www.facilitiesdive.com/news/life-sciences-markets-hit-vacancy-rate-highs-deflating-rents/760008/ -
GlobeSt - "Life Science Leasing in San Diego Surges 88%" by Lynn Giles (January 16, 2025)
https://www.globest.com/2025/01/16/life-science-leasing-in-san-diego-surges-88-/ -
Connect CRE - "Bolour Affiliate Provides Acquisition Loan on Former Union Bank Building" (November 19, 2024)
https://www.connectcre.com/stories/bolour-affiliate-provides-acquisition-loan-on-former-union-bank-building/ -
Bolour Associates Inc. - Corporate website
https://bolour.associates/ -
CRE Daily - "Maturing Debt Drives 2026 CRE Distress" (November 18, 2025)
https://www.credaily.com/briefs/maturing-debt-drives-2026-cre-distress/ -
CRE Daily - "Debt Maturities Rise Amid 2026 CRE Pressure" (October 31, 2025)
https://www.credaily.com/briefs/debt-maturities-rise-amid-2026-cre-pressure/ -
Moss Adams / Baker Tilly - "The Commercial Real Estate Debt Dilemma is Still Here: Insights and Trends" (October 23, 2025)
https://www.mossadams.com/articles/2025/10/commercial-real-estate-debt-insights -
Agora Real - "Commercial real estate lending trends in 2026" (January 2026)
https://agorareal.com/blog/commercial-real-estate-lending-trends/ -
National Association of REALTORS - "Don't Panic as Trillions in Commercial Loans Come Due" (November 11, 2024)
https://www.nar.realtor/magazine/real-estate-news/commercial/dont-panic-as-trillions-in-commercial-loans-come-due -
PB Mares - "Preparing for the CRE Maturity Wall" by Ryan Paul (June 23, 2025)
https://www.pbmares.com/preparing-for-the-cre-maturity-wall/ -
Investing in CRE - "Navigating Commercial Real Estate Debt Maturity" (October 2, 2025)
https://investingincre.com/2025/10/02/navigating-commercial-real-estate-debt-maturity/ -
MMG Real Estate Advisors - "The 2026 CRE Refinancing Wall: Opportunities in Multifamily Distress"
https://mmgrea.com/2026-cre-refinancing-wall/ -
Deloitte Insights - "2026 commercial real estate outlook" (December 24, 2025)
https://www.deloitte.com/us/en/insights/industry/financial-services/commercial-real-estate-outlook.html -
CBRE - "Commercial Real Estate Lending Activity Increases in Q1 2025 Despite Market Volatility"
https://www.cbre.com/press-releases/commercial-real-estate-lending-activity-increases-in-q1-2025 -
San Diego Regional Economic Development Corporation - "Life Sciences: San Diego's Economic Engine"
https://www.sandiegobusiness.org/industries/life-sciences -
Mortgage Bankers Association - "Commercial/Multifamily Origination Trends" (2024-2025)
https://www.mba.org/news-and-research/research-and-economics
Note: This article synthesizes information from 30+ verified sources including commercial real estate market research firms, regional and national business publications, industry trade organizations, and commercial property listing services. All data points and quotes are attributed to their original sources. Readers seeking additional analysis should consult the cited sources directly or contact commercial real estate research firms for updated market intelligence.
Comments
Post a Comment