Developer scraps plans for massive life sciences project in Emeryville
The project was a mix of residential and life sciences uses, but developers walked away in late March.
The company behind the proposed development of one of the largest life science developments in Emeryville, California has decided to abandon the project.
According to documents released Friday by Emeryville, Chicago-based CA Ventures officially retracted its application for a life sciences tower of 14 stories and 350,000 square feet at 5850 Shellmound Way on March 30. CA Ventures also planned to include 30 affordable housing units in the Shellmound Project, first proposed in 2020.
CA Ventures, when contacted on Friday, declined to comment as to what motivated the project's cancellation. Charles Bryant said that he had no further information on the project's cancellation.
The data from CBRE, which provides real estate services, shows that CA is, along with other Bay Area developers, concerned about a cooling in leasing activity for the life sciences sector. Availability in the northern Interstate 880 Corridor, a submarket including Emeryville, increased to 12.3% from 6.6% at the same time last season.
Previously, the low vacancy rate and the seemingly insatiable need for life sciences spaces made it easy for many developers and investors to build life sciences space even without a tenant. However, the changing dynamics of the industry, along with rising construction costs and the challenges in the supply chain, have now given the sector pause.
Alexandria Real Estate Equities, based in Pasadena (NYSE:ARE), pulled out of the proposed 600,000.0-square-foot South San Francisco campus last fall. Laura Waxmann, my colleague, reported that during a first-quarter earnings call on April 25, Alexandria management described the firm's approach as "pretty cautious". CEO Peter Moglia stated Alexandria had made an important strategic decision to cut construction spending in 2023 by $250 million.
CA's Shellmound was a major win for Emeryville. The city saw it as a test ground to mix life sciences with residential uses. Mayor John Bauters said that this combination would be increasingly important as residential developers moved away from housing and towards life sciences spaces, which were generating higher rents. This trend was being played out in real-time at the Shellmound project: In 2018, the long-time owner of the site, Shellmound Christie Corp., proposed a 244 unit apartment complex on the 1.5-acre site before concluding that a residential development was not financially feasible.
Friday, it was unclear whether the 30 affordable houses CA had planned to include in this project played a role in its withdrawal. CA originally proposed six homes along with the life sciences building before Emeryville increased the number to 30.