Nexus Properties, a commercial real estate developer that was among the first to develop property in Torrey Pines and UTC for life science companies, is going out of business.
The company announced in November that it was ceasing most of its operations by the end of this year and would shut down completely by mid-2023.
Founded in 1974 by Ronald Bonaguidi, the company based in University City can no longer compete with the big real estate investment trusts like Alexandria and Biomed Realty and national developers that have moved into the San Diego market for life science construction, said Brandon Crocker, Nexus president who has been with the company since 1988.
Since 2011, the company limited its activities to property management.
“With the sale of our last major real estate holding in 2021, and with no real prospects for any new real estate development, our current property management portfolio just doesn’t warrant keeping the doors open any longer,” Crocker said. “We had an illustrious career. We’re getting older. We’re a little more risk adverse. It’s just a little more difficult to compete these days.”
At its peak, Nexus had a staff of about 50, including its own construction company and marketing team.
As it prepared to close, Nexus was down to three people, Crocker said.
Nexus initially made a name for itself developing office projects, including the six-building, 400,000 square-foot Century Park in Kearney Mesa that was originally leased to General Dynamics.
Long before many others recognized life science as a lucrative market, Nexus built its first biotech building in University City in 1988 followed by one in Torrey Pines.
The challenge then was arranging financing because lenders thought that life science buildings were risky because they more expensive to build, Crocker said.
Offsetting the upfront cost, once a building is outfitted for life science, the interior doesn’t have to be completely redone if a tenant leaves and is replaced by another life science company, Crocker said.
“It’s not like an office building where everything is gutted when a tenant moves out,” Crocker said.
Union Bank was among the lenders that took a chance in backing Nexus’ life science construction, Crocker said.
Crocker said that the life science real estate market has changed dramatically since Nexus entered the field. Back then, life science companies were cash-strapped and wanted no-frills buildings. Now, they want full campuses packed with amenities to attract skilled workers and scientists who want more than a desk or lab space to work, Crocker said.
“Improvements have become more and more expensive,” he added.
Financing also has become an issue again following the Great Recession with developers expected to put more of their own money into a project.
“Since 2008, 2009, requirements for development are a lot higher than they used to be,” Crocker said. “Small guys like us, we just don’t have the cash to come up with 30%, 40% equity.”
President: Brandon Crocker
Headquarters: University City
Business: Developer and property manager
Notable: Nexus Properties was one of the first developers to build projects in San Diego specifically for life science companies.