E
meryville, a Bay Area city known for its developer-friendly atmosphere, has seen its once thriving life science development market come to an abrupt halt. Longfellow Real Estate Partners, a Boston-based developer, has fallen behind on rent payments and lost its ground lease at a site where it had planned to build a 750,000-square-foot life science campus called Atrium Labs.

    According to court documents obtained by the San Francisco Business Times, Longfellow Real Estate Partners owes $1 million in back rent and is facing legal fees and damages from landowner PSAI Real Estate Partners, who wants possession of the site at 1650 65th Street in Emeryville.

    In response, Longfellow Real Estate Partners has listed an adjacent property at 6601-6603 Shellmound Street, which was part of its initial plan in Emeryville, for sale at $36 million. This move comes after Longfellow managed to stave off a similar action by PSAI just a month ago, when both parties were negotiating new terms for their 40-year ground lease.

    The developer's representatives declined to comment on the latest developments in court. Emeryville had previously enjoyed a successful run as a hotspot for commercial development, particularly in the life science sector. However, the pandemic has brought an end to this streak, with the city's life science sector vacancy rate recently surpassing 30 percent, more than double the national average of around 15 percent. This is a significant shift from Emeryville's years-long track record of single-digit vacancy rates.

    The decline in Emeryville's life science sector is indicative of broader trends in the Bay Area's commercial real estate market, as the hot streak of commercial development in Emeryville has clearly ended.