RAF Pacifica Group has completed Escondido Logistics Center, a two-building,147,054-square-foot industrial property in Escondido, Calif. Development costs rose to $60 million.

The San Diego Water Authority acquired one of the buildings upon completion, in a $38.8 million deal brokered by Colliers International. Cushman & Wakefield represented the seller in the transaction and is marketing the second property for lease.

RPG secured a $11.4 million construction loan from City National Bank in 2023, CommercialEdge data shows. The company acquired the development site in 2022 for $4.5 million from JRMC Real Estate, according to San Diego County public records.

READ ALSO: Top 5 Markets for Industrial Deliveries

The 7-acre property is at 1903 and 1943 Citracado Parkway, within Escondido Research and Technology Center, a 22-acre business campus. It is near Interstate 15, which allows for easy access to San Diego and Los Angeles. Montgomery-Gibbs Executive Airport is 25 miles away while San Diego International Airport is within 33 miles.

Escondido Logistics Center’s two buildings measure 88,000 and 58,000 square feet. Features include 28-foot clear heights, grade-level loading doors, dock doors and heavy power. RPG envisioned the property to accommodate manufacturing and distribution users.

Executive Vice Chairman Aric Stark and Senior Director Drew Dodds with Cushman & Wakefield are marketing the remaining 58,000-square-foot facility for lease.

Some 5.5 million square feet planned for San Diego

A few large deliveries took shape in metro toward the end of last year. Among these was Chestnut Properties’ 380,000-square-foot Gillespie Field iPark in El Cajon, Calif. In January 2024, the developer secured $91 million in construction funds for the project, which was already 40 percent preleased to GKN Aerospace.

During the last quarter of 2024, the San Diego industrial market had 2.8 million square feet of space under construction, with an additional 5.5 million square feet in the planning and permitting stages, according to a Cushman & Wakefield report. A significant share of this upcoming space is in the Otay Mesa submarket.

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The seller was Diversified Healthcare Trust, which reported that at the time of sale, the property was 49 percent leased, with a weighted average lease term of more than eight years. The seller stated that it plans to use the transaction proceeds to pay down its senior secured notes due in January 2026.

DHC is managed by leading U.S. alternative asset management company The RMR Group.

MUSE consists of three buildings totaling 186,000 square feet in the heart of Torrey Pines. The campus was recently repositioned with a new exterior glass façade and enhanced amenities, including a new fitness center, indoor/outdoor conference center, landscaping with outdoor seating and games, as well as a full-service café.

Two of the buildings were recently upgraded to modern labs and are fully leased on a long-term basis, Breakthrough stated. One vacant building will be repositioned to provide flexible wet lab space to accommodate a variety of life science research.

READ ALSO: The Most Active Life Science Markets in the US

As of press time, a Breakthrough Properties spokesperson had not replied to Commercial Property Executive’s request for additional information.

The Class A buildings are at 3030, 3040 and 3050 Science Park Road and are, respectively, three stories, 94,456 square feet, occupied by Surgalign; two stories, 36,418 square feet; and two stories, 55,102 square feet, tenanted by Prometheus Biosciences, according to information provided by CommercialEdge. All three were completed in 1985 and 1986 and completely redeveloped in 2021.

San Diego’s life science market performance

The San Diego life science market has seen direct vacancy rise steadily from a low of about 6 percent in mid-2022 to nearly 18 percent currently, according to a January report from Savills USA. Meanwhile, the construction pipeline has fallen to 4.5 million square feet, Savills reported, “as developers hold off on new projects amid limited preleasing and ongoing tepid demand.”

Torrey Pines and Sorrento Mesa have been the two most active submarkets for leasing activity recently.

In October, Breakthrough Properties opened Torrey Heights (renamed), a 520,000-square-foot life science campus in San Diego’s Del Mar Heights submarket. The 10-acre, three-building property is fully preleased, largely to Pfizer’s oncology division and Becton, Dickinson and Co.

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PMB and Sharp Rees-Stealy have topped out the 75,000-square-foot medical outpatient building at 480 H St. in Chula Vista, Calif., a San Diego submarket. The development team includes HGW as architect and Pacific Building Group as general contractor. Completion is expected later this year.

Project partners also feature Solaris Community Capital as new market tax credit consultant, Chase New Markets Corp. as civic community partners and Border Communities as new market tax credit lenders.

Located in South San Diego, the facility is taking shape on more than 15 acres within walking distance of downtown Chula Vista, while downtown San Diego is 9 miles northeast. Other medical providers in the area include Scripps Mercy Hospital and the Sharp Chula Vista Medical Center.

READ ALSO: Why the Medical Outpatient Sector Is Poised for Growth in 2025

Upon delivery, the three-story medical facility will provide advanced health care including primary and specialty care, urgent care, physical therapy, radiology, cardiology, neurology and laboratory services. Additionally, the building will comprise ground-floor retail space, including a pharmacy and a café.

The property will also include a 127,000-square-foot parking structure with 375 stalls. The low-rise will have a second-floor pedestrian bridge connected to the parking structure.

San Diego MOB sector holds steady, despite rising vacancies

Only 135,884 square feet of medical office space were under construction in metro San Diego in the third quarter of last year, according to a Cushman & Wakefield report. The figure represented 0.9 percent of the market’s inventory. Meanwhile, the medical office overall vacancy rate clocked in at 7 percent, up 40 basis points year-over-year.

In August, Turner Impact Capital’s Healthcare Facilities Fund received a $29.1 million loan for a 64,231-square-foot medical office building in Chula Vista, Calif. The borrower will use the funds to convert the mid-rise and another one in Costa Mesa, Calif., into modern medical facilities.

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Foxx Development Inc. has signed a 102,099-square-foot, full-building expansion at Britannia Technology Park, a 203,244-square-foot industrial campus in San Diego’s Otay Mesa submarket. Hines owns the two-building property through its Hines U.S. Property Partners investment fund. Cushman & Wakefield represented the landlord.

Foxx initially committed to the 101,145-square-foot warehouse at 7222 Airway Road in mid-2024. The new deal, involving the facility at 7498 Colchester Court, doubled the tenant’s footprint at the campus, which became fully leased.

READ ALSO: SoCal Industrial Market’s Comeback Story

Britannia Technology Park comprises two facilities that were part of the 52-acre Brown Field Technology Park. Hines picked up the assets in late 2023 for $60.9 million from developer Murphy Development Co., according to CommercialEdge.

Completed in 2023, the buildings feature 32- to 34-foot clear heights, heavy power and office build-out components. Additionally, the campus includes rooftop solar capacity, a fenced yard area, outdoor patio spaces, EV charging stations, skylights and a total of 328 vehicle parking spots.

The campus occupies almost 14 acres near State Route 905, interstates 5 and 805 and Brown Field Municipal Airport. The U.S.-Mexico border is neighboring the property, while San Diego International Airport is 21 miles away.

Cushman & Wakefield Vice Chairman Brant Aberg negotiated on behalf of the landlord.

San Diego industrial leasing slows down

San Diego’s industrial vacancy rate reached 6.5 percent during the fourth quarter of last year, up by 50 basis points over the quarter, according to a Cushman & Wakefield report. The was the highest rate recorded in the market since the third quarter of 2014.

New leasing deals totaled 665,000 square feet during the last quarter of 2024, down 46 percent quarter-over-quarter. However, the leasing volume for the full year new deals increased by 8 percent when compared to 2023.

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King Street Properties has purchased The Esplanade, a 241,963-square-foot life science campus in San Diego. Alexandria Real Estate Equities sold the asset for $120 million, according to public records. The transaction also involved a $166 million seller carry-back loan.

In a deal arranged by Newmark, Alexandria sold the buildings at 4755 Nexus Center Drive, 4757 Nexus Center Drive and 4796 Executive Drive. The agreement also encompasses the sale of a fourth building, which is scheduled to be finalized in late 2025.

Situated in San Diego’s University Town Center submarket, The Esplanade is adjacent to Interstate 805 and some 13 miles north of downtown San Diego.

The new owner intends to enhance the campus by adding shared amenities, upgrading the current lab infrastructure and expanding the available lab space. Planned common-area amenities include a conference room, a fitness center and improved outdoor gathering areas.

READ ALSO: What’s Defining Office in 2025?

The three facilities were built between 1991 and 2006. Back in 1998, Alexandria purchased the 54,540-square-foot 4757 Nexus Center for $16.2 million from Matrix Pharmaceutical, according to CommercialEdge data. In 2011, the company acquired from Arden Realty the 45,000-square-foot 4755 Nexus Center for $7.4 million, according to the same source. Afterward, the two properties were merged and rebranded as Esplanade – 4755 & 4757 Nexus Center Drive.

The Newmark team included Executive Managing Directors Brunson Howard, Rick Reeder and Brad Tecca, Co-Head of U.S. Capital Markets Kevin Shannon and Associate Tanner Harris.

Back in September, King Street Properties completed the first building at The Landing in Burlingame, Calif. At seven stories, the 300,000-square-foot structure at 1699 Bayshore will anchor the 4.5-acre campus. The second building, 1701 Bayshore, is currently under construction. It will be six stories tall and measure 203,500 square feet.

San Diego’s life science sector

Due to a reduction in venture capital investments and an influx of new office spaces entering the market, the life science sector—which had previously driven office development in the years following the pandemic—is now facing an oversupply issue.

Between 2021 and 2023, more than 30 million square feet of lab space commenced construction. However, only 948,000 square feet of new lab space broke ground in 2024, according to a recent CommercialEdge report.

San Diego’s office sector still attracts investment; the metro recorded $651 million in sales through the end of November. Development activity remained strong with around 3.1 million of square feet underway, while the vacancy rate clocked in at 20.5 percent, up 280 basis points over a 12-month period.

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It is the first joint venture between BKM and Tokyu Land US Corporation, a real estate investment and operating company owned by Japan-based Tokyu Fudosan Holdings Group.

These small-bay facilities, aggregating 342,073 square feet, are in the active industrial submarket corridor of Otay Mesa. BKM acquired them five years ago and invested $1.4 million in upgrades.

Otay’s strategic location along the U.S.-Mexico border positions it as a critical hub for cross-border trade, nearshoring and warehouse distribution.

Borderpoint Business Park at 6754, 6774 and 6794 Calle de Linea comprises 16 units totaling 173,330 square feet across three buildings. It features 22- to 24-foot-clear ceiling heights, 104 dock-high loading doors and 14 grade-level loading doors.

READ ALSO: Why Light Industrial Properties Will Continue to Shine

Otay Crossing Business Park has three units within two buildings at 2340 Enrico Fermi Drive and 10025 Siempre Viva Road. The 64,833-square-foot property features 24-foot warehouse clearance, 27 dock-high loading doors and three grade-level loading doors.

Otay Distribution Center includes eight units totaling 103,910 square feet in two buildings at 6987 and 6995 Calle de Linea. The park features 24-foot-clear ceilings, 63 dock-high loading doors and a single grade-level loading door.

The assets are all that’s left of BKM’s Otay Mesa industrial portfolio, a six-park package that BKM acquired from Stockbridge Capital Group in 2018 for $71.6 million.

These properties were also individually reorganized to create better functionality and efficiency. The efforts resulted in an 86 percent increase in the portfolio’s weighted average in-place rental rate.

The three parks are leased to 21 tenants with 2.2 years of WALT and rents approximately 17 percent below current market rates. BKM, which will serve as the joint venture’s domestic operating partner, is leveraging upcoming expirations to implement improvements and secure market rental rates in early 2025.

Light industrial space market remains tight

The South County San Diego small bay, multi-tenant industrial leasing market will remain robust through 2024, according to Jackson Childers, JLL associate.

“Unlike the 10 million square feet of larger block product (50,000+ square feet) delivered in Chula Vista and Otay Mesa in the past five years, the supply of multi-tenant industrial space has been stagnant,” Childers told Commercial Property Executive.

“While developers have focused on maximizing coverage and thus built larger warehouse units, the robust tenant mix in the 5,000 to 15,000 square foot range has been neglected. Thus, 25-year-old buildings offering smaller suites achieve rents 25 percent higher than brand-new ‘big box’ construction.”

As warehouse vacancy climbs toward 15 percent in South County, for owners of small bay, Childers said multi-tenant projects are largely insulated from the difficulties of competing against a set of five, and sometimes 10, similar spaces.

“Looking toward 2025, we expect resiliency within this product type, as the pipeline for new multi-tenant industrial is empty as usual,” he said.

READ ALSO: Are Co-Warehousing Solutions a Game-Changer for Industrial?

Recently, the San Diego industrial/flex market has seen increases in vacancy at 10-year highs, according to Eli Randel, Crexi COO, told CPE.

“Those rates could potentially increase from new deliveries and from proposed tariffs and their impact on trade,” Randel said. “However, the San Diego industrial/flex market generally remains healthy and tight, even at these higher vacancy levels, and had previously experienced good rental rate growth.”

Given the relative health of this market, it’s unlikely there was severe asset-level distress associated with the recap, Randel explained.

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IDEC Corp. has purchased Studio 2200, a 233,194-square-foot flex office asset in Carlsbad, Calif., from Hill Cos. for $49.5 million.

Cushman & Wakefield represented both parties. In addition, a CBRE team negotiated on behalf of the buyer.

Japan-based IDEC—which operates within the robotics and semiconductor industries, among others—will relocate its U.S. headquarters from a 83,600-square-foot property in Silicon Valley’s Sunnyvale, Calif. The new owner plans to occupy a large portion of Studio 2200 and continue leasing the remaining space to the facility’s existing tenants.

The current roster includes cloud infrastructure operator Arlo and Rubio’s Restaurant Group, the property serving as head office for both companies, according to CommercialEdge data. The duo occupies 63,650 square feet combined.

READ ALSO: Post-Election Investment Strategies: Navigating the Unknown

Completed in 1990, Studio 2200 underwent renovations in 2007 and 2014. The facility can accommodate various uses including office, R&D and industrial. Moreover, the property has planned unit development rights to construct new product on the current parking lot.

The two-story building features 15-foot, 6-inch and 17-foot, 5-inch ceiling heights, but also a freight elevator, one loading dock—expandable to seven—and one grade loading position. Amenities include a gym, lounge areas and EV charging.

Located at 2200 Faraday Ave., the facility is the largest single asset at Carlsbad Research Center, a 560-acre high-tech park. The McClellan-Palomar Airport is some 2 miles away, while the Port of San Diego is roughly 32 miles southeast.

Cushman & Wakefield Executive Vice Chairman Aric Starck together with Senior Associate Drew Dodds represented the seller, while Executive Director Peter Curry negotiated on behalf of the buyer. CBRE Senior Vice President Dennis Visser and Vice President Weston Yahn also advised IDEC on the purchase.

San Diego office sales rebound

Year-to-date through September, 2.4 million square feet of office space traded in greater San Diego, marking an 82.7 percent spike year-over-year, according to a report by Kidder Mathews. What’s more, the third quarter figure clocked in at 1.1 million square feet—the first time it surpassed the 1 million mark since September 2022.

Meanwhile, office cap rates have been steadily climbing since 2022, nearly reaching 8 percent as of September, the report shows. Just two years ago, the cap rates hovered below the 6 percent point.

The metro’s office leasing activity totaled 3.5 million square feet during the first nine months of the year, down 31 percent year-over-year, Kidder Mathews shows. The tepid activity led to a 90-basis-point increase in vacancy year-over-year. The index reached 13 percent in September.

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Both investment volume and average sale price per square foot saw decreases at the end of the third quarter. Meanwhile, some significant office leases closed through the first nine months of the year, despite the heightened vacancy rate, as has been the case in most markets.

With office-to-residential conversions emerging as a trend across the country, CommercialEdge’s new tool, The Conversion Feasibility Index, is designed to highlight and evaluate which markets have strong repurposing fundamentals. While San Diego is not among the nation’s top markets for residential transformations, multiple Western markets have a percentage conversion potential between 15 to 20 percent and higher.

San Diego’s pipeline on the national podium

San Diego’s office sector had nearly 4.1 million square feet of space under construction spread across properties—the third largest pipeline among the best-performing markets in the U.S., only trailing San Francisco (4.7 million square feet) and Boston (11.6 million square feet).

The figure represents 4.2 percent of total stock, well above the national average of 1.0 percent and second after Boston’s 4.6 percent rate. When adding office projects in planning stages, San Diego’s share reached 6.8 percent.

Notable office projects underway include a 426,927-square-foot development at 4135 Campus Point Court, in the metro’s Torrey Pines submarket. Scheduled to come online by the end of 2025, the life science project is developed by Alexandria Real Estate Equities as part of its 2 million-square-foot Alexandria Point campus and is fully preleased by Bristol-Myers Squibb Co.

Another notable development is Bioterra, a 315,997-square-foot life science project at 5889 Oberlin Drive, within the University City submarket. With Longfellow Real Estate Partners as developer, the project broke ground in 2022 and is financed by a $165 million construction loan held by Bank OZK.

Developers delivered approximately 2.7 million square feet of office space across 12 properties, while construction starts included 1.2 million square feet across nine office projects. One of the significant completions in the metro was IQHQ’s Research and Development District, the first urban life science waterfront development in San Diego. RaDD’s The Rise (729,903 square feet), The Vida (396,154 square feet) and The Core (269,341 square feet) all came online in March.

Investment activity follows national pattern

Year-to-date through September, San Diego’s office sector saw $447 million in investments, with 26 properties totaling 2.1 million square feet having changed hands.

Significant office deals in San Diego included the $45.7 million sale of Symphony Towers, a 530,000-square-foot office asset in East San Diego. Originally completed in 1990, the Class A high-rise was purchased in September by Formosa. Irvine Co. sold the property, the second tallest skyscraper in the city, after more than 21 years of ownership.

The Hazard Center Office Tower also changed hands. The 268,645-square-foot office mid-rise was purchased by BH Properties for $40.3 million. Principal Real Estate Investors sold the 15-story building that previously traded in 2003.

Office properties traded at an average sale price of $196 per square foot, above the national average of $171 per square foot. The figure saw a significant drop since the $422 per square foot recorded at the end of May.

Across Western markets, Los Angeles led ($320 per square foot) and was followed by the Bay Area ($279 per square foot) and San Francisco ($268 per square foot). Only Phoenix ($174 per square foot), Portland ($132 per square foot) and Denver ($103 per square foot) recorded lower average sale prices when compared to San Diego.

Office vacancy rate keeps climbing

San Diego’s office vacancy rate reached 18.5 percent in September, below the national rate of 19.5 percent. The figure fluctuated from the 17.2 percent recorded in January, showing a consistent increase at 18.5 percent in May and at 19.1 percent in August. However, across similar markets, San Diego fared better than Austin (27.8 percent), Houston (25.2 percent), Denver (24.7 percent) and Portland (19.9 percent).

The asking rent prices in the metro averaged at $43.04 per square foot, on par with Los Angeles and outperforming the national average of $32.89 per square foot. Across similar markets, the Bay Area led with $54.74 per square foot, while San Diego was pricier than Denver ($30.79 per square foot), Houston ($30.14 per square foot) and Phoenix ($28.17 per square foot).

Significant office leases closed since the start of the year included Pfizer Oncology’s 230,000-square-foot deal at Torrey View, a life science project developed by Breakthrough Properties, a joint venture of Tishman Speyer and Bellco Capital. The tenant will occupy two of the three buildings at the 520,000-square-foot campus.

In June, Alexandria Real Estate Equities landed a 127,300-square-foot long-term agreement at its SD Tech by Alexandria Mega Campus in the Sorrento Mesa submarket. The tenant is a top-20 pharmaceutical company which signed a 10-year commitment at a 253,000-square-foot life science building, currently underway.

One month later, Lincoln Property Co. renewed the 134,000-square-foot, full-building lease with Charter Communications at Pacific Corporate Center, a two-story office property in the same submarket.

Coworking sector keeps steady

There were 2.1 million square feet of shared office space in San Diego as of September, on par with Nashville but more than in Austin (1.7 million square feet), Charlotte (1.5 million square feet) and Orlando (1.3 million square feet).

The rate of coworking space as percentage of total leasable office space stood at 2.1 percent, higher than the national average of 1.9 percent and outperforming Houston and Phoenix, both with 1.8 percent.

The flex office provider with the largest coworking footprint in San Diego remained Regus, leading with 299,162 square feet of space. The company was followed by Gateway Labs by Lilly (218,742 square feet), Premier Workspaces (122,948 square feet) and WeWork (105,282 square feet).

The post San Diego’s Office Sales, Prices Decelerate appeared first on Commercial Property Executive.

Capstone Advisors has purchased Beachwalk Shopping Center, a 55,580-square-foot retail center in Solana Beach, Calif., for $32.1 million. The buyer also took out a $25.8 million loan from LoanCore Capital for this property, according to CommercialEdge information.

JLL represented the seller, identified by the same source as GEM Realty Capital. The firm had acquired the asset in 2017 for $33.3 million.

Completed in 1993 on a 3-acre site, Beachwalk consists of eight buildings housing a mix of retail, restaurants, medical and creative office spaces. Its tenants include food, beverage and wellness vendors.

The new owner intends to revitalize the center through physical improvements and tenant roster additions. Pure Infrared Sauna and Lana Restaurant, currently under construction, will be the first of many new businesses to open soon at the property.

The shopping center is at 437 S. Highway 101, across from the Coaster commuter rail which connects Solana Beach to Encinitas, Calif., and San Diego. Del Mar, Calif., is less than 2 miles south, while Interstate 5 is 2 miles east. 

JLL Managing Directors Geoff Tranchina and Gleb Lvovich, together with Senior Director Daniel Tyner, led the Investment Sales and Advisory team that completed the transaction. Tranchina and Lvovich were also instrumental in another recent retail center sale in California, a free-standing Whole Foods store that traded for $44.4 million.  

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However, office sales closed at a somewhat steady pace. A total of $23.8 billion in investment volume was registered nationally year-to-date through September, with assets changing hands for $171 per square foot on average, CommercialEdge data shows. This only marks a slight decrease compared to 2023’s same time frame, when sales totaled $25 billion. During that interval, properties traded for $198 per square foot.

California’s office transactions volume clocked in at $4.2 billion. About 16.9 million square feet across 159 properties sold for an average of $251 per square foot. The following list shows the leading top markets for office transactions in the state in the first three quarters of the year.

1. The Bay Area

The leading market for transactions in California year-to-date as of September was the Bay Area, which registered more than $1.8 billion in office investment volume. Sales in the metro comprising the San Jose area and the East Bay more than doubled year-over-year. Additionally, the market ranked third nationally, being surpassed only by Manhattan ($2.7 billion) and Washington, D.C. ($2.0 billion).

Despite the considerable growth in investment, office distress is still affecting the Bay Area, with the average price per square foot dropping year-over-year. Assets traded for an average of $278 per square foot in the first three quarters of this year, a significant decline from the $348 per square foot registered during the same interval in 2023.

In September, Behring Cos. purchased 1950 Franklin St., a 446,998-square-foot office building in Oakland, Calif., for only $14.4 million. This means the high-rise changed hands for a little more than $32 per square foot.

2. Los Angeles

Los Angeles remained the priciest market in the state and regionally, with properties trading for $345 per square foot through the first nine months of the year. However, the metro has been surpassed by Austin as the nation's leader in sale prices, with assets averaging $379 per square foot.

Total L.A. sales amounted to just under $1 billion during the same time frame, ranking second in the top markets for office transactions in California. This accounts for less than half of the roughly $2 billion registered in the same interval in 2023. Despite the huge volume shrinkage, the price per square foot increased by nearly $40.

At the beginning of the year, The Regents of the University of California paid $700 million for a pair of office assets dubbed One Westside and Westside Two. Hudson Pacific Properties and Macerich sold the recently redeveloped buildings totaling about 687,000 square feet.

3. San Diego

Despite San Diego being a hotspot for investors, the metro’s average price per square foot year-to-date as of September was $196, the lowest compared to the other major markets in the state and this ranking, but still above the U.S. figure. On average, properties traded for nearly half the price registered during the same period of 2023.

Total sales in the market reached $447 million, marking an almost 34 percent drop year-over-year. One of this year's most notable transactions was Breakthrough Properties’ purchase of a 65 percent stake in Callan Ridge, a two-building life science development. The fully leased property traded for $236 million.

4. San Francisco

Rounding out the top markets for office transactions in California is San Francisco, where office sales in the first three quarters of the year totaled $339 million. This marks a 40 percent decrease year-over-year, as investments reached about $571 million in the same interval of 2023.

Assets in the metro traded for an average of $268 per square foot, a considerable decline from the $321 per square foot registered during last year's same interval. In September, SC Properties paid $37.5 million—about $160 per square foot—for San Mateo Gateway Center, a 235,000-square-foot office campus. The complex changed hands for less than half of its pre-pandemic price.

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Breakthrough Properties, a joint venture of Tishman Speyer and Bellco Capital, acquired the site in October 2020 and developed it into a research and development center that spans three buildings, along with a parking structure. The property has obtained LEED Gold certification.

Drug giant Pfizer’s oncology division leased 230,000 square feet in two Torrey View buildings. Global medical technology company Becton, Dickinson and Co. created a 220,000-square-foot center for bioscience research in a third building. Charles River Laboratories, Actio Biosciences and Architect Therapeutics are also tenants.

Torrey View has floorplates ranging between 17,400 and 46,700 square feet and includes a fitness space, meeting areas, all-hands conference facilities and dining venues. The property also offers park-like collaboration zones, a pickleball court, as well as surfboard and bike storage.

READ ALSO: Life Science Sector Faces Challenges, Yet Recovery Is in Sight

Breakthrough developed Torrey View with co-equity partners Mitsui Fudosan America, Investment Management Corp. of Ontario and AP2. The developer tapped life science architectural firm Flad Architects and general contractor Clark Construction. JLL handled the leasing of the development.

Breakthrough is an active player in the sector, with a portfolio of more than 5 million square feet of life science space in operation or in the development pipeline in the U.S. and Europe. The company targets LEED Gold certification at its U.S. properties, as well as BREEAM Outstanding certification in all of its projects in the U.K. and the European Union.

In San Diego, the company’s portfolio includes Torrey Plaza, Callan Ridge and Governor Pointe, a two-story life science campus nearing completion.

Other Breakthrough assets include The 105, a facility fully leased by gene-editing company CRISPR Therapeutics, and One Milestone, two interconnected lab buildings under development at the Enterprise Research Campus, both in Boston. The company’s 2300 Market, an R&D building, is nearing completion in Philadelphia. StudioLabs by Breakthrough—a brand for hypergrowth users—is being launched in several new markets.

San Diego life science development still hot

More than 4 million square feet of new life science developments are under construction in the Greater San Diego market, preleased at a 39 percent rate, according to Cushman & Wakefield data. The majority of the inventory, some 64 percent, is spec space, with the remaining 36 percent build-to-suit. Also, 241,500 square feet of life science conversions of existing buildings are underway in the area.

Landlords who acquired sites at recent peak land pricing for life science development are still eager to complete their projects, Cushman & Wakefield notes. However, a decline in venture capital investment and banks less willing to originate construction loans will temper development in the future.

As of the second quarter of 2024, San Diego’s life science real estate vacancy was 16.3 percent, up 350 basis points quarter-over-quarter and up 880 basis points year-over-year, Cushman & Wakefield reported. Sublease vacancy increased 20 basis points since the first quarter and 110 basis point since a year earlier.

Even so, San Diego County boasts a robust life sciences industry, employing more than 75,800 direct employees at more than 1,960 establishments in various subsectors. The largest employment sector is biotechnology, followed by research and testing. Life science R&D, medical laboratories and analytical instrument manufacturing all contributed to job creation in San Diego during the past year.

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A joint venture between Harbor Associates and F&F Capital Group has acquired Highlands Corporate Center, a 211,000-square-foot, five-building office campus in San Diego.

Blackstone’s EQ Office sold the asset for $77 million, public records show. Adam Edwards, Justin Shepherd and Bailey Bland of Eastdil Secured advised the REIT.

According to CommercialEdge, EQ Office had acquired Highlands Corporate Center in a $3.3 billion portfolio transaction involving 136 properties in two dozen metro areas nationwide. The assets included 14.4 million square feet of office space, alongside industrial and retail space.

READ ALSO: You Bought an Office Building. Now What?

Highlands Corporate Center is at 12730–12780 High Bluff Drive in Del Mar Heights, a coastal community 20 miles north of downtown San Diego.

The Class A, multi-tenant development came online in 1985, featuring 15,000-square-foot floorplates and a parking ratio of 3.8 spaces per 1,000 square feet. The property was about 90 percent leased at the time of sale, noteworthy tenants including Banner Bank and Keller Williams Realty.

The seller extensively renovated the campus over the last several years to include new lobby finishes, a new conference center, fitness facilities, a tenant lounge and outdoor pavilion. In addition, the property features private balconies on several of the upper-floor tenant suites, as well as EV charging stations.

Harbor Principal Rich McEvoy said, in prepared remarks, that the property’s leasing success in recent years—more than 40 new leases and renewals totaling 150,000 square feet since 2021—can be attributed in part to its location across One Paseo, a 23-acre mixed-use development that includes more than 40 restaurants.

Slow-motion collision?

Highlands Corporate Center’s leasing momentum contrasts with San Diego’s broader office market. According to a recent CommercialEdge office report, the metro witnessed a steadily rising overall vacancy that reached 19.1 percent in August, up 310 basis points over the year.

This looks to be on a collision course with the San Diego office pipeline, as CommercialEdge information placed the metro among the five top U.S. markets for office deliveries. The area saw first-half deliveries (including R&D space) totaling about 2.1 million square feet across eight projects.

The post Blackstone’s EQ Office Sells San Diego Campus for $77M appeared first on Commercial Property Executive.

Turner Impact Capital’s Healthcare Facilities Fund has received $29.1 million in financing for Chula Vista Medical Arts I, a 64,231-square-foot medical office building in Chula Vista, Calif. Siemens Financial Services provided the loan, with a maturity date set for 2031, according to San Diego County records. JLL represented the borrower.

Turner Impact Capital has owned the Chula Vista property since April 2024. The company acquired the asset for $18 million from Welltower, CommercialEdge data shows. Last month, Turner sold Chula Vista Medical Arts II to the Cypress West Partners and TPG Angelo Gordon joint venture, for $11.6 million.

In March, Turner also secured a $6.7 million, three-year loan for 1650 Adams Ave. in Costa Mesa, Calif. The borrower will retrofit the 6,700-square-foot asset into a community health center for Share Our Selves.

The owner will use the funds to convert both buildings into modern medical facilities.

Senior Managing Director John Chun and Director Matt DiCesare with JLL Capital Markets led the team representing the borrower in both transactions.

Facility ready for renovation

The five-story Chula Vista building came online in 1973 and underwent cosmetic renovation in 2013. The low-rise, Class B facility features two passenger elevators, controlled access and offers 94 car parking spaces. The owner will renovate and turn a section of the building into a community health center for San Ysidro Health.

The tenant roster includes Quest Diagnostics, Colton Health and Mora Family Dental, among others. Current trends in medical office building occupancy show a focus on wellness, catering to the aging population and urgent care services.

Located at 480 4th Ave., the property is adjacent to the Scripps Mercy Hospital Chula Vista and has access to interstates 5 and 805. Downtown San Diego is some 10 miles northwest of the facility. Other medical providers in the surrounding area include Turullols Medical Center, California Medical Injury & Rehabilitation Physicians and Adams Medical Clinic.

The post Turner Impact Capital Lands Financing for San Diego MOB appeared first on Commercial Property Executive.

Lincoln Property Co. has renewed a full-building lease with Charter Communications at Pacific Corporate Center, a 134,000-square-foot office building in San Diego, within the Sorrento Mesa submarket. Cushman & Wakefield negotiated on behalf of the landlord, while CBRE represented the tenant.

Lincoln Property Co. picked up the two-story office asset in 2021, when Crown Realty & Development sold the property for $63 million, according to CommercialEdge.

Pacific Corporate Center is at 10450 Pacific Center Court and features efficient office layouts, with 67,000-square-foot floorplates, well designed ingress and egress options, outdoor amenities and 536 parking spots. The tenant is using the building as its flex and corporate headquarters location.

The 9-acre property dates back to 1992 and is 10 miles from Montgomery-Gibbs Executive Airport, 16 miles from downtown San Diego, 21 miles from San Diego International Airport and within 25 miles of Chula Vista, Calif. Additionally, Pacific Corporate Center is close to interstates 805 and 5, allowing for easy access to the Greater San Diego area.

Cushman & Wakefield’s Vice Chairman Brant Aberg worked on behalf of the landlord, while CBRE’s team of Executive Vice President Mike Hoeck and Vice Chairman Meredith LaPier represented Charter Communications.

Office deals with large footprints

A recent CommercialEdge report shows that the country’s office vacancy rate is still rising in most of the top 25 markets. As of June, San Diego’s figure clocked in at 18 percent, showing a 240-basis-point increase over the last 12 months. Across Western markets, The Bay Area’s vacancy rate hit 20.8 percent, while Los Angeles had the lowest rate, at 17 percent.

Significant recent San Diego leases include a 127,300-square-foot deal signed by landlord Alexandria Real Estate Equities in the Sorrento Mesa submarket. A top-20 pharmaceutical company signed the 10-year deal that includes expansion options at 10075 Barnes Canyon Road, a 253,000-square-foot life science building currently underway.

Another significant deal was Pfizer Oncology’s 230,000-square-foot expansion at Torrey View, a 520,000-square-foot life science project in the metro. The lease brought the development to fully preleased status.

The post Lincoln Property Inks 134 KSF Renewal in San Diego appeared first on Commercial Property Executive.

ROIC has sold Marketplace del Rio, a 183,292-square-foot neighborhood shopping center in Oceanside, Calif. 1st Commercial Realty Group purchased the asset for $56.6 million, or $384.24 per square foot, according to CommercialEdge information. Cushman & Wakefield represented the buyer, while CBRE negotiated on behalf of the seller.

Completed in 1980, Marketplace del Rio has recently undergone a significant renovation of its exterior, common areas and interior spaces.

Stater Bros. Markets anchors the shopping center and has recently signed a long-term lease extension and expansion. The newly renovated store celebrated its grand reopening early last year.

The property’s tenant roster also includes UPS, The Home Factory, Subway, Burger King and Road Ready USA, among others.

READ ALSO: Coffee, Auto, Discount Retailers in Growth Mode

Located on 20 acres at 3762-3774 Mission Ave., Marketplace del Rio is near Highway 76, which allows direct access to downtown San Diego. In 2023, there were 104,225 people living within a 3-mile radius of the retail property, with an average household income of $110,319, according to ROIC.

CBRE Senior Vice Presidents Jimmy Slusher and Preston Fetrow, together with Associate James Tyrell, represented ROIC. Cushman & Wakefield Managing Director Phil Lyons and Executive Director Chad Iafrate negotiated on behalf of 1st Commercial Realty Group.

San Diego’s retail scene

San Diego’s retail market showed increasing rental rates and vacancies in the second quarter of this year, while construction deliveries were declining, according to a recent Kidder Mathews report. The average asking rents reached $2.41, while vacancy clocked in at 4.2 percent. Meanwhile, the metro had 542,398 square feet of retail space under construction and approximately 29,374 square feet of completions.

Iafrate said in prepared remarks the new residential and commercial projects in the area, such as the 92-acre OceanKamp development and the future expansion of the Rancho Del Oro master plan, also made this property appealing for long-term investment.

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Meanwhile, San Diego has topped all Western metros for office prices through the first five months of 2024, as interest in life sciences space continues to remain high.

As of May, there were 4.2 million square feet of office space under construction in San Diego, across 25 office properties. The figure represents 3.8 percent of total stock, well above the national average of 1.4 percent and outpacing larger peer markets—The Bay Area, at 2.3 percent and Houston, at 1.0 percent—or even gateway markets like San Francisco, where the rate stood at 3.0 percent.

Shared space is also a significant boon for the metro, as San Diego outpaced peer markets for the share of coworking out of existing office inventory.

Significant deliveries and construction starts

Year-to-date through May, 1.8 million square feet of office space entered San Diego’s inventory, representing 3.8 percent of total stock. One significant project that came online since the start of the year was Research and Development District’s Phase I, a two-building life science campus developed by IQHQ. The two properties, dubbed The Rise and The Vida, were completed this January and total more than 1.1 million square feet. The $1.5 billion project represents the first urban life science waterfront development to come online in San Diego.

The market’s development pipeline includes Campus at Horton Plaza’s Building 100, a 371,683-square-foot office project that is expected to come online this August. Developed by Stockdale Capital Partners, the property is part of a 1 million-square-foot mixed-use master-planned campus in downtown San Diego that represents one of the largest adaptive reuse projects in the Western region.

The highest average sale price per square foot in the West

Year-to-date through May, 637,234 square feet of space across 10 properties changed hands in San Diego for a total of $269 million, at an average sale price of $422 per square foot. Across Western markets, the metro saw the highest price per square foot, followed by Los Angeles ($368 per square foot) and San Francisco ($352 per square foot).

The investment volume placed San Diego in 11th place nationally, with Washington, D.C., leading the ranking ($999 million), while the Bay Area occupied the second position ($795 million).

Some of the priciest office deals in the metro included Advin Biotech’s $23 million acquisition of a 41,034-square-foot flex office property at 10140 Mesa Rim Road, in San Diego’s Sorrento Valley submarket.

Another notable deal was Turner Impact Capital’s approximately $18 million acquisition of Chula Vista Medical Arts I, a medical office building totaling 62,503 square feet in Chula Vista, Calif. In March, Arrimus Capital paid $17 million for Chesapeake Corporate Center, a 50,562-square-foot office building at 9573 Chesapeake Drive in the metro’s Kearny Mesa submarket.

High vacancy rates endure

The office vacancy rate in San Diego reached 18.5 percent in May. The percentage has fluctuated since the start of 2024—from 17.2 percent in January, posting continuous increase. However, the metro’s index was the lowest among similar markets, outperforming the Bay Area (20.0 percent), Houston (22.5 percent) and Austin (23.3 percent).

Notable office leases that closed in the first five months of the year included the 230,000-square-foot, long-term expansion signed by Pfizer Oncology in March. The tenant will occupy two of the three buildings of Torrey View, a 520,000-square-foot life science campus owned by Breakthrough Properties, a joint venture between Bellco Capital and Tishman Speyer.

In May, Drawbridge Realty signed a 16,485-square-foot expansion at Discovery Corporate Center, a three-building office campus in the metro’s Rancho Bernardo submarket. The tenant is Leonardo DRS Inc., a supplier of integrated products and services for defense contractors and military forces.

A hotspot for coworking spaces

There were 1.0 million square feet of shared office space in San Diego as of May, more than in Raleigh-Durham, N.C. (831,637 square feet), Nashville, Tenn. (651,613 square feet) and Tampa, Fla. (535,267 square feet). The metro’s coworking space as a percentage of total leasable office space reached 2.0 percent, above the national average of 1.8 percent and more than in the Bay Area (1.2 percent) and Houston and Austin (1.7 percent).

The coworking operators with the largest San Diego footprint included Regus, leading the rankings with 299,162 square feet, followed by WeWork (146,227 square feet), Premier Workspaces (122,948 square feet) and Spaces (99,970 square feet).

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Cypress West Partners, in a joint venture with TPG Angelo Gordon, has acquired Chula Vista Medical Arts II, a nearly 37,000-square-foot medical office building in Chula Vista, Calif. Turner Impact Capital sold the Class B asset for $11.6 million, according to San Diego County records. JLL Capital Markets brokered the transaction on behalf of the seller.

The property last traded a few months ago, when Turner Impact Capital purchased the facility for $10.5 million from Welltower, CommercialEdge shows.

Earlier in spring, Cypress West and TPG Angelo Gordon formed a programmatic joint venture aimed at acquiring some $300 million in medical office assets across the Sun Belt over the next two years.

The four-story facility came online in 1985 and went through cosmetic renovations in 1999 and 2015. The building features 11,700-square-foot floorplates, two passenger elevators, an on-site lounge, controlled access and 198 car parking spaces.

Anchored by Scripps Health, the property is currently leased to 12 tenants, including The Oncology Institute of Hope and Innovation, Grimaldi Center, The Neuron Clinic and Labcorp, among others.

Located at 450 4th Ave., the facility is situated within the Scripps Mercy Hospital Chula Vista campus and has access to interstates 5 and 805. Downtown San Diego is more 10 miles northwest of the property. Other medical providers in the surrounding area include Adams Medical Clinic, Concentra Urgent Care, Chula Vista Family Health Center and Turullols Medical Center, among others.

The JLL Capital Markets team included Director Matt DiCesare and Senior Managing Director Evan Kovac.

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At the time of the sale, Polo Plaza was 69 percent leased to a diverse mix of restaurant, office and retail tenants. The roster includes Coldwell Banker, SeniorQuote Insurance Services, Loantown, I-Rise Dental, Love to Live Spa, Rancho Del Mar Physical Therapy, Market Restaurant + Bar and Berkshire Hathaway.

Back in 2018, ASB and Lincoln Property Co. purchased the asset for $27.5 million with the help of a $13 million acquisition loan provided by Capital One Bank, according to CommercialEdge data.

READ ALSO: Office Sector Adapts Amid Market Shifts

Completed in 1987, Polo Plaza comprises two buildings on some 3 acres. The two-story property features expansive outdoor areas, patios, 180 parking stalls with 43 garage stalls and controlled access. The new owner plans to improve the façades and common areas, while also leasing the remaining unoccupied space.

Located at 3702 & 3790 Via De La Valle, the mixed-use property is at the gateway between Del Mar and Rancho Santa Fe. Polo Plaza is near Interstate 5, which allows direct access to downtown San Diego.

Newmark Executive Managing Directors Rick Reeder, Brad Tecca, Brunson Howard and Associate Tanner Harris, alongside Cushman & Wakefield Executive Director Peter Curry and Senior Director Brooks Campbell, represented the seller.

San Diego, one of the priciest office markets

San Diego’s office market witnessed one of the top three sale prices in the West year-to-date through May, averaging $422 per square foot, according to a recent CommercialEdge report. In one of the most expensive transactions of the interval, Advin Biotech paid $23 million, or nearly $561 per square foot, for a 41,000-square-foot property in San Diego, CommercialEdge information shows.

Meanwhile, the metro also led the West in office development on a percentage-of-stock basis. The market’s 4 million-square-foot pipeline represented 4.2 percent of its existing inventory.

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The building is part of SD Tech by Alexandria Mega Campus, a development of Alexandria Real Estate Equities in the Sorrento Mesa submarket of San Diego. With the new lease, 10075 Barnes Canyon is now 70 percent leased ahead of delivery, according to Alexandria.

Alexandria did not respond to a query about the identity of the tenant, nor did Cushman & Wakefield, who had listed the building for lease.

Earlier in June, Japanese pharmaceutical company Shionogi leased about 20,000 square feet at Building C, where it will focus on antimicrobial research, along with the development of treatments for infectious diseases.

READ ALSO: Office Debt – The Underwater Mountain

Common amenities at 10075 Barnes Canyon include a number of eateries, a health and wellness center, meeting and conference spaces, a lawn and a 7-acre central park. The building is targeting LEED Gold Core & Shell and Fitwel certifications.

The lease brings Alexandria’s 1.2 million-square-foot pipeline of under construction mega campus developments in San Diego to 94 percent occupied, according to the REIT, which has five such projects underway in the market. Last year, Alexandria recapitalized a joint venture which owns 9625 Towne Centre Drive, another San Diego life science asset.

Besides San Diego, Alexandria Real Estate Equities, a life science REIT, has properties in Greater Boston, the San Francisco Bay Area, Seattle, Maryland, the Research Triangle of North Carolina and New York City.

The company holds about 7.8 million square feet of life science space in San Diego, its third-largest market after the San Francisco Bay Area (7.9 million square feet) and Greater Boston (10.8 million square feet). As of the end of the first quarter of 2024, the REIT had more than 1.1 million square feet of space under development in the San Diego market, the largest total of any of its markets.

San Diego life science still in demand

A number of sizable pharmaceutical leases in the first quarter of 2024 kept demand in the San Diego life science market at a respectable level, according to CBRE, with almost 1.7 million square feet of leases inked. That represents a small amount of positive absorption for the quarter, however, at about 6,800 square feet. That makes two quarters of positive absorption, after four negative quarters.

Companies are taking a more conservative approach to leasing life science space in the market, considering the current capital market and dodgy economic environment, CBRE noted. The largest lease during the first quarter was by Pfizer, which took 233,000 square feet in the Torrey View submarket.

Investors, on the other hand, seem optimistic about the market’s longer-term prospects. Venture capital investment in the market totaled nearly $1.4 billion during the first quarter of this year, the first time that figure topped $1 billion in almost two years, and 155 percent about the quarterly investment average in 2023, CBRE reported.

The post Alexandria Real Estate Lands Major Life Science Tenant appeared first on Commercial Property Executive.

Decron Properties has acquired Mira Mesa Market West Shopping Center, a 238,747-square-foot retail center in San Diego.

Stockbridge Capital Group sold the fully leased asset for $99 million. Furthermore, the acquisition of the property included the assumption of the current financing with New York Life Insurance Co., which has a below-market interest rate of 3.5 percent fixed for the remaining loan term.

The purchase represents the first retail acquisition for Decron since 2008. The company operates in markets across California, Arizona and Washington, while its retail portfolio encompasses 600,000 square feet. Despite some disruption in the retail industry, including economic downturns and the growth of e-commerce, investors are adapting to the new retail landscape.

Back in 2016, Stockbridge acquired the asset from DSB Properties Inc. in a $229 million deal, with the help of a $200 million acquisition loan provided by KeyBank. The mortgage was then shortly refinanced by two loans totaling $103 million funded by New York Life Insurance Co., according to San Diego County records.

A lukewarm San Diego retail market

Located at 10604 Westview Parkway, the 20-acre property is near Interstate 15 and some 16 miles north of downtown San Diego. Dating back to 2000, the shopping center is anchored by Home Depot, Smart & Final and CVS. Other tenants include Dave’s Hot Chicken, Starbucks, Rubio’s Baja Grill, Jersey Mikes, PNC, Verizon Wireless and Lazy Dog restaurant.

In the first quarter of this year, the vacancy rate in the San Diego retail market was up 26 basis points since the previous quarter, hitting 4.1 percent, according to a Colliers report. The average sale price for retail space and shopping centers decreased to $335 per square foot, but experts predict that deals will pick up in the second half of this year.

The post Decron Pays $99M for San Diego Shopping Center appeared first on Commercial Property Executive.

Drawbridge Realty has signed a 16,485-square-foot expansion with Leonardo DRS Inc. at Discovery Corporate Center, a three-building, 228,895-square-foot Class A office campus in San Diego’s Rancho Bernardo submarket.

The tenant, a supplier of integrated products and services for military forces and defense contractors, will now fully occupy the 84,277-square-foot Building D. With this deal, Discovery Corporate Center reached 100 percent occupancy.

The current ownership acquired buildings B and D in 2012 for $52.2 million, according to CommercialEdge. Drawbridge purchased Building A in 2013 for $36.5 million, from Menlo Equities.

Building D is a three-story Class A office and R&D building at 16465 Via Esprillo, completed in 2011 as a built-to-suit expansion for Broadcom Inc. The tenant will use the space to grow its research operations in the area while also providing additional office space. The acre

The three-story, 90,610-square-foot Building A is at 16340 W. Bernardo Drive and features two passenger elevators, 30,204-square-foot floor plates and 362 vehicle parking spots. The office property came online in 2007 and includes R&D space, a fitness center, a cafeteria and a basketball court. Building A is fully occupied by Broadcom Inc., that signed a five-year lease extension in February last year.

Discovery Corporate Center’s Building B is a 54,008-square-foot, two-story property at 11020 Via Frontera that also came online in 2007 as a built-to-suit project for Broadcom, now leased by Apple.

Recent activity in the Rancho Bernardo submarket

Discovery Corporate Center is a 10-acre office campus close to Interstate 15, that allows easy access in the area, while being 19 miles from Ramona Airport, 25 miles from San Diego International Airport and within 26 miles from downtown San Diego.

Drawbridge Realty recently completed construction on Via Del Campo Court’s Building 2, an 80,720-square-foot, three-story speculative office building at 16705 Via Del Campo Court. The property is part of a three-building Class A office and R&D campus totaling 248,792 square feet.

Building 2 is the first speculative project to have been constructed in the Rancho Bernardo submarket in more than a decade. In August last year, the landlord signed a 55,227-square-foot long-term lease with semiconductor manufacturer ASML. The deal was also brokered by JLL, that now is marketing the remaining 25,493 square feet of space for lease.

The post Drawbridge Inks Lease Expansion at San Diego Office Campus appeared first on Commercial Property Executive.

Sunroad Enterprises has obtained $82.5 million for the refinancing of Sunroad Centrum Office Tower, a 274,758-square-foot office building in San Diego. Goldman Sachs provided the five-year, fixed-rate senior loan in a deal brokered by JLL.

Previous financing included a $77.5 million CMBS loan from Wells Fargo and originated by Cantor Commercial Real Estate in 2014, according to CommercialEdge information. That note is set to expire in August this year.

The 11-story building came online in 2008 and underwent a $30 million tenant improvement program, after Bridgepoint Education vacated it in 2020. The Class A property has floorplates ranging from 24,800 to 59,500 square feet and almost 1,100 parking spaces. Upgrades included a new fitness center, restaurant and conference center, as well as the renovation of lobbies and elevators.

The property is now fully leased to multiple firms, including a Berkshire Hathaway company, Kyocera, Conam, Veterans Administration and California Government Departments. The mid-rise has a weighted average lease term of 10.5 years.

READ ALSO: What Office Tenants Want Now

Located at 8620 Spectrum Center Blvd., the LEED Certified building is less than 9 miles from downtown San Diego in the Kearny Mesa submarket. San Diego International Airport is within 11 miles southwest.

The property is part of the Sunroad Centrum master plan, set to include 1,245 luxury apartments, six fitness centers, five swimming pools, a 2-acre park and various other amenities. Plans also call for the construction of two more office buildings that will measure a combined 583,000 square feet.

JLL Debt Advisory Senior Managing Directors Aldon Cole and Tim Wright, along with Vice President Bharat Madan, led the brokerage team.

San Diego’s office sector holds steady

San Diego’s office vacancy rate clocked in at 18.2 percent as of March, on par with the national average, the latest CommercialEdge office report shows. The metro also registered the second-largest sales volume in the Western region in the first three months of the year, totaling $159 million. However, the average listing rate dropped 770 basis points year-over-year, falling to $42.76.

In March, Pfizer Oncology expanded its R&D footprint by signing a 230,000-square-foot lease at Torrey View in San Diego. The firm will occupy the space for 15 years.

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Signs are pointing to a resurgence, and there are reasons to be optimistic about improving conditions, said Travis McCready, head of life sciences for the Americas with JLL, in a prepared statement. McCready emphasized company creation throughout 2023 despite significant headwinds. He noted venture capital firms have record funding waiting deployment and big pharma has substantial resources aiming for acquisitions. There’s also an upcoming patent cliff that will help drive activity.

The JLL paper pinpoints five key trends for lab space, including growing national demand, how quality in top markets is driving leasing successes and how the supply-to-demand ratio is gradually beginning to normalize in most major cities. Other top observations include the fact that lease terms are shrinking in an occupier-favorable environment, and that newly added vacancies are expected to fall after 2024.

While there are good rebound indicators, the main hurdle is dealing with current oversupply, virtually everywhere. The sector saw a dramatic shift in the macro environment combined with a glut of new supply arriving while the market cooled, leading to a downcycle. Data shows the sector is on the right path to achieving equilibrium, though.

READ ALSO: Emerging Life Science Hubs Stake a Claim

Newly added vacancies are set to fall quickly after 2024, but the sector must first absorb all the new space that came online after 2021. A little more than 13 million square feet of vacant space came online in the U.S. lab market in 2022 and 2023 alone. This year, more than 15 million square feet of new vacant space could be delivered unless demand materially changes before the year ends.

However, the numbers drop considerably after 2024. Currently, only 4.7 million square feet of lab space underway has the potential to deliver vacant from 2025 into 2027, according to JLL. The report also notes that a respite in new supply will give the market some breathing room for improved absorption. Total supply at the end of 2024 could be more than 65 million square feet, with aggregate demand at only 11.5 million square feet.

Hot markets, shorter leases

The usual suspects continue to see strong activity: Boston, San Diego and the Bay Area. The Bay Area alone jumped from less than 2 million square feet of demand at the end of 2023 to 2.7 million square feet in the first quarter. Kevin Wayer, division president for JLL life sciences, stated occupiers in those markets should take advantage of conditions this year because competition for space is likely to heat up once startup capital starts flowing more freely in 2025 and beyond.

READ ALSO: Attracting Life Science Tenants in Core Markets

Wayer also noted demand in the three markets is now on par with 2019 levels. While the aggregate U.S. figure is still 55 percent lower than the 2021 peak, the big three have 6.9 million square feet of demand today. Over the past three quarters, they have seen quarterly growth in demand for lab space averaging 17 percent.

Not surprisingly, the top-tier “core” submarkets have significantly outperformed peers in the three areas. Those top submarkets include UTC and Torrey Pines in San Diego, South San Francisco in the Bay Area and East Cambridge in Boston.

JLL also observed that lease terms are shrinking in an occupier-favorable market. In the second half of the last decade, demand started to outpace supply, giving landlords greater leverage. With supply outpacing demand as of late, tenants are now pushing for shorter lease terms, particularly startups.

The report notes that shorter leases are particularly evident in smaller and midsize deals, which make up the majority of activity now. The average term has decreased by 2 years for middle-market deals and by almost 1.5 years for smaller deals, compared to 2 years ago. Lease terms in the first quarter of 2024 were at an average of 5.1 years.

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Dollinger Properties has acquired a 90,000-square-foot R&D and lab portfolio in Rancho Bernardo in San Diego, Calif., for $30.8 million. Montana Avenue Capital Partners sold the two properties. JLL represented the seller in the transaction and procured the buyer.

The assets last traded in 2021 as part of a larger $45.5 million portfolio transaction, according to CommercialEdge data. In the same year, they became subject to a $20.5 million loan from Wells Fargo Bank and a $7.1 million note from Mesa West Capital, the same source shows.

The two buildings are 11501 Rancho Bernardo Blvd. and 16981 Via Tazon. They were fully occupied at the time of the sale. Tenant Millennium Health is part of the roster, the company having owned the assets between 2010 and 2021, according to CommercialEdge data. The adjacent buildings are off Interstate 15 and roughly 24 miles from downtown San Diego.

JLL Managing Directors Bob Prendergast and Lynn LaChapelle, along with Vice President Greg Moore and Market Lead Tim Olson led the Capital Markets team that brokered the transaction.

San Diego transactions drop by two thirds

Throughout all of 2023, more than 2 million square feet of office space traded across 23 properties in San Diego, for a total of $642.8 million, according to CommercialEdge data. These figures represent a tremendous drop from the previous year, when more than triple the square footage changed hands for an investment volume of nearly $2.4 billion.

One of the largest recent transactions in the metro was Tishman Speyer partnering with Bellco Capital to acquire a 65 percent stake in a $236 million life sciences development. Tenant Turning Point Therapeutics, a subsidiary of Bristol-Myers Squibb Co., is fully leasing the property, committing to the space through 2035.

The post Dollinger Pays $31M for San Diego Life Science Portfolio appeared first on Commercial Property Executive.

Pfizer Oncology has recently expanded its R&D footprint. The firm leased 230,000 square feet for 15 years at Torrey View, a 520,000-square-foot life science development in San Diego, Calif. Breakthrough Properties, a joint venture between Tishman Speyer and Bellco Capital, owns the soon-to-be-completed project.

Pfizer will occupy two buildings at the 10-acre, fully preleased campus. The firm also agreed to provide Breakthrough’s StudioLabs clients with streamlined access to its scientific, clinical and strategic infrastructure via Pfizer Ignite.

READ ALSO: Attracting Life Science Tenants in Core Markets

Last year, Pfizer renewed and expanded its lease at Hudson Valley iCampus in Pearl River, N.Y., to 151,000 square feet. The space has manufacturing, laboratory, warehouse and office functions.

Torrey View, up close

Construction of the three-building life science campus started in 2020. The development team also includes co-equity partners Mitsui Fudosan America, Investment Management Corp. of Ontario (IMCO) and AP2, alongside architecture firm FLAD Architects and general contractor Clark Construction. JLL is conducting the marketing and leasing efforts.

When complete, Torrey View will also feature an amenity building that will include a fitness center, meeting areas, conference rooms, dining venues and indoor/outdoor collaboration zones, along with a yoga studio, spa, bar and café. The property will comprise a pickleball court, a 1,400-stall parking structure and media rooms. Floorplates will range from 17,400 to 46,700 square feet.

The development rises at 11202 El Camino Real, close to interstates 5 and 805, while downtown San Diego is within 17 miles southeast. The location is also 3 miles from Elements, a 290,000-square-foot campus that was recently converted from office to life science space.

In November 2021, Breakthrough Properties signed a full-building, 220,000-square-foot lease at the campus with medical tech company Becton, Dickinson and Co. The firm began a phased move-in in late 2023.

Breakthrough’s recent life science expansion

Tishman Speyer and Bellco Capital formed Breakthrough Properties in 2019, with the purpose of acquiring, developing and operating life science properties in prominent tech markets. The firm’s portfolio totals nearly 2.2 million square feet across completed, under-construction and prospective facilities, according to CommercialEdge information.

In January, the company acquired a 65 percent stake in Callan Ridge, a two-building life science campus valued at $236 million. The transaction involved a stabilized cash capitalization rate of 5.3 percent based on the initial annual rental rate of $67 per square foot.

Last year, the firm received $130 million for the development of a 223,000-square-foot life science project in Philadelphia. The developer broke ground on the eight-story building around the same time and first tenant fit-outs are expected this summer.

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BKM Capital Partners has once again added to its West Coast industrial portfolio with the $70.2 million acquisition of Canyon Industrial Center, a 13-building, 198,728-square-foot Class B light industrial park located in San Diego’s Kearny Mesa area. The seller was the Los Angeles County Employees Retirement Association, according to CommercialEdge data. The park is 99 percent occupied and BKM is eyeing a $1.7 million repositioning plan.

Cushman & Wakefield worked for the seller, with the team including Executive Vice Chairmen Jeff Cole and Jeff Chiate, alongside Vice Chairman Bryce Aberg, while BKM had in-house representation.

Opportunities, upgrades at a San Diego industrial park

Completed in 1979, Canyon Industrial Center occupies 16.2 acres and 31 percent of it is office space. Rentable units range from 552 to 18,953 square feet, and are leased to a mix of small bay construction, utility, home design and health-care companies. The buildings themselves include 14- to 20-foot clear heights, and the campus totals 56 grade-level and seven dock-high loading doors.

Located at 9424-9560 Chesapeake Drive, Canyon Industrial Center is within 4 miles of three separate onramps to interstates 8, 15 and 805, while downtown San Diego is located 9 miles to the south.

As part of BKM’s multimillion-dollar plan, the firm intends to bring the entire property up to Class A standards through improvements in roofing, signage, paint, HVAC systems and parking lots. The firm also plans to redevelop to larger units totaling 32,000 square feet into four small-bay units averaging some 8,000 square feet.

On the management front, the company plans to replace CBRE, the park’s third-party facilities and leasing manger, with its own team, to be based inside a currently vacant unit.

According to BKM, the renovations are motivated in part by a desire to fix a 30 percent deficiency in rents that it has detected at the park, with 92 percent of existing leases slated to roll over during the firm’s intended hold period. More than 500 industrial tenants have been displaced from the Sorrento Mesa and Sorrento Valley submarkets, said BKM CEO Brian Malliet in prepared remarks. This came at a time when the city’s Central County area had a vacancy rate of just 2.7 percent, data derived from Cushman & Wakefield’s most recent market update.

READ ALSO: Meeting the Needs of Industrial Users of Various Sizes: An Orlando Story

In the same vein, the firm intends to transition the park’s rent structures from industrial gross leases to triple net.

BKM’s West Coast campus build-up

BKM’s purchase of Canyon Industrial Center is the latest addition to the Newport Beach-based firm’s portfolio of campuses following a joint venture with StepStone Real Estate. As part of the new partnership, the latter will also focus on investing in additional small and mid-bay industrial properties around the Western U.S.

Earlier this month, BKM bought Airport Way Corporate Park, a three-building, 140,693-square-foot property in Portland, Ore. Back in January, the firm grew its presence in Phoenix and Silicon Valley with a $79 million purchase of three industrial parks totaling 387,510 square feet.

The post BKM Capital Pays $70M for San Diego Asset appeared first on Commercial Property Executive.

Last year ended with significant deliveries in San Diego, while developers are slowly planning new additions, pushing the metro at the top among peer markets in terms of construction starts. Office properties changed hands at one of the highest average sale prices across West Coast metros, despite the drop in sales volume since the start of 2023.

As of December, San Diego had 5.4 million square feet of office space underway across 28 properties, representing 4.9 percent of the existing inventory, above the national average of 1.7 percent.

Multiple projects underway

Construction starts in the market totaled 1.6 million square feet across 11 properties, representing 1.4 percent of total stock. Significant under-construction projects include IQHQ’s Research and Development District’s Phase I, a two-building life sciences campus encompassing 1.2 million square feet. Dubbed RaDD, the $1.5 billion project is the first urban life sciences waterfront development in the metro. Phase I includes the 729,903-square-foot RaDD Block 2B and the 396,154-square-foot RaDD Block 4B.

Another significant development underway is the 371,683-square-foot Campus at Horton’s Building 100, owned and developed by Stockdale Capital Partners, and expected to be delivered the second quarter of 2024. The property is part of a bigger, 1 million-square-foot mixed-use redevelopment in downtown San Diego that is also one of the largest adaptive reuse projects in Western U.S.

Year-to-date through December, developers completed 559,964 square feet of office space across four properties. Projects that came online in 2023 included the 212,851-square-foot La Jolla Commons’ Tower III, a Class A office building developed by American Assets Trust. The property is the latest addition to the three-building campus that now totals 930,687 square feet.

Another notable delivery was 4930 Directors Place, a 163,000-square-foot, Class A office building that came online in August 2023. The property is part of Healthpeak Properties’ two-building office campus dubbed Sorrento Gateway and is fully occupied by biotech company Sorrento Therapeutics.

In May 2023, Alexandria Real Estate Equities’ Scripps Ranch Technology Park’s Building A came online. The Class A low-rise life sciences building is at 10102 Hoyt Park Drive, totals 114,113 square feet and is fully occupied by Arrowhead Pharmaceuticals.

Office deals drop, average price still high

Year-to-date through December, 1.7 million square feet across 20 properties changed hands in the metro for a total of $612 million. On a quarter-over-quarter basis, the sales volume reached $330 million at the end of the first quarter, while in the fourth quarter office investments decreased to $73.5 million.

Despite the drop in office sales, properties changed hands at an average $363 per square foot—still pricy when compared to other Western gateway metros. Assets in The Bay Area traded at a median price of $339 per square foot, followed by San Francisco ($322 per square foot) and Seattle ($267 per square foot).

One of the priciest deals in San Diego was Rexford Industrial Realty Inc.’s $148.3 million acquisition of 9233 Balboa Ave., a 250,000-square-foot, two-building office property in the Kearny Mesa submarket. The $200 million portfolio deal also included a 55,000-square-foot, Class B industrial building in the same area.

Another significant transaction was DivcoWest’s $86 million acquisition of a 72,506-square-foot Class A laboratory building. Situated within the Torrey Pines research cluster, the property was sold by Alexandria Real Estate Equities Inc. in May 2023.

In March, Vertical Ventures paid $72.8 million for the 233,000-square-foot Rose Canyon Business Park, a low-rise office building in West San Diego that includes office, retail and R&D space.

Increased vacancy rates

Year-to-date through December, the office vacancy rate in San Diego reached 17.4 percent, below the national average of 18.3 percent. The index fluctuated since the start of 2023—from 14.1 percent in January and 15.5 percent in June, the vacancy rate peaked at 18.2 percent in October, point after which it started to drop.

Across other similar markets, San Diego’s vacancy rate was the lowest, having been surpassed by Houston’s (23.9 percent), San Francisco’s (23.6 percent), Seattle’s (22.5 percent), Austin’s (21.1 percent) and The Bay Area (20.2 percent).

Significant leasing deals in the metro included the 87,000-square-foot office prelease signed by The San Diego Association of Governments at the 37-story West development. SANDAG’s commitment also marked the first office prelease at a speculative project in downtown San Diego in the past 20 years. The $450 million office project is developed by the joint venture of Holland Partner Group, North America Sekisui House and Lowe.

Also in August, Netherlands-based semiconductor manufacturer ASML leased 55,227 square feet at Via Del Campo Court II. The 80,720-square-foot office and R&D building is owned by Drawbridge Realty.

In February, the same owner signed a five-year lease extension at Discovery Corporate Center, a 230,000-square-foot office campus in the Rancho Bernardo submarket. The tenant, Broadcom Inc., is fully occupying the 90,610-square-foot Building A.

Attracting notable flex office providers

As of December, San Diego had 1.1 million square feet of shared office space, more than Nashville (664, 279 square feet), Charlotte (536,576 square feet) and Baltimore (205,502 square feet).

With the rate of coworking space as percentage of total leasable office space at 1.9 percent, San Diego outpaced the 1.7 percent national figure, and was on par with markets like Dallas-Fort Worth, Boston, Houston and Austin.

Year-to-date through December, Regus had the largest footprint of total leasable office space, with locations totaling 299,162 square feet. The company was followed by WeWork, with 145,877 square feet, Premier Workspaces, with 122,948 square feet, and Spaces, with 99,970 square feet.

The post San Diego Boosts Office Inventory appeared first on Commercial Property Executive.

Breakthrough Properties, the joint venture of Tishman Speyer and biotechnology investment firm Bellco Capital, has acquired a 65 percent stake in Callan Ridge, a two-building life science campus nearing completion in San Diego. Developer Healthpeak Properties will retain the remaining 35 percent.

The transaction valued the fully leased asset at $236 million, representing a stabilized cash capitalization rate of 5.3 percent based on the initial annual rental rate of $67 per square foot. Healthpeak’s net proceeds amount to approximately $130 million.

A Class A life science campus

The developer broke ground on Callan Ridge, a redevelopment involving a 90,000-square-foot structure being replaced by two three-story buildings totaling 185,000 square feet, in 2021. PMA, BNBuilders and Ferguson Pape Baldwin Architects are also on the project’s team.

Upon delivery, the Class A property will have floorplates ranging between 22,000 and 35,000 square feet, two levels of underground parking and a drop dock with hydraulic dock leveler. Amenities are set to include a roof deck, restaurant, fitness center and an outdoor covered patio space.

The campus will also have sustainable building features such as electrochromic windows, photovoltaic glass panels, recycled steel and concrete and drought-tolerant landscaping, as well as the largest single-building green roof in San Diego. The joint venture plans to pursue LEED Gold certification once the project is finalized.

READ ALSO: Dos and Don’ts for Life Science Conversions

The property’s sole tenant is Turning Point Therapeutics, a subsidiary of Bristol-Myers Squibb Co., under a lease agreement ending in 2035. The company first leased 105,000 square feet in July 2023; the remaining 80,000-square-foot commitment will start in July 2024.

Callan Ridge is taking shape on 5 acres at 3020-3030 Callan Road in the Torrey Pines Science Park, some 16 miles north of downtown San Diego. The site has access to interstates 5 and 805.

Big players in the life science market

Breakthrough Properties came to life in 2019, with the purpose of acquiring, developing and operating life science properties in leading tech markets. The firm’s portfolio includes Torrey View, a 520,000-square-foot campus in San Diego and Boulder 38 by Breakthrough, a 9-acre campus set to feature office, lab and flex space in Boulder, Colo.

In 2023, the partnership received a $130 million construction loan from Corebridge Financial for the development of a 223,000-square-foot life science building in Philadelphia’s Center City district. First tenant fit-outs are expected this summer.

Healthpeak has also been recently active in the life science sector. In December, the firm received approval of entitlements for the second and third phases of a campus currently underway in South San Francisco, Calif. The project will comprise 1.7 million square feet at full build-out.

The post Breakthrough Acquires Majority Stake in $236M Life Science Campus appeared first on Commercial Property Executive.

Rockefeller Group has sold Heritage Industrial Center, a 202,760-square-foot industrial asset in Chula Vista, Calif. EQT Exeter acquired the three-building campus, while Cushman & Wakefield brokered the transaction.

Rockefeller purchased the land from HomeFed Corp. and began construction in June 2022. The campus came online in September last year.

Heritage Industrial Center occupies 12 acres and comprises three buildings, measuring 105,550, 56,470 and 40,740 square feet. The campus features office spaces, 28’-32’ clear heights, ESFR fire sprinklers, grade-level and dock-high loading doors, controlled access and parking spaces.

READ ALSO: What’s Next for Industrial Real Estate?

Located at 3330 Heritage Road, the property is within the South San Diego submarket, near Interstate 805, which provides easy access across the San Diego metropolitan area.

Cushman & Wakefield’s Jeffrey Cole, Jeff Chiate, Bryce Aberg, Brad Brandenburg, Zachary Harman and Mike Adey represented the developer in the investment sale element, while Voit Real Estate Services’ Michael Mossmer and Patrick Connors worked on the leasing efforts and the sale of the project.

San Diego vacancy increased

Heritage Industrial Center marks Rockefeller’s second development within South San Diego and its sale was the second deal with EQT within the past three months. In another recent deal, EQT sold a 319,336-square-foot Class A industrial property in the Northwest submarket of Indianapolis for $28.4 million.

According to a recent Cushman & Wakefield report, San Diego’s industrial vacancy rate was up 80 basis points quarter-over-quarter, as of September. This marked the third consecutive quarter of increases in vacancy. About 636,000 square feet came online in Chula Vista and Otay Mesa, but remained unleased through the third quarter.

The post Rockefeller Group Sells San Diego Industrial Campus appeared first on Commercial Property Executive.

Chesnut Properties has received a $91 million construction loan for the completion of Gillespie Field iPark, an approximately 380,000-square-foot industrial facility at 1756 Weld Blvd. in El Cajon, Calif., in eastern San Diego County. 3650 REIT provided the financing.

Based in Solana Beach, Calif., sponsor Chesnut Properties develops a variety of asset types, including industrial, life science and office properties. 

The lender’s Bridge and Event-Driven lending platform originated the 24-month note. Senior Director Peter Hillakas and Director Drit Shoemaker of Gantry Inc. arranged the financing.

Upon delivery, Gillespie Field iPark will feature clear heights from 28 to 31.5 feet, dock-high and grade-level loading doors, and 650 stalls for parking spaces, including 34 trailer-storage stalls. The property is being built to maximize the use of renewable energy and so will feature a solar roof and EV charging stations.

READ ALSO: A Recap of the Industrial Sector’s Performance

About 40 percent of the building is preleased to GKN Aerospace, and the remainder will accommodate a range of industrial tenants including manufacturing, R&D, warehousing and distribution.

The 31.5-acre site is adjacent to the Gillespie Field airport, on a long-term ground lease from the County of San Diego. Developable space within the El Cajon submarket is limited, making the property one of the few offering modern features and opportunities to lease space of more than 100,000 square feet, according to 3650 information.

In a prepared statement, Lee Chesnut, CEO of Chesnut Properties, described Gillespie Field iPark as a challenging project, since the developer began construction with their own capital in a very difficult capital markets climate.

Slow at the moment

3650 REIT co-founder & managing partner Jonathan Roth added that in a commercial real estate environment with little ground-up construction taking place, there is a strong demand for a variety of asset classes in strategic locations and desirable submarkets, and that the Gillespie project will provide the modern infrastructure that older properties in the East County San Diego area lack, fulfilling the need for sustainable industrial space amid the market’s tight inventory.

The third quarter saw San Diego County’s industrial/flex space market hit three straight quarters of negative demand, which has added up to a bit more than 1.5 million square feet of negative net absorption, according to an October report from Colliers. Nonetheless, the overall vacancy for industrial space (excluding flex and life science) is still below 4 percent.

In April, Rexford Industrial Realty Inc. acquired two adjacent properties, at 9223-9323 Balboa Ave. and 4285 Ponderosa Ave. in San Diego, from Cubic Corp. in a $200 million sale-leaseback. The properties are a 100,000-square-foot office building and a 55,000-square-foot industrial facility.

3650 REIT has also recently originated a more than $54 million construction loan for The Ranch at Model Colony, an approximately 200,000-square-foot retail project in Ontario, Calif. And last fall, the company provided a $71.5 million loan for the acquisition of Creekside Town Center. Cane Cos. Management purchased the 10-building retail power center in Roseville, Calif., in metro Sacramento, Calif.

The post Chesnut Properties Takes $91M Loan for Industrial Project appeared first on Commercial Property Executive.

Oxford Properties acquired the Ionis campus in October 2022, and is now working on its expansion. Image courtesy of CNW Group and Oxford Properties Group

Oxford Properties Group has broken ground on a 165,000-square-foot life science facility in Carlsbad, Calif. The project is part of the existing Ionis Pharmaceuticals life science campus and headquarters, which currently includes some 250,000 square feet of office and lab space.

Located at 2830 Whiptail Loop in San Diego’s North County, the development will feature purpose-built lab and office space. Ionis, a biotech company leading in RNA-targeted therapeutics, will utilize the facility expansion for drug research, technology, development and delivery.

UC San Diego, San Diego State University, Scripps Research and the Sanford Burnham Prebys Medical Discovery Institute are all in proximity, contributing to the strong workforce in the area. Nearby firms include Genentech, Novartis and Thermo Fisher Scientific. Downtown San Diego and the San Diego International Airport are approximately 36 miles south.

The project has an expected completion date in 2025. It will contribute toward Oxford’s current San Diego life science portfolio, which totals more than 900,000 square feet. The company first entered the market in February last year with a $464 million, 13-building acquisition.

A long-term leaseback deal

The campus features chemistry and biology labs, offices and R&D support systems and technology. Upon the delivery of the newest facility, it will include more than 400,000 square feet across four buildings.

Oxford initially acquired the Ionis campus in October of last year in a purchase and long-term leaseback deal. Ionis sold the three-building portfolio to Oxford for $258.4 million. At the time, the biotech company agreed to a 15-year lease. The other facilities in the 18.4-acre campus are at 2850, 2855 and 2859 Gazelle Court. They were completed between 2011 and 2021.

The post Oxford Properties Breaks Ground on 165 KSF Life Science Expansion appeared first on Commercial Property Executive.

The completed Elements redevelopment. Image courtesy of Alloy Properties

Alloy Properties has completed the redevelopment of Elements, a three-building, 290,000-square-foot life science campus in San Diego’s Sorrento Mesa submarket. The developer, an affiliate of TPG Real Estate Partners, started the conversion of offices to laboratory space after the $104 million purchase of the property in March 2020, according to CommercialEdge information.

In addition to its San Diego moves, Alloy has recently been active in other high-performance markets as well. In June, the firm paid $365 million for a five-building, 425,000-square-foot life science portfolio located in metro Boston.

The brand new Elements

Originally completed in 1986 and located at 10201-10241 Wateridge Circle, the 7.9-acre campus was previously known as The Elements at Waterbridge. Four years prior to its sale, the previous owner completed a $2.5 million capital improvement program at the property that included upgrades to the buildings’ exterior finishes and amenity spaces.

READ ALSO: Life Science Assets Outperform Despite Slowing Economy

The current conversion to lab space involved mainly 10201 and 10241 Wateridge Circle. McFarlane Architects designed the buildings’ interiors and amenity spaces, while JB Pacific provided contracting services. JLL Executive Managing Director Chad Urie, Senior Managing Director & Market Lead Tim Olson and Managing Director Tony Russell oversee leasing at the campus.

The new spaces have floorplates averaging 20,000 square feet, with 13- to 18-foot ceiling heights. Leases can range from roughly 20,000 to 189,000 square feet, with laboratory suites spanning from 19,462 to 62,294 square feet. Elements’ new amenity package includes outdoor meeting spaces, a new fitness center and electric vehicle charging stations.

Elements is part of one of the highest-performing submarkets of San Diego, which is one of the nation’s largest life science markets by both development pipeline and rentable area, according to data from a CBRE report. The campus’ immediate neighbors include Intertek, Inovio Pharmaceuticals and Telesis Bio. The University of San Diego is 9 miles to the south, while its research hospital is less than 2 miles further east.

Redevelopments, in depth

10201 Wateridge Circle is a five-floor, LEED Silver-certified facility. Redevelopments involved the reconstruction of three office floors to speculative lab and office space totaling 60,215 square feet. The present build-out, delivered in 2022, comprises 44 percent lab space and 56 percent office space, complete with lab support rooms, private offices and conference rooms. The building’s fourth and fifth floors remain open for expansion.

The redevelopments at 10241 Wateridge Circle comprised the entirety of the 85,623-square-foot building. This property is also LEED Silver certified and includes a mix of lab and office space on each of its five floors.

In addition to the existing facilities, Elements allows for the construction of a 170,000-square-foot build-to-suit space and the expansion of the parking garage.

The post Alloy Properties Delivers Office-to-Life Science Conversion appeared first on Commercial Property Executive.

The San Diego Association of Governments has inked an 87,000-square-foot office prelease at West. Image courtesy of Holland Partner Group

The San Diego Association of Governments has inked an 87,000-square-foot office prelease at West, a $450 million, 37-story transit-oriented development currently underway at 1011 Union St. in downtown San Diego.

SANDAG’s new digs mark the first office prelease for a speculative project in downtown San Diego in the past 20 years, as well as the largest new office lease in this part of the city over the past seven years.

According to The San Diego Union-Tribune, the signing of the lease takes place as SANDAG’s 34-year occupancy at the nearby Wells Fargo Plaza Building nears its expiration. The firm’s current lease totals 114,079 square feet. With the signing of the new agreement, the government agency seeks to downsize its space in order to accommodate a hybrid work environment. In January, SANDAG, a coalition of local San Diego County Governments, was shopping for space at three separate properties downtown.

READ ALSO: Property Management Success: New Formulas for the New Office

JLL Managing Director Tony Russell and Executive Vice President Richard Gonor serve as the property’s leasing brokers. The team represented the project’s owners and development partners, a joint venture between Holland Partner Group, North America Sekisui House and Lowe. San Diego-based brokerage firm Range Partners acted on behalf of SANDAG in the negotiations.

Nearing completion

Holland Partner Group, NASH and Lowe broke ground on West in early 2022, and topped off the building in May of this year. Architecture firm Carrier Johnson + CULTURE designed the project, and Holland Construction served as the general contractor. Upon completion at the end of the first quarter of 2024, the LEED and Well-Certified property will include 289,000 square feet of office space, 10,000 square feet of retail and 431 luxury multifamily units. The office, retail and amenity space will occupy the bottom floors, and the luxury apartments will be situated near the top of the building. Furthermore, the building is located along the city’s trolley line, with direct access to Courthouse station.

The office space contains floorplates averaging 40,000 square feet in size that are capable of accommodating tenants with leases starting at 5,000 square feet. Additionally, the project’s office portion can be expanded to 880,000 square feet on two adjacent blocks. The individual offices feature floor-to-ceiling windows, as well as outdoor balconies. Site-specific amenities include a lounge, private meeting rooms, ground-floor dining space, as well as tenant engagement programs provided by Hospitality at Work.

West’s amenity spaces on the ninth and 37^th floors accommodate today’s hybrid work environment, featuring meeting areas, a rooftop green area that includes a pool deck, as well fitness centers and a dog run.

West’s location at the intersection of Union Street and Broadway places it at the heart of San Diego’s largest business district. Upon leaving the building, residents and tenants have access to retail, dining entertainment and cultural attractions across downtown, with frontage to San Diego Bay, half a mile westward.

Leasing in San Diego

Despite its low occupancy rate and high volume of construction activity, leasing activity around San Diego remains deflated, bearing the brunt of here-to-stay hybrid work and an unsavory investment environment. Through the second quarter, 380,188 square feet, excluding renewals, came under occupancy, a sharp decrease from 1.2 million square feet coming under occupancy in 2022, according to a report from Cushman & Wakefield.

Earlier in August, Dutch photolithography developer ASML leased 55,227 square feet at Via Del Compo Court II, an 80,720-square-foot R&D facility in San Diego.

The post $450M SoCal Project Lands Government Tenant appeared first on Commercial Property Executive.

Via Del Campo Court II is the first building constructed on a speculative basis in Rancho Bernardo in more than a decade. Image courtesy of Drawbridge Realty

Netherlands-based semiconductor manufacturer ASML has signed a long-term lease agreement with Drawbridge Realty for 55,227 square feet at Via Del Campo Court II, an 80,720-square-foot office and R&D building in San Diego, currently under construction. JLL brokered the transaction.

The firm will occupy the second and third floors at the three-story development that will be ready for occupancy later this summer. Drawbridge broke ground on the project last March.

Via Del Campo Court II is the first speculative building to have been constructed in the Rancho Bernardo submarket in more than a decade. Located at 16707 Via Del Campo Court, the property is near Interstate 15 and roughly 24 miles north of downtown San Diego, having access to retail and dining options in the nearby 4S Ranch neighborhood.

JLL Senior Managing Director Tim Olson and Managing Director Jay Alexander represented the landlord, while Executive Vice President Damon Melda worked on behalf of the tenant.

Drawbridge currently owns 48 buildings across 12 markets, totaling some 6.1 million square feet. The firm recently secured a 90,000-square-foot lease extension at another Rancho Bernardo property.

The post Drawbridge Secures 55 KSF Tenant in San Diego appeared first on Commercial Property Executive.

The entire One Paseo campus occupies 36 acres in San Diego’s Del Mar submarket. Image courtesy of JLL

Kilroy Realty Corp. has obtained a $375 million loan from New York Life Insurance Co., secured by part of the company’s One Paseo mixed-use property in San Diego. JLL arranged the 11-year, interest-only note at a 5.9 percent fixed rate. Proceeds will serve general corporate purposes and development funding, as well as the company’s December 2024 unsecured bond maturity.

Allen Matkins advised Kilroy in the transaction. The law firm was also recently instrumental in negotiating a 206,000-square-foot office lease in Los Angeles’ Century City.

As of June, Kilroy’s portfolio amounted to 16.2 million square feet of office and life science space located in San Diego, Greater Los Angeles, the Bay Area, the Pacific Northwest and Austin, Texas. One of the firm’s properties, a 656,000-square-foot life science facility in South San Francisco, came online last year as the largest office delivery in the metro.

One Paseo, up close

Occupying 36 acres in the Del Mar submarket, One Paseo encompasses roughly 1.4 million square feet of office, retail and residential space. The LEED Gold-certified office component totals some 600,000 square feet across five buildings.

The 23-acre section serving as collateral for the current financing comprises two office buildings and 95,000 square feet of retail space, along with 608 residential units. Its components came online in phases, between 2019 and 2021.

The two office buildings rise four and six stories, spanning a combined 286,000 square feet, CommercialEdge data shows. Tenants include Bank of America, Cushman & Wakefield, JP Morgan Chase and McCarthy Building Cos., according to the same source.

Located at 3275 Del Mar Heights Road, the property is just east of Interstate 5, roughly 19 miles north of downtown San Diego. The campus is across from Del Mar Highlands Town Center shopping mall.

JLL Directors Charlie Vorsheck and Samuel Godfrey, along with Senior Managing Director Greg Brown, led the Capital Markets Advisory team that arranged the financing.

The post Kilroy Lands $375M Loan appeared first on Commercial Property Executive.

Runway Distribution Center. Image courtesy of JLL

An Ares Management real estate fund has purchased a newly built 199,997-square-foot distribution facility in Otay Mesa, Calif., from Lincoln Property Co. and a real estate fund advised by Crow Holdings Capital. The sale was announced on Wednesday by JLL Capital Markets, which had arranged the forward sale/purchase.

Runway Distribution Center consists of two newly completed Class A distribution facilities on a 11.91-acre parcel. The buildings feature 32- and 36-foot clear heights, 53 dock-high doors, six grade-level doors and 16 trailer parking stalls. JLL called the development “the most functional industrial project to be built in San Diego in recent years.”

The Otay Mesa submarket is adjacent to the U.S./Mexico border, an area that has experienced significant growth over the last several years because of its upgraded infrastructure, abundant labor supply on both sides of the border and increased demand caused by nearshoring.

READ ALSO: Can Cold Storage Keep Its Cool This Summer?

Runway Distribution Center is less than 25 miles from San Diego International Airport and less than a mile from the U.S./Mexico Port of Entry. The nearby Otay Mesa Land Port of Entry is the largest commercial land port of entry, with more than $46 billion in annual trade, and offers pedestrian crossing into the Tijuana International Airport via Cross Border Xpress.

The JLL Capital Markets Investment Sales and Advisory team was led by Senior Director Ryan Spradling, Senior Managing Director Mark Detmer, Managing Director Ryan Sitov and Associate Makenna Peter, and the Markets team was led by Andy Irwin and Greg Lewis.

Action at the border

After experiencing historically tight conditions over the past few years, the metro San Diego industrial space market has seen upward bumps in both vacancy and availability, year over year, according to a second-quarter report from Kidder Mathews. In parallel with that, leasing activity decreased to about 1.4 million square feet, a 15-year low, and sublease availability reached a level not seen in more than a decade.

Looking ahead, Kidder Mathews expects the market to experience continued softening, although a limited development pipeline should help keep things “well positioned for the near future.” The report notes that about half of what construction is taking place is in Otay Mesa. The submarket has a 5 percent total vacancy and 1.7 million square feet under way, on an inventory of 23 million square feet.

In April, Kearny Real Estate Co. was preparing to break ground on the $90 million, 26-acre final phase at the 311-acre Otay Crossings Commerce Park in Otay Mesa. This phase will consist of four buildings ranging from 45,000 to 205,500 square feet, with completion scheduled for early next year.

Almost simultaneously, Rexford Industrial Realty Inc. purchased for $200 million two adjacent buildings — one a 100,000-square-foot and the other a 55,000-square-foot industrial facility — in San Diego itself. The buyer reportedly plans to redevelop both properties into a distribution hub.

The post Lincoln Property, Crow Holdings Sell New Distribution Center appeared first on Commercial Property Executive.

Westfield Mission Valley “East”. Image courtesy of Lowe

As part of its multi-year deleveraging strategy, Unibail-Rodamco-Westfield has completed the sale of two parcels comprising the 1.5 million-square-foot Westfield Mission Valley shopping center in San Diego. The deals amounted to a total of $290 million.

Lowe—formerly Lowe Enterprises—and Real Capital Solutions purchased the approximately 1.1 million-square-foot Westfield Mission Valley “East” open-air center, while Sunbelt Investment Holdings Inc. picked up the Westfield Mission Valley “West” power center.

The asset opened in the early 1960s and last underwent a significant renovation in the 1990s. At the time of the sale, the Class B property had an overall occupancy of 71 percent.

Lowe and RCS revealed that they plan to reposition the 41-acre open-air center as a transit-oriented mixed-use village by refreshing the retail facilities and adding multifamily. The repositioning will fall under Lowe’s Retail reVision platform, launched in 2020.

Located at 1640 Camino del Rio N., opposite the San Diego Trolley’s Mission Valley Center Station, the property has easy access to interstates 8 and 805, as well as Highway 163.

The center’s current tenant mix includes Target, Nordstrom Rack, Macy’s Home, Michael’s, Bloomingdale’s Outlet, 24-Hour Fitness, AMC Mission Valley 20 theaters. Yard House, Outback and Buffalo Wild Wings are some of the dining options at the location.

Sunbelt Investment Holdings currently owns and operates 20 neighborhood and power shopping centers totaling more than 3.5 million square feet of leasable space in Southern California and Arizona. The company also has land holdings in Arizona totaling more than 2,200 acres.

San Diego’s healthy retail market

In February, URW sold its 1.2 million-square-foot North County Mall, in the San Diego suburb of Escondido, to Bridge Group Investments and Steerpoint Capital. The center is anchored by Macy’s, JCPenney and Target.

Metro San Diego’s retail market is seeing rental rates and construction deliveries trending up year-over-year, while vacancy rates decline, according to a second-quarter report from Kidder Mathews. In June, about 516,000 square feet of retail space was under construction in the metro, up 8.7 percent since the same period last year. The market’s overall vacancy hit 4.1 percent at the end of the second quarter, marking a nearly 2.4 percent decrease year-over-year.

The post Unibail-Rodamco-Westfield Sells San Diego Mall for $290M appeared first on Commercial Property Executive.

Pacific Coast Industrial Center. Image courtesy of BKM Capital Partners

BKM Capital Partners has purchased Commerce Carlsbad, an eight-building, 129,928-square-foot industrial park in Carlsbad, Calif., and renamed it to Pacific Coast Industrial Center. Public records show the buyer paid $44 million for the asset and financed the acquisition with a $29.9 million loan from First Citizens Bank.

The firm picked up the Class B asset from Alexandria Real Estate Equities, according to CommercialEdge data, with the intention of conducting a number of improvements across the property.

Brad Tecca, former managing director of Cushman & Wakefield’s Southwest Capital Markets Group, represented the former owner in the sale, while BKM was self-represented.

A Carlsbad industrial park

Alexandria had acquired the property in 2021 also for $44 million, as part of a larger $135.5 million deal that also involved the purchase of a 175,000-square-foot office building located at 5600 Avenida Encinas, the same data provider and reporting from The Registry show.

READ ALSO: The Big City Rebound and Its CRE Implications

Completed in 1985 at 5205-5375 Avenida Encinas, Pacific Coast Industrial Center features 62 flexible small-bay facilities averaging 2,515 square feet, alongside 70,161 square feet of office space, spread across eight buildings on a 7.6-acre lot, as well as 133 parking spaces. The facilities feature 66 grade-level loading doors and 16- to 18-foot clear heights.

BKM plans to upgrade the property’s roofs, HVAC systems, signage, parking lots and landscaping, as well as to convert 18 percent of the existing office space to industrial. Conversions will gradually take place in direct correlations with the park’s vacancies.

Situated just west of Interstate 5, Pacific Coast Industrial Center is 33 miles north of downtown San Diego, while the southernmost point of the Los Angeles metro is 25 miles in the opposite direction. The Mexican border lies further 14 miles south of San Diego, giving the city direct trucking access to the nation’s largest importer.

Industrial demand in San Diego

Despite having fundamentals that trail the ones of the Inland Empire and the Bay Area, and experiencing a leasing slowdown over the first quarter of 2023, San Diego’s industrial market remains in high demand, with a vacancy rate of 2.5 percent and a pipeline of nearly 2.6 million square feet, according to a report from JLL.

Demand for small-bay space has been even sharper, in part due to its niche uses and low construction volume proportional to the rest of the metro’s pipeline. In a statement, BKM Senior Managing Director of Acquisitions and Dispositions Brett Turner said that only 1.2 million square feet of small-bay space has been added to the market in the past 5 years, accounting for less than 9 percent of new inventory and for less than 6 percent of the industrial pipeline.

Recent headlines from the city’s industrial sector include Rexford Industrial Realty’s $200 million purchase of 155,000 square feet of office and industrial space across two properties, which the firm was considering converting into a distribution center. That same week, Kearny Real Estate Co. announced the expansion of Otay Crossings Commerce Park, a 311-acre industrial property located half a mile from the border with Mexico.

The post BKM Capital Partners Buys San Diego-Area Industrial Park appeared first on Commercial Property Executive.

One Paseo. Image courtesy of McCarthy Building Cos. Inc.

McCarthy Building Cos. Inc. has signed a 30,000-square-foot office lease at One Paseo, a recently completed, mixed-use  development in San Diego. Kilroy Realty is the owner of the approximately 1.4 million-square-foot campus, CommercialEdge data shows. JLL negotiated on behalf of the construction company.

One Paseo features 286,000 square feet of Class A office space, across a pair of buildings designed by Gensler. McCarthy’s new space will be located at the 194,445-square-foot Building 2.

Situated at 12830 El Camino Real, the six-story structure comprises three passenger elevators and 778 covered parking spots. The campus’ other office building at 12860 El Camino Real totals 91,555 square feet on four stories and offers 366 covered parking spots.

READ ALSO: As Hybrid Work Expands, Coworking Is No Longer the Exception

One Paseo received LEED Gold and Energy Star certifications. Its office tenant roster includes biotech investment funds company Boxer Capital, Fish & Richardson, Cushman & Wakefield, JPMorgan Chase, ACADIA Pharmaceuticals and Bank of America, according to CommercialEdge data.

The five-building, 23.6-acre complex is part of the the Carmel Valley submarket and includes more than 40 retail and dining spaces, along with 600 luxury residential units. Common-area amenities include indoor and outdoor spaces, wellness areas, a pet spa, swimming pools, a fitness center, a common-area tenant lounge, a conference center, lockers and multiple coworking spaces.

The mixed-use development is close to Interstate 5 and U.S. State Route 56, 2.6 miles from Del Mar Heights neighborhood, 18 miles from San Diego International Airport and within 19 miles of downtown San Diego.

JLL’s team of Senior Vice President Nicole Winters, Managing Director Shawn Lorentzen and Executive Vice President Scott Wetzel negotiated on behalf of McCarthy.

A closer look at San Diego

According to a recent CommercialEdge report, life science-driven markets scored higher occupancy rates overall, with San Diego’s vacancy rate settling at 15.4 percent as of May, below the national average of 17.1 percent. The life sciences sector is also keeping asking rates higher in leading markets, with rents reaching $47.83 per square foot in San Diego that same month.

Roughly a year ago, Kilroy inked a 72,500-square-foot lease with biopharmaceutical company Halozyme Therapeutics at one of its corporate campuses in San Diego. Looking to relocate its headquarters, the new tenant took space at Del Mar Corporate Centre, a three-building campus encompassing approximately 377,549 square feet of Class A office space.

The post Kilroy Inks Lease at San Diego Mixed-Use Campus appeared first on Commercial Property Executive.

9625 Towne Centre Drive. Image courtesy of Alexandria Real Estate Equities

Alexandria Real Estate Equities has recapitalized a joint venture which owns 9625 Towne Centre Drive, a San Diego life science asset. The research facility was purpose-built for Takeda Pharmaceutical Co.

Alexandria and Nuveen sold a 70 percent interest in the property at a total valuation of $160.5 million or $981 per rentable square foot, at a capitalization rate of 4.5 percent. Nuveen fully divested its shares in the asset.

Following the transaction, Alexandria’s ownership stake decreased from 50.1 to 30 percent while retaining operating control of the facility. Sale proceeds, totaling $32.3 million, will be reinvested in the REIT’s development pipeline.

A LEED Gold-certified facility

The 163,648-square-foot, LEED Gold-certified property came online on some 7 acres in 2019. Alexandria developed the three-story building by teaming up with Marshall Andrews and DPR Construction as general contractors, while LPA Design Studios served as architect. The project involved the first large-scale use of cross-laminated timber in San Diego and 27.6 percent of the construction costs were funded by green bonds proceedings.

READ ALSO: Getting Into the Heads of Life Science Clients

The building houses specialized equipment and contiguous, integrated non-technical workflow space supporting Takeda’s scientific research pipeline, Daniel Ryan, co-chief investment officer & regional market director at Alexandria, said in prepared remarks. The property is one of Takeda’s three global centers, conducting research into debilitating gastrointestinal and neurological diseases.

Situated in San Diego’s University City neighborhood, the life science building is close to numerous research & development companies such as Bionano Genomics, Tanabe Research Laboratories, Epic Sciences and Genomatica, to name a few.

Together with the Bay Area, San Diego remains one of the West Coast’s top life science markets. In May, Sterling Bay and Harrison Street obtained $265 million in construction financing for a five-building project in the Sorrento Mesa submarket.

The post Alexandria, Nuveen Sell Majority Stake in $161M San Diego Asset appeared first on Commercial Property Executive.

Sterling Bay, in partnership with Harrison Street, has secured $265 million in construction financing for Pacific Center, a five-building life science project in the Sorrento Mesa submarket of San Diego. Bank OZK originated financing for the development, which broke ground last week. The $650 million campus is designed by Gensler and will be developed in multiple phases during the next four years, with the first phase, encompassing some 500,000 square feet, expected to be completed in the last quarter of 2024.

READ ALSO: Getting Into the Heads of Life Science Clients

This is not Sterling’s first project with partners Harrison Street. The companies have recently completed two life science developments, in San Diego and Chicago, totaling 1 million square feet. Other projects are expected to be announced in Philadelphia, Denver and Raleigh-Durham, according to Sterling Bay.

While San Diego’s demand for life science products reached a critical point, Pacific Center will be a needed product that will also support the growth of research industries in the area, said Sterling Bay CEO Andy Gloor in prepared remarks.

Pacific Center will comprise several lab buildings, a mass-timber amenity space totaling 28,000 square feet and a 1,700-spot parking facility. The buildings will provide fully equipped research capabilities, creative office spaces, indoor and outdoor areas, conference rooms and a fitness center.

A growing life science pipeline

Sterling Bay purchased the two development sites located at 5975 and 9985 Pacific Heights Blvd. in 2021 from City Office REIT Inc., according to CommercialEdge. Situated on 8 acres, the development will be close to interstates 5 and 805, some 15 miles from downtown San Diego and within 17 miles of San Diego International Airport.

Together with the Bay Area, San Diego remains one of the West Coast’s top life science markets. Earlier this month, DivcoWest paid $86 million for a facility in Torrey Pines, Calif., near the University of California, San Diego. Elsewhere in the metro, in the first quarter of 2023, BentallGreenOak acquired a life science asset while Longfellow Real Estate Partners secured more than $200 million for a similar project. 

The post San Diego Life Science Project Gets $265M appeared first on Commercial Property Executive.

11119 N. Torrey Pines Road. Image courtesy of DivcoWest

DivcoWest has expanded its San Diego and life science portfolio with the acquisition of 11119 N. Torrey Pines Road, a 72,506-square-foot Class A laboratory building in the Torrey Pines research cluster, for $86 million from Alexandria Real Estate Equities Inc.

Alexandria acquired the 4.4-acre property in 2007 for $42.6 million and redeveloped the standalone building. The building is leased by the California Institute of Biomedical Research, a division of Scripps Research. Calibr has occupied the asset since 2012 and focuses on drug discovery and development for a wide range of human diseases, including cancer.

Gregg Walker, president of DivcoWest Real Estate Asset Management, said in a prepared statement the acquisition presented a rare opportunity to acquire a purpose-built lab in Torrey Pines below replacement costs and secured by credit tenancy. Walker said Torrey Pines is a strong-performing and highly sought-after submarket with long-term upside due to natural supply constraints.

READ ALSO: VC Investment in Life Science Sector Is Healthy, But Slowing

Torrey Pines is consistently viewed as one of the top life science submarkets in the country and has the highest average asking rents and lowest direct vacancy in San Diego. The acquisition is the first made by a private real estate investor since 2000 and is one of only three research properties in the market not owned by a public REIT, nonprofit or owner/user. The property was marketed to a limited group of qualified buyers by Eastdil Secured.

The LEED Gold-certified lab building was built in 1990 and completely renovated in 2012. The building has on-site showers and lockers rooms as well as conference rooms and a fitness center. It is situated across from the coastal cliffs overlooking the Pacific Ocean and the Torrey Pines Golf Course, which has hosted the U.S. Open as well as other professional golf tournaments. It is a seven-minute drive from UC San Diego’s North Campus and close to several world-renowned research institutes including Scripps Research, the Scripps Institute of Oceanography, the Salk Institute for Biological Studies and Sanford Burnham Prebys.

Walker said the asset complements DivcoWest’s existing local and national life science portfolio. The San Francisco-based company, which has six other offices in the U.S., including Cambridge, Mass., has acquired approximately 59 million square feet of commercial space in the office, R&D, lab, industrial, retail and multifamily sectors.

In November, DivcoWest topped off 441 Morgan Ave., the company’s fifth life science building within its Cambridge Crossing mixed-use development. The 375,000-square-foot lab property will have 12 stories, including two penthouse floors. The company has already completed 1.9 million square feet of the 4.5 million-square-foot development that will encompass 43 acres and feature commercial, residential, retail and dining space. Current tenants include Bristol Myers Squibb, Phillips, Sanofi and Cerevel Therapeutics.

Alexandria reinvestments

Alexandria stated in its announcement the sale is an example of its value harvesting and asset recycling strategy. The REIT capitalizes on the strong private market valuations by sourcing significant equity-type capital for reinvestment into value-add development and redevelopment projects. As of March 31, Alexandria’s highly leased pipeline of 6.7 million square feet of current and near-term projects is expected to generate more than $610 million of annual incremental net operating income through early 2026.

Peter Moglia, Alexandria CEO & co-chief investment officer, said in prepared remarks the stand-alone asset, no longer fits with the REIT’s focus on aggregating its highly sought-after mega campuses. He said the scarcity of high-quality life science assets combined with the performance of the company’s properties creates strong demand for investment opportunities. Moglia added the sale underscores Alexandria’s ability to monetize its investments at significant profit margins even in challenging times.

Alexandria is targeting $1.5 billion in dispositions and sales of partial interests this year. To date, approximately $865 million in transactions have been completed or are subject to letters of intent and sales agreements. As of March, the REIT had a total market capitalization of $33 billion and 75.6 million square feet of space in North America, including 41.9 million rentable square feet of operating properties, 9.7 million rentable square feet of space of near-term and intermediate-term development and redevelopment projects and 18.5 million square feet of future development projects. The company focuses on life science, agtech and advanced technology campuses in major U.S. innovation clusters including San Diego, Greater Boston, San Francisco Bay Area, New York City, Seattle, Maryland and the Research Triangle in North Carolina.

The post DivcoWest Pays $86M for San Diego Life Science Asset appeared first on Commercial Property Executive.

9323 Balboa Ave. Image courtesy of CommercialEdge

Rexford Industrial Realty Inc. has acquired 9223-9323 Balboa Ave. and 4285 Ponderosa Ave., two neighboring properties in San Diego, for $200 million. The previous owner was Cubic Corp., according to CommercialEdge data.

Rexford is considering redeveloping both properties, now including a 100,000-square-foot office building and a 55,000-square-foot industrial facility, into a distribution hub. The assets traded in sale-leasebacks that allow the new owner access to an initial 5.3 percent unlevered cash yield, which is projected to grow to an aggregate unlevered stabilized cash yield of 7.4 percent upon redevelopment.

READ ALSO: Manufacturing’s Comeback Boosts Industrial Space Demand

The San Diego purchases are the REIT’s most recent in a series of Southern California acquisitions that totaled $357.2 million. The deals were partly funded with proceeds from forward equity settlements, a recent public bond offering and cash on hand. Rexford’s year-to-date investments amount to $762 million.

Rexford’s recent deals

Just days before purchasing the San Diego assets, The REIT paid $143 million for an 18.4-acre industrial zoned site at 9000 Airport Blvd. in Los Angeles. The property sits adjacent to Los Angeles International Airport and is leased to a single credit tenant through a three-year sale-leaseback deal that includes annual 4 percent rent increases. the new owner retains the option to redevelop the property into a Class A industrial campus or otherwise repurpose the site as an industrial outdoor storage area. The investment pays out an initial 5.4 percent unlevered cash yield, which is projected to grow to an unlevered stabilized cash yield upon total investment of 6.3 percent.

In a previous transaction, Rexford acquired 3520 Challenger St. in Torrance, Calif., for $14.2 million. The property is an industrial-zoned, covered land site measuring 2.5 acres and home to a light industrial research and development building occupied by a single tenant under a long-term lease. The Torrance property nets an initial unlevered cash yield of 6.3 percent, growing annually through contractual 3 percent rent increases.

Meanwhile, Rexford also netted $17 million from the sale of 8101-8117 Orion Ave. in Van Nuys, Calif. A multi-tenant building, the property totals 48,394 square feet and was 93 percent occupied at closing. The unlevered internal rate of return on the transaction is 16.8 percent.

The post Rexford Pays $200M for 2 San Diego Assets appeared first on Commercial Property Executive.

A rendering of the final phase of Otay Crossings Commerce Park. Image courtesy of Kearny Real Estate Co.

Kearny Real Estate Co. is set to break ground on the 26-acre final phase of Otay Crossings Commerce Park, a 311-acre industrial property in Otay Mesa, Calif. The buildings being constructed will sit adjacent to a future U.S.-Mexico port of entry.

The company is in the process of grading the construction site, which will host four buildings ranging in size from 45,000 square feet to 205,500 square feet. The first building is expected to total 45,100 square feet and is due to be completed in the fourth quarter of 2023.  All four buildings are scheduled for completion by early 2024. The total cost of the final phase will be $90 million.

READ ALSO: CapRock’s Cautiously Optimistic Outlook for Industrial Development

Buildings comprising the final phase are all designed to provide divisible suites down to 25,000 square feet and will have dock-high and grade level doors, 32- to 36-foot minimum clear heights and truck courts with depths of up to 180 feet. The property will also include a 3.6-acre trailer lot with 47 stalls, an amenity feature that will allow for storage of materials and trailers.

The site pre-construction. Image courtesy of Kearny Real Estate Co.

Located at the southernmost point of the industrial park, the new phase will be situated at the intersection of Siempre Viva and Paseo Del La Fuente Roads, adjacent to the new border crossing. The buildings will offer direct access to California State Route 11, which is under construction. Once completed, SR-11 will connect to California SR-905 and SR-125, as well as to other major truck routes.

The evolving economies of the San Diego metro and northern Baja California are increasingly more diverse and more reliant on cross-border infrastructure, with trade between San Diego and Mexico exceeding $4 billion annually, Kearny said in a statement.

Jeff Givens, a partner in Kearny’s San Diego office, noted in prepared remarks that the Otay Mesa industrial market has grown significantly in recent years, with market vacancies hovering around 3 percent and industrial facilities becoming increasingly sought-after in the region.

The post Kearny Readies Site for $90M San Diego Project appeared first on Commercial Property Executive.

Parkway Commerce Center. Image courtesy of JLL Capital Markets

SENTRE has acquired Parkway Commerce Center, a 147,907-square-foot industrial park in Poway, Calif., for $38.2 million from TA Realty, according to CommercialEdge data.

San Diego County public records show the buyer received $21.4 million in acquisition financing, provided by Jackson National Life Insurance Co.

According to CommercialEdge data, the property last traded in 2016 for $24.6 million, when TA Realty purchased it from Invesco Real Estate.

Completed in 1999, the Class A property is on a 9.8-acre lot and encompasses two warehouse and distribution buildings and two industrial and flex buildings. Parkway Commerce Center features 19- and 25-foot clear heights, 21 dock-high doors, 36 drive-in doors, 175-foot truck court and 316 parking spaces. The tenant roster includes Xpress Global Systems, Ramona Research, San Diego Pure Water and Grand Design Kitchens.

A JLL Investment Sales team comprising Managing Directors Bob Prendergast and Lynn LaChapelle, Executive Vice President Ryan Spradling and Financial Analyst Zac Saloff brokered the transaction on behalf of TA Realty.

A JLL Capital Markets team including Senior Managing Director Aldon Cole and Associate Brad Vansant helped secure the fixed-rate loan for SENTRE. The company also retained JLL to handle leasing operations for the industrial park.

The property is at 13651-13771 Danielson St., approximately 20 miles from San Diego and offers direct access to Interstate 15, enabling same-day delivery to all Southern California. Other companies in the area include General Atomics, Amazon and Best Buy, among others.

Recent San Diego industrial transactions

Since the beginning of the year, several industrial properties traded in the San Diego market. Among them, LaSalle Investment Management acquired a 601,103-square-foot building in the Otay Mesa submarket. An Ares Management Real Estate fund sold the asset.

A property occupied by Phillips changed hands when Wimatex purchased the 85,165-square-foot industrial facility in Carlsbad, Calif., for $21.2 million.

The post SENTRE Buys San Diego Asset for $38M appeared first on Commercial Property Executive.

Discovery Corporate Center – Building A. Image courtesy of CommercialEdge

Broadcom Inc. has signed a five-year lease extension at Discovery Corporate Center, a 230,000-square-foot, Class A office campus in San Diego’s Rancho Bernardo submarket. The tenant is fully occupying the 90,610-square-foot Building A, which keeps Drawbridge Realty’s campus at 100 percent occupancy, COO Charlie McEachron said in prepared remarks.

The current ownership purchased Building A in 2013, for $36.5 million, and Buildings B and D in 2012, for $52.2 million, from Menlo Equities, according to CommercialEdge information. The same source shows that JLL handles leasing at the property. This is the second lease signed at Discovery Corporate Center during the last nine months, according to the owner.

READ ALSO: Life Science Outlook Remains Strong: Cushman & Wakefield

Completed in 2007, the three-story Building A is located at 16430 W. Bernardo Drive and features two passenger elevators and 30,204-square-foot floorplates, while common-area amenities include a fitness center, controlled access and 363 parking spots.

The two-story Building B, located at 11020 Via Frontera, came online in 2007 as a built-to-suit for Broadcom, while Building D at 16465 Via Esprillo was a built-to-suit expansion also for Broadcom, built in 2011. All three properties include R&D components. Discovery Corporate Center is close to Interstate 15, some 23 miles from downtown San Diego, 29 miles from Oceanside, Calif., and within 32 miles of Carlsbad, Calif.

Other recent Drawbridge Realty deals

In September 2022, Drawbridge Realty secured a 102,000-square-foot lease expansion at its Pacific Center in Santa Ana, Calif. Collectors Universe is now occupying 286,636 square feet of office space.

Earlier in 2022, the company landed a recapitalization for its $1.7 billion portfolio, composed of 5.4 million square feet of Class A office assets situated on the West Coast and Sun Belt region. The company, together with KKR’s Global Atlantic Financial Group, plan on doubling the size of the portfolio, that was 95 percent occupied at the time of the deal.

The post Drawbridge Secures 90 KSF San Diego Office Lease appeared first on Commercial Property Executive.

2271 Cosmos Court. Image courtesy of Cushman & Wakefield

Wimatex has acquired an 85,165-square-foot industrial facility in Carlsbad, Calif., for $21.2 million. Cushman & Wakefield worked on behalf of the seller, a private individual. The property was fully occupied by Philips, according to CommercialEdge, at the time of the transaction.

Located at 2271 Cosmos Court, the property features clear heights between 24 and 26 feet, six loading doors, drive around accessibility and three grade-level loading doors. The building is also equipped with glass lines, a two-story lobby, an outdoor entrance and concrete exterior. Situated on a 4-acre lot, the facility is close to Interstate 5, allowing easy access to Los Angeles. The facility is also 33 miles from the Port of San Diego and within 34 miles of downtown San Diego.

A Cushman & Wakefield Capital Markets team formed of Vice Chairman Aric Starck and Senior Associate Drew Dodds negotiated on behalf of the seller. The transaction represents a good value-add opportunity since the property is located in one of North San Diego’s infill markets, providing the buyer with in-place income, while also being one of the largest lease-up deals in the area, said Starck in prepared remarks.

Earlier this month, the company represented an Ares Management Real Estate fund in the disposition of a 601,102-square-foot, multi-tenant industrial building in San Diego’s Otay Mesa submarket. The fully leased property was purchased by Ares in 2020, for $109 million.

The post Wimatex Buys San Diego-Area Infill Asset appeared first on Commercial Property Executive.

Shopping mall interior. Image by Erich Westendarp via Pixabay.com

Bridge Group Investments and Steerpoint Capital have acquired North County Mall, a 1.2 million-square-foot shopping center in Escondido, Calif.

Unibail-Rodamco-Westfield sold the asset, according to CommercialEdge data. The company had purchased the center in 1994, the same source shows. URW will maintain its leasehold interest in the shopping center until it expires in June 2053, as reported by local publication Times Advocate.

Previously known as Westfield North County Fair, the retail center is anchored by Macy’s, JCPenney and Target. Other tenants at the property include Forever 21, H&M, MAC, Apple, Game Stop, 24 Hour Fitness and many more. The center also includes several dining options such as Black Angus Steakhouse, BJ’s Restaurant and Brewhouse, The Cheesecake Factory and Chipotle.

North County Mall is located at 272 E. Via Rancho Parkway, in northern San Diego County. The shopping center is situated on approximately 83 acres, situated next to Interstate 15.

Steerpoint Capital Managing Partner Bo Okoroji said in prepared remarks that the shopping center can be positioned as both a dominant player in the regional retail market and a vibrant community hub.

North County Mall marks Bridge Group Investment and Steerpoint Capital’s fourth acquisition together. The partners have acquired three other retail centers last year. In December, the companies paid $60 million for Antelope Valley Mall, a 441,835-square-foot shopping center in Palmdale, Calif.

Last year, Unibail-Rodamco-Westfield made headlines with another large California sale, the disposition of Westfield Santa Anita in Arcadia, in Los Angeles County, for a whopping $538 million.

The post Westfield Sells 1.2 MSF San Diego Shopping Center appeared first on Commercial Property Executive.

2210 Faraday Ave., Carlsbad, Calif. Image courtesy of CommercialEdge.com

BentallGreenOak has acquired a 119,591-square-foot R&D and life science flex building in Carlsbad, Calif. Hill Cos. sold the asset for $35.8 million.

The property, which is part of the Faraday Research Center, last traded in 2015 and was previously subject to a $23.7 million loan in 2019, with a maturity date set for 2029, provided by Colony Capital, CommercialEdge data shows.

The two-story, Class B building originally built in 1997 as an industrial facility, was converted into office space in 2005 with a life science and R&D buildout. The property features 24-foot ceilings, dock and grade loading, heavy power, two passenger elevators, gated access and offers 478 parking spaces. The freestanding building is fully leased to three research and development and life science tenants, including Acutus Medical and Nemko.

READ ALSO: MBH Architects on Trends in Bay Area Life Science Design

The property is located at 2210 Faraday Ave., 34 miles from San Diego and has access to Interstate 5. The facility is situated within the larger Carlsbad Research Center, surrounded by various corporate centers and life science facilities, including Navigate Biopharma, Ionis Pharmaceuticals and Genoptix Medical Laboratory, among others.

Executive Vice Chairman Aric Starck and Senior Associate Drew Dodds with Cushman & Wakefield represented the seller and Don Trapani provided leasing advisory.

San Diego among top life science markets

Significant growth in the life science sector is due to private capital funding over the last decade, according to a 2023 Cushman & Wakefield insight report. The total funding in 2022 totaled $35.8 billion, a 28 percent decrease from 2021. In the fourth quarter of 2022, the average deal size of $22.2 million was up 53 percent quarter-over-quarter and 12 percent higher than the fourth quarter of 2021.

As to the major life science hubs, San Diego received 2.5 billion, a 7 percent share of U.S. funding, with the San Francisco Bay Area leading with 35 percent, a total of $12.6 billion.

A large San Diego transaction took place in the second half of 2022 in Carlsbad, Calif., when Oxford Properties Group acquired a 250,000-square-foot life science property, occupied by Ionis Pharmaceuticals. The company paid $258.4 million for the asset.

The partnership between Phase 3 Real Estate Partners Inc. and Bain Capital obtained $165 million in refinancing for Genesis Science Center, a 252,000-square-foot life science property in San Diego. The campus was slated for a 365,000-square-foot R&D building expansion.

The post BentallGreenOak Buys San Diego Life Science Facility appeared first on Commercial Property Executive.

Majestic Realty Co., together with Sunroad Enterprises, have signed a 240,975-square-foot preleasing agreement with R.L. Jones Customhouse Brokers at Landmark at Otay, a 1.1 million-square-foot industrial development in San Diego. Colliers negotiated on behalf of the landlord.

R.L. Jones’ current commitment represents an expansion to nearly 400,000 square feet; the tenant had initially leased 150,000 square feet at Landmark at Otay in 2021. The company intends to relocate its corporate headquarters at 1610 Landmark Road, targeted for shell completion in May 2023. 

The arrangement represents the largest leasing deal in San Diego County in the past five years and also the biggest non-Amazon industrial deal in the Otay Mesa submarket in the past decade, according to the brokerage team. Colliers Executive Vice Presidents Mark Lewkowitz and Chris Holder, together with Associate Vice President Will Holder, negotiated on behalf of the developer and are in charge of marketing the property for lease.

An expanding industrial campus

Originally, Landmark at Otay was a 50-acre, four-building industrial project. However, the partnership purchased a 17-acre additional lot in 2021, and now the development’s plans consist of a six-building campus that will encompass more than 1.1 million square feet of Class A industrial space. The joint venture received construction financing from Comerica Bank, according to CommercialEdge data.

Landmark’s Phase II consists of two industrial facilities taking shape at 1610 and 1910 Landmark Road. R.L. Jones’ future home features 36-foot clear heights, ESFR sprinklers, LED lightning, 40 dock-high doors, two ground-level doors, 277 parking spots for vehicles and 51 parking spots for trailers.

The second building of Phase II, a 235,085-square-foot facility with 36-foot clear heights, 51 parking spots for trailers and an office component, is slated for completion in June 2023. The team also broke ground on the project’s Phase III, that will include two warehouses totaling 265,000 square feet.

Betting on expansion

In September 2022, Majestic Realty moved forward with another project in the West: Having preleased the Majestic Reno Commercenter I in Reno, Nev., the company started construction on two additional phases which will bring nearly 1.5 million square feet of space to the area.

Earlier, in 2021, Majestic Realty expanded Majestic Commercenter, its 5.5 million-square-foot industrial campus in metro Denver. The company broke ground on a speculative, three-building component, adding 806,630 square feet of space in Aurora, Colo.

The post Majestic Realty JV Inks 240 KSF Prelease at San Diego Development appeared first on Commercial Property Executive.

2020 Piper Ranch Road. Image courtesy of Cushman & Wakefield

LaSalle Investment Management has purchased a 601,103-square-foot multi-tenant industrial building in San Diego’s Otay Mesa submarket. Cushman & Wakefield advised the seller, an Ares Management Real Estate fund.

The Class A building is on 31 acres at 2020 Piper Ranch Road. It was completed in 2003 and is fully leased.

The transaction’s dollar value was not disclosed. The property had been purchased by Ares in November 2020 for $109 million, according to information provided to Commercial Property Executive by CommercialEdge. Cushman & Wakefield also negotiated that sale.

READ ALSO: Industrial Leasing Trends for 2023

2020 Piper Ranch features concrete tilt-up construction with varied bay sizes that accommodate a wide range of configurations, as well as above-standard loading capabilities with grade and dock-high doors, up to 32-foot clear heights, ESFR sprinkler systems and concrete truck courts.

The property offers freeway identity and quick access to the newly completed California State Route 905 freeway, and its proximity to the U.S.-Mexico border provides convenient access to Tijuana International Airport, the planned Otay Mesa East Port of Entry border crossing, and the new Cross Border Xpress airport terminal, a processing facility with a cross-border bridge that improves domestic and international access.

The project also lies within the Foreign Trade Zones and HUB Zone, significantly benefiting local trade operations.

Executive Vice Chairman Jeff Cole, Vice Chairman Bryce Aberg, Executive Vice Chairman Jeff Chiate, Executive Vice Chairman Rick Ellison, as well as Associates Mike Adey and Zach Harman of Cushman & Wakefield’s National Industrial Investment Advisory Group in Southern California represented the seller in the transaction. Cushman & Wakefield’s Vice Chairman Brant Aberg and Senior Vice Presidents Bill Dolan and Rob Hixon of CBRE also provided local market leasing expertise.

Active at the border

Citing Cushman & Wakefield research, Bryce Aberg described the 22 million-square-foot Otay Mesa industrial submarket as “a market leader in San Diego,” with almost 1.6 million square feet of positive net absorption in 2022. He added that vacancy in the submarket was just 3.8 percent as of the fourth quarter.

Only days ago, Elevation Land Co. announced plans to develop Otay Business Park, a 1.8 million-square-foot industrial campus in San Diego, in partnership with a fund advised by Crow Holdings Capital.

The post LaSalle Acquires 601 KSF Industrial Building in San Diego appeared first on Commercial Property Executive.

Rendering of Otay Business Park. Image courtesy of Cushman & Wakefield

Elevation Land Co., in partnership with a real estate fund advised by Crow Holdings Capital, has announced plans to develop Otay Business Park, a 1.8 million-square-foot industrial campus in San Diego. The project is considered one of the largest distribution developments in Southern California.

The joint venture acquired 263 acres of land for $165 million from Paragon Co. in the second quarter of 2022. The industrial park will rise on 119 acres, while several other parcels will be necessary to develop roadways through the site, including 68 acres of on-mesa biological mitigation land and 76 acres of off-mesa non-native grasslands.

READ ALSO: How CRE Boosts the Economy: NAIOP

The Cushman & Wakefield team of Brant Aberg, Ryan Downing and Trent Smith will oversee leasing at the industrial campus. The company’s Bryce Aberg, Jeff Chiate, Jeff Cole, Zachary Harman and Brant Aberg represented the seller in the land purchase transaction.

An industrial campus near the border

The first phase of construction will consist of five buildings totaling approximately 1 million square feet, scheduled for completion in the second half of 2024. The second phase will encompass 770,000 square feet across three warehouses, with delivery expected in late 2025. The project is planned for speculative development, although buildings can also be delivered on a build-to-suit basis to cater to specific occupier needs.

When complete, the industrial campus will include facilities ranging from 45,000 to 500,000 square feet with 32- to 36-foot clear heights. The property will feature more than 325 dock-high loading positions, 16 grade-level doors and more than 175 trailer stalls.

Situated within Foreign Trade and HUB Zones, the development site is north and south of the future Siempre Viva Road connection to State Route 11 in Otay Mesa, San Diego’s largest industrial submarket. Downtown San Diego is some 20 miles away.

The industrial campus will be close to the international border with Mexico, with State Route 11 and Freeway 905 providing connections to Tijuana International Airport and the planned Otay Mesa East Port of Entry border crossing. The surrounding area features Amazon and FedEx facilities, as well as other logistics and distribution centers.

San Diego industrial development

Cushman & Wakefield Vice Chairman Brant Aberg said, in prepared remarks, that Otay Business Park will have connections to domestic and international destinations, in a market with high demand for industrial space. According to CommercialEdge data, San Diego had 38 industrial projects in various stages of development as of February, set to add more than 4.4 million square feet to the existing inventory.

Last year in October, a joint venture between Industrial Realty Group and Belzberg & Co. unveiled plans to redevelop 331 acres at San Diego’s Brown Field Municipal Airport. The $1 billion project is expected to be built over 20 years.

The post Crow Holdings JV to Develop 1.8 MSF San Diego Industrial Campus appeared first on Commercial Property Executive.

Image by Michal Jarmoluk, courtesy of Pixabay.com

Square Mile Capital Management and Bank OZK have provided $202.6 million in construction financing for Bioterra, a 316,000-square-foot life science project in San Diego. Longfellow Real Estate Partners is the developer and the project is slated for completion in the third quarter of 2024.

Senior Managing Director Aldon Cole and Managing Director Patrick Burger of JLL Capital Markets arranged the financing.

Square Mile Capital Management Director Tom Burns underlined, in prepared remarks, the need for purpose-built lab facilities in life science markets, with Bioterra fitting that goal.

In a recent interview for Commercial Property Executive, Managing Director Michael Lavipour with Square Mile mentioned that, apart from new developments, there’s also a focus on converting office to life science lab space, which is a faster method than ground-up building.

READ ALSO: Life Science Assets Maintain Lasting Appeal

Square Mile is also active across other large life science markets in the U.S. In July, an affiliate provided a $192.5 million loan for the development of 100 Chestnut, a 208,616-square-foot project in Somerville, Mass. Square Mile also provided a $155 million loan for the conversion to lab use of an office building in the Long Island City neighborhood of Queens, New York City.

A state-of-the-art life science campus

Bioterra broke ground in August this year. The six-story campus will encompass lab and office spaces, as well as a three-story subterranean parking facility. The property, designed to reach LEED Gold certification, is set to be an all-electric HVAC life science building. Amenities will include conference rooms, a fitness center, a coffee bar and a full-service restaurant and café.

The property will rise at the intersection of Oberlin Drive and Mira Mesa Boulevard, in the Sorrento Mesa submarket, 15 miles from central San Diego, close to interstates 5 and 805. The development site is within walking distance of Mesa Biotech, 4.4 miles from Scripps Memorial Hospital La Jolla and 4 miles from the University of California San Diego.

A recent Cushman & Wakefield report shows that San Diego remained the second-largest market, after Boston, when it comes to developing life science facilities, with a pipeline of 3.7 million square feet.

The post San Diego Life Science Project Lands $203M appeared first on Commercial Property Executive.

AMP&RSAND. Image courtesy of Cushman & Wakefield

Turner Construction Co. has signed a 15,936-square-foot lease at Casey Brown Co.’s AMP&RSAND, a creative office property in San Diego’s Mission Valley neighborhood. Cushman & Wakefield’s Derek Hulse, Morgan Reno and Brett Ward brokered the deal on behalf of the landlord, while Duncan Dodd represented the tenant.

Turner Construction’s lease marks the fourth agreement brokered by Cushman & Wakefield at AMP&RSAND. Most recently, the firm arranged for architecture design, engineering and planning firm Harley Ellis Devereaux Corp. to sign a 10,549-square-foot lease at the location.

READ ALSO: Key Considerations for Adaptive Reuse Projects

In a prepared statement, Reno mentioned that AMP&RSAND offers a workplace setting to meet the post-pandemic flight-to-quality trend. According to Casey Brown Co.’s Founder, President & CEO Casey Brown, the office campus was reimagined to meet the needs of its diversified tenant roster, which includes Midland Credit Management, QDOBA Mexican Eats and Encore Capital Group, among others.

According to a recent CommercialEdge report, office vacancy rates pursue an upward trajectory at a national level. San Diego had a 14.5 percent vacancy rate as of October, the lowest among other leading Western markets.

Meeting the flight-to-quality demand

CommercialEdge data shows the owner picked up the asset back in 2015 for $52 million from Manchester Financial Group. The 343,000-square-foot property was originally completed in 1975, serving for many years as a campus for The San Diego Union-Tribune.

Representing the redevelopment of a five-story office building and a three-story printing press facility, AMP&RSAND came online in 2018 and received the Best Project Renovation/Restoration in Southern California award in 2019. Wolcott Architecture, Gilliland Construction Management and Coffman Engineers worked on the adaptive reuse project.

Located at 350 Camino De La Reina on a 13-acre site, AMP&RSAND encompasses two Class A office buildings offering space flexibility for small and large tenants. Amenities include a fitness center, yoga studio and gourmet café, as well as conferencing rooms, workspaces and meeting places.

The Fashion Valley Trolley Station as well as several retail, dining and entertainment hubs are within walking distance of the property. San Diego International Airport is some 7 miles away.

The post Casey Brown Welcomes New Tenant at San Diego Office Building appeared first on Commercial Property Executive.

Carlsbad Executive Plaza. Image courtesy of Cushman & Wakefield

Brookwood Financial has sold a two-property office portfolio in Carlsbad, Calif., with the assistance of Cushman & Wakefield.

M.C. Strauss acquired Carlsbad Executive Plaza and The Plaza, two Class A assets totaling 222,000 square feet. CommercialEdge data shows Brookwood had purchased both campuses in 2015 for a combined $40.6 million.

The 133,136-square-foot Carlsbad Executive Plaza is made up of four office buildings, each three stories tall, completed throughout the 1980s and 1990s. The asset features a courtyard café, koi ponds and lounge areas. Situated at 2111, 2121, 2131 and 2141 Palomar Airport Road, the campus is near the entrance to the McClellan-Palomar Airport.

READ ALSO: Economist’s View: How Inflation Will Impact Property Valuations

Brookwood completed some $2.6 million in capital improvements at the property that was 77.5 percent leased at the time of sale. According to CommercialEdge data, current tenants at the Carlsbad Executive Plaza include Cardinal Industrial, WWM Financial and Maxim Healthcare Services, among others.

The Plaza. Image courtesy of Cushman & Wakefield

The Plaza is a two-building, Class A office campus totaling 88,869 square feet. Built in the late 1980s, the property was 68.3 percent leased when M.C. Strauss acquired it.

Located at 1921 and 1925 Palomar Oaks Way, the property is roughly 1 mile from Carlsbad Executive Plaza. Its tenant roster features a diverse mix of companies such as National Search Associates, Integrity Applications and Fitzpatrick Capital, according to CommercialEdge data.

Rick Reeder, Brad Tecca, Tanner Harris and Kevin Donner with Cushman & Wakefield’s Capital Markets team in Southern California represented Brookwood Financial in the deal. The firm’s Justin Halenza and Matt Sundberg provided leasing advisory.

A strong office market

In prepared remarks, Tecca said that the Carlsbad office market fundamentals are improving as inventory lessens due to life science conversions. He added that the city has seen nearly 165,000 square feet of office occupancy growth year-to-date as of September, among the highest submarket levels countywide.

The general San Diego area seems to be similarly performing well. According to a recent CommercialEdge national office report, the metro’s office market has seen an increase of 12.6 percent in listing rates in the last 12 months, closing September with an average $43.91 per square foot. The pipeline totaled nearly 4 million square feet of office space.

The post Brookwood Financial Sells San Diego Office Portfolio appeared first on Commercial Property Executive.

5959 Santa Fe St.

LBA Logistics has paid $46.3 million for 5959 Santa Fe St., a 131,299-square-foot infill and coastal distribution center in San Diego. A CBRE team represented the seller, identified by CommercialEdge as Anheuser-Busch Cos., in the sale-leaseback transaction.

Completed in 1980 on 7.1 acres, 5959 Santa Fe has been Anheuser-Busch’s primary distribution center. The building features 190-foot truck courts, mechanical loading doors, built-in dock levelers and duck bumpers, according to CommercialEdge information. Situated just east of Interstate 5, the facility is 10 miles north of San Diego, having access to the entirety of Los Angeles and the Inland Empire.

READ ALSO: Industrial Rents Continue to Climb at Robust Pace

CBRE Executive Vice President Matthew Carlson, Vice President Hunter Rowe, First Vice President Sean Williams and Senior Vice President Matthew Carlson, together with Vice Chairman Barbara Perrier and Executive Vice President Joe Cesta, negotiated on behalf of the seller.

LBA has been an active investor nationwide, having closed 22 acquisitions in the last 12 months, CommercialEdge data shows. On the development side, the firm recently completed Industry Center at Melrose Park, a three-building industrial park in Chicago, and inked a full-building prelease at its under-construction research facility in Irvine, Calif.

San Diego’s industrial reign

San Diego’s industrial market has continued to post strong vitals even in the face of looming economic headwinds. A third quarter 2022 report from JLL indicates that the metro’s net absorption trended upwards at 1.5 million square feet year-to-date as of September while the average vacancy rate continued to be among the lowest in the region’s history, at 2.2 percent.

Understanding the deal in this context, Rowe explained to Commercial Property Executive, “The significant interest level and investor enthusiasm for the asset indicate how the market values well-located coastal assets in San Diego. The rare infill nature of the facility and the opportunity for a prime last-mile location to serve some of San Diego’s more affluent communities make 5959 Santa Fe an ideal asset for many institutional investors.”

Data also shows that San Diego had more than 2 million square feet of industrial space under construction, with some 580,000 square feet to be delivered by the end of the year. Most of the current developments are located in Otay Mesa, a submarket that will soon see the start of a $1 billion industrial project.

The post LBA Logistics Buys $46M San Diego Asset appeared first on Commercial Property Executive.

Brown Field Tech Park I. Image courtesy of Cushman & Wakefield

PCI Pharma Services, a provider of integrated pharmaceutical development services, has signed a full-building lease with Hines Interests for a 105,475-square-foot industrial facility in San Diego. Cushman & Wakefield Vice Chairman Brant Aberg represented the landlord.

Located at 7725 Otay Mesa Road, the warehouse is part of Brown Field Tech Park I, a Class A industrial campus that also includes a 124,233-square-foot building fully leased to Home Depot, CommercialEdge data shows. Hines acquired the two assets in June, for a total of $77.3 million.

The 2021-completed facility, proposed for LEED certification, features 32-foot clear heights, 277/480-volt power, grade and dock-high loading doors and ESFR sprinkler systems. The property also features concrete truck courts and more than 220 parking spaces.

The 6.3-acre property is some 22 miles from downtown San Diego and 3 miles from Brown Field Municipal Airport, near the intersection of state routes 195 and 125. The surrounding area is home to companies such as Amazon, FedEx, Costco and HJM Enterprises, among others.

San Diego’s industrial leasing activity

According to a Cushman & Wakefield report, leasing activity totaled 766,300 square feet in the San Diego industrial market in the third quarter of 2022. The Otay Mesa submarket witnessed the largest amount of new leases, adding up to 161,400 square feet.

Overall occupancy across the county increased by 236,000 square feet in the third quarter, marking the ninth consecutive quarter of occupancy gains since the beginning of the COVID 19 pandemic. The average rent was up 15.6 percent year-over-year at the end of September.

Higher rents are the effect of significant demand in a sector in which the supply pipeline is not directly proportional with the needs for available space. A CommercialEdge report shows that Southern California markets had some of the highest increases of in-place rents over the year as of September, the Inland Empire leading with 9.6 percent. In the same period, the national average grew by 5.8 percent.

The post Hines Inks Full-Building Lease in San Diego appeared first on Commercial Property Executive.

Kearny Mesa Logistics Center. Image courtesy of Newmark

Lincoln Property Co. and a real estate fund advised by Crow Holdings Capital have sold their 299,381-square-foot distribution facility in San Diego. Terra Enterprises purchased the newly completed Kearny Mesa Logistics Center for $162.1 million, according to Commercial Edge data.

The Class A industrial facility is fully leased to Amazon, in accordance with the same data. Situated in the Kearny Mesa submarket, the property provides easy access to the Greater San Diego area through major thoroughfares including Interstate 805, I-15, SR-163 and SR-52.

Located at 5650 Kearny Mesa Road, the on 15.2-acre industrial asset features 36-foot clear heights, a cross-dock configuration, 120-foot concrete truck courts and dock-high loading capabilities.

The sellers were represented in the deal by Newmark’s Kevin Shannon, Co-Head of U.S. Capital Markets, along with Executive Managing Directors Andrew Briner, Bret Hardy, Jim Linn, Brunson Howard and Ken White.

Strong demand for industrial space

Lincoln Property Co. and Crow Holdings have previously teamed up for another San Diego-area acquisition, with the purchase of a 112,000-square-foot industrial property in 2020.

San Diego continues to benefit from a high demand for industrial space. Year-over-year, the average vacancy rate as of the third quarter of 2022 went down 2.4 percent, while the average asking rent per square foot in the same period went up by $1.41, according to a report by Cushman & Wakefield.

The area is not only a hot spot for industrial developments, but life science projects as well. Due to its location and access to a growing workforce, San Diego is among the nation’s largest hubs for life science construction and investment activity.

The post Lincoln Property JV Sells Industrial Asset for $162M appeared first on Commercial Property Executive.

13100 Danielson St.

Lincoln Property Co.’s LPC West, together with New York Life Investors, has acquired a 135,000-square-foot industrial asset in Poway, Calif. According to CommercialEdge data, Liberty Diversified International sold the property for $35.1 million. The off-market transaction, marking the joint venture’s second purchase, was completed with the assistance of Lee & Associates.

The acquisition brought LPC West’s San Diego portfolio to more than 2 million square feet of owned and managed commercial assets. Furthermore, some 1 million square feet are in the firm’s development pipeline.

Built in 1998 on a 7.2-acre lot, the one-story building features exterior concrete, a 28-foot clear height, four loading docks, five exterior dock positions and 16 parking spots.

Located at 13100 Danielson St., the warehouse is 20 miles from downtown San Diego and 22 miles from San Diego International Airport. Interstate 15 is 4 miles west, providing access to Los Angeles, Orange and Riverside counties.

Lee & Associates Principals Rusty Williams, Chris Roth and Jake Rubendall worked on behalf of the buyer, LPC West Executive Vice President Scott Moffatt said in prepared remarks.

CommercialEdge data shows more than 5.2 million square feet of industrial space have changed hands in San Diego since the beginning of the year. In one of these transactions, Hines purchased a 229,680-square-foot industrial campus in San Diego on behalf of the Hines U.S. Property Partners Fund. The investment vehicle is slated to acquire two other buildings at the same technology park.

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The Ionis Pharmaceuticals Campus. Image courtesy of Oxford Properties Group

Oxford Properties Group has acquired Ionis Pharmaceuticals’ campus, a three-building, 250,000-square-foot life science and office property in Carlsbad, Calif., in a sale-leaseback transaction.

Public records show Oxford paid $258.4 million for the asset, financing the purchase with a $158 million loan from Credit Agricole. Ionis will continue to occupy the campus for the next 15 years.

The Ionis campus purchase brought Oxford’s San Diego life science portfolio to 900,000 square feet, following a recent $464 million acquisition of a 13-building, 650,000-square-foot portfolio in the metro’s Sorrento Mesa and Sorrento Valley. The firm’s local footprint is expected to reach more than 1.2 million square feet upon the completion of its development pipeline.

READ ALSO: Exploring Redevelopment Opportunities Within Life Sciences

Since the beginning of 2021, Oxford has invested more than $3 billion in global life science assets, one of the acquisitions involving a 402,700-square-foot facility in the Bay Area that will be converted to comprise more research and development space. The firm also formed a $1.5 billion strategic venture with Ensemble/Mosaic this March for the development of a 3 million-square-foot life science campus in Philadelphia.

A North County life science property

Situated on 18.4 acres at 2850, 2855 and 2859 Gazelle Court, the campus came online between 2011 and 2021, featuring a mix of chemistry and biology laboratories, R&D support systems and office space. According to CommercialEdge data, Ionis had acquired it in 2017 for $79.4 million from BioMed Realty.

The property is within San Diego’s North County cluster of life science facilities, close to numerous other pharmaceutical and biotech companies. Downtown San Diego is some 36 miles south.

San Diego’s life science success

San Diego remains the top market in the West and the second largest in the nation for life science construction and investment activity, due to its geographic location, as well as its large and concentrated number of research universities and hospitals. According to a CommercialEdge report, the metro had 2.9 million square feet in its life science pipeline as of August, while the average listing rate has increased by 11.8 percent in the last 12 months.

Speaking about the benefits of the purchase in the context of its specific market, Tycho Suter, vice president of investments at Oxford, said in prepared remarks that the firm is very confident in the San Diego life sciences market, which is supported by its strong STEM presence and a highly-skilled labor force as well as world-renowned research and academic institutions.

The post Oxford Properties Buys $258M San Diego Life Science Campus appeared first on Commercial Property Executive.

Metropolitan Airpark at Brown Field Municipal Airport. Image Metropolitan Airpark

A long-delayed $1 billion plan to redevelop 331 acres at San Diego’s Brown Field Municipal Airport is moving forward now that Los Angeles-based Industrial Realty Group has acquired a 43 percent stake in a joint venture with Belzberg & Co. for the Metropolitan Airpark project.

Located in the Otay Mesa submarket near the United States-Mexico border, the new facilities will support the region’s demand for industrial space. The City of San Diego recently approved IRG as a joint venture partner with Belzberg & Co., a family-backed investment firm and controlling shareholder of Metropolitan Airpark. The approval and purchase of the existing Metropolitan Airpark leasehold by the joint venture will set the stage for construction of the state-of-the-art commercial and aviation facilities.

The project is expected to be built over 20 years and will include a new Fixed Base Operator terminal building and individual airplane hangars. Additional development could include more than 1 million square feet of retail and industrial buildings and possibly a hotel.

“IRG is a great fit with their airport redevelopment experience. Their project is well designed with truck yards adjacent to the building, which is highly desired in Otay Mesa,” Rob Hixson, a senior vice president with CBRE in San Diego who is leading preleasing efforts, told Commercial Property Executive.

READ ALSO: Why These CRE Sectors Provide Safer Harbors

One of the nation’s largest industrial real estate developers, IRG operates a portfolio of more than 150 properties in 31 states with more than 100 million square feet of space. The firm is recognized as a leading force in adaptive reuse of commercial and industrial space.

The company has redeveloped a dilapidated Baltimore steel mill and transformed McClellan Air Force Base in Sacramento, Calif., into industrial space. In April 2021, IRG bought the former site of Caterpillar’s hydraulic manufacturing operations, a nearly 1.5 million-square-foot industrial site outside Chicago, with plans to turn into a multi-tenant industrial park. Earlier in 2021, IRG acquired five Gannett Co. Inc., printing plants in Ohio, Indiana and Florida in a sale-leaseback deal that also gave IRG the right to redevelop portions of the space for multiple tenants and other industrial or manufacturing uses.

Jason van Itallie, managing director of Canadian-based Belzberg & Co., said in a prepared statement the firm was pleased to have found a well-qualified partner in IRG to help take the next step in the development of Brown Field.

Stuart Lichter, IRG president, said in prepared remarks, there is an immediate need for quality industrial space in the San Diego market. Lichter said the location at the airport in Otay Mesa will be attractive to air-related businesses or those desiring to expand in the tight market that is a gateway for international trade. Lichter added the project should provide economic benefits to the community and create sustainable jobs.

San Diego-area industrial developments

In late August, Murphy Development Co. secured a $35.4 million construction loan for Phase II of its 50-acre Brown Field Technology Park in Otay Mesa. The development will include two Class A industrial buildings totaling 203,244 square feet of space and is slated for delivery in the second quarter of 2023. The park is less than 1 mile from Brown Field Municipal Airport.

Rockefeller Group bought three parcels totaling 11.6 acres in Chula Vista, Calif., in May to develop three industrial buildings totaling 201,200 square feet. Construction on Heritage Park, located less than 4 miles from Brown Field Municipal Airport, is scheduled for completion by the winter of 2023.

The post IRG, Belzberg Plan $1B Development at San Diego Airport appeared first on Commercial Property Executive.

3215 Merryfield Row

LaSalle Investment Management has acquired a Class A life science building in San Diego. The asset was purchased through the firm’s flagship core institutional real estate fund, the LaSalle Property Fund. The majority interest acquisition of 3215 Merryfield Row was purchased by LPF through a joint venture with a publicly traded REIT.

According to CommercialEdge data, the asset totals 170,523 square feet and covers 8 acres of land. The Class A property is 3 stories high and offers a mix of life science and data center office and research space.

The life science building was developed in 2018 and is currently fully leased to Vertex. The asset is LEED Gold Certified and features glass interior walls, a 1,500-square-foot STEM learning lab and an air circulation system that brings 100 percent outside air inside the property.

READ ALSO: Life Science Assets Maintain Lasting Appeal

The property is located in the Torrey Pines submarket, where life science assets have an average vacancy rate of approximately 0.3 percent. San Diego houses some 1,300 life science companies with 19.8 million square feet of space. According to a JLL report, employment in the San Diego life science industry has increased some 20 percent over the last five years.

LPF Properties

LPF’s portfolio, after the acquisition of 3215 Merryfield Row, is made up of 13 percent life science and medical office properties. Illumina’s headquarters, another life science investment located in the San Diego area, was partially acquired by LPF in 2019.

This year LaSalle purchased the Bellingham Distribution Center, a 345,000-square-foot logistics asset in the Boston area, through the LPF.

The post LaSalle Acquires San Diego Life Science Asset appeared first on Commercial Property Executive.

14950 Meridian Parkway. Image courtesy of JLL Capital Markets

IDS Real Estate Group has secured $124 million in post-close acquisition financing for its cold storage facility. Lent from Northwestern Mutual, the 10-year fixed-rate loan will go toward 14950 Meridian Parkway in Riverside, Calif.  JLL Capital Markets arranged the deal working on behalf of the borrower.

The property was purchased by an affiliate of IDS Real Estate Group for $225 million in February, according to The Registry.

United Natural Foods Inc. is the sole tenant for the asset. 14950 Meridian Parkway is the company’s main facility for cold storage in Southern California.

The cold storage facility is 1.2 million square feet. Renovated and expanded in 2020, the asset was originally completed in 2007. It features 39 percent cold storage and 61 percent dry storage space with 42-foot clear heights, 185 dock doors and some 700 parking spaces. Temperatures range from -10 degrees Fahrenheit to over 60 degrees Fahrenheit.

Situated with access to Interstate 215, the facility provides proximity to California thoroughfares serving Los Angeles, San Diego, the Inland Empire and western U.S. The lot is 59.4 acres, located in the Moreno Valley/Perris industrial submarket.

According to CommercialEdge data, the area has a traffic count of some 150,000 cars per day.

Representing the borrower was Paul Brindley, JLL Capital Market’s Head of Debt Advisory – Asia Pacific, along with Senior Director Matt Stewart and Director Alethia Halamandaris.

In high demand

The Inland Empire has one of the tightest industrial vacancies nationwide, with an all time low of 0.2 percent in the second quarter of this year according to a CBRE report.

Southern California had more than 621 million square feet of industrial space under construction as of March. Demand for industrial space in the area has been on the rise throughout 2022.

The post IDS Real Estate Lands $124M Loan for Cold Storage Facility appeared first on Commercial Property Executive.

5752 Oberlin Drive. Image courtesy of CBRE

A local private investor has acquired a 17,238-square-foot office building in San Diego, Calif., from an individual seller. CBRE brokered the $5.3 million—or $305 per square foot—deal for both parties.

According to CommercialEdge data, the former owner purchased the asset in 1992, for $1.1 million. The two-story property at 5752 Oberlin Drive sits on a nearly 1-acre plot in the Sorrento Mesa neighborhood. Located just off Mira Mesa Boulevard and in proximity of interstates 5 and 805, the building is part of San Diego’s active life science and tech hub.

Built in 1982, the property has a mansard-style roof, wood-framed walls and glass doors, as well as roof-mounted HVAC units and 49 parking spots. The previous owner renovated the building’s interior.

CBRE’s Senior Vice President Matt Pourcho, Vice Chairman Anthony DeLorenzo, Senior Vice President Scott Kincaid and Associate Matt Harris worked on behalf of the seller. The company’s Vice Chairman Ted Jacobs, Vice President Hunter Rowe and Executive Vice President Matt Carlson represented the buyer. The new ownership intends to occupy a portion of the property, according to Pourcho.

San Diego’s active life science and tech hub

As the nation’s suburban office markets are seeing a more rapid recovery than downtown areas, central San Diego is in line with these national trends: the metro’s office vacancy fell by 100 basis points in the second quarter of 2022, to 10.4 percent, according to a recent CBRE report.

Earlier this year, Manulife Investment Management closed on the $145 million disposition of a two-building office campus located 4 miles south of 5752 Oberlin Drive. The property was fully leased at the time of the sale and holds life science redevelopment potential.

The post CBRE Brokers San Diego Office Sale appeared first on Commercial Property Executive.

Brown Field Technology Center Park. Image courtesy of Murphy Development Company

Murphy Development Co. has landed a $35.4 million construction loan for Phase II of its Brown Field Technology Park in the Otay Mesa submarket of San Diego.

The development will include two Class A industrial buildings totaling 203,244 square feet. JLL Capital Markets arranged the financing, a non-recourse construction loan, through a regional bank.

Scheduled for delivery in the second quarter of 2023, the new buildings will feature clear heights ranging from 32 to 42 feet, 41 dock-high doors, eight grade-level doors, a low office finish and ESFR fire protection.

READ ALSO: Why Industrial Outdoor Storage Is the New Hot CRE Type

The 50-acre Brown Field Technology Park is entitled for more than 3.2 million square feet of building space. The project’s second phase is located on 13.8 acres. According to Murphy Development, the current buildings, designed for distribution and manufacturing tenants, lease from 25,000 to 229,000 square feet. The firm plans to develop a total 1 million square feet in the park.

Located close to the U.S.-Mexico border, Brown Field Technology Park is less than 1 mile from the Brown Field Municipal Airport. The Otay Mesa industrial submarket is in proximity to freeway access, a strong labor pool and a variety of corporate tenants. The largest commercial land port of entry in the nation, Otay Mesa Land Port of Entry, is also nearby, operating more than $50 billion in annual trade.

Murphy Development originally built the park in the 1980s, reacquiring half of the property from The Panasonic Corp. of North America in 2017. Current tenants include The Salvation Army, which has leased 85,504 square feet, as well as Home Depot, with a 124,233-square-foot lease, according to CommercialEdge data.

Senior Managing Director Aldon Cole, Managing Director Bryan Clark and Associate Bradley Vansant from the JLL Capital Markets Debt Advisory team represented Murphy Development in the financing deal.

The post San Diego Project Obtains $35M in Financing appeared first on Commercial Property Executive.

1320-1430 Eastlake Parkway. Image courtesy of Newmark.

Crow Holdings has completed the $47.8 million sale of a 60,000-square-foot, multi-building portion of The Shops at Eastlake Terraces, a retail and community center located at 1320-1480 Eastlake Parkway in Chula Vista, Calif. Newmark represented Crow Holdings in the deal with the buyer, Gershman Properties.

Built in 2004, The Shops at Eastlake Terraces is home to 360,000  square feet of retail space, comprised of both in-line and free-standing buildings, the largest being a Walmart Supercenter and a Home Depot, according to CommercialEdge data. Other tenants include Walgreens, Chase Bank and Starbucks.

The sale marks Crow Holdings’ second western U.S. transaction this year, following their development of FRED310, a 4 million-square-foot industrial facility in Frederickson, Wash. Crow Holdings has also funded the construction of the second phase of the Phoenix Industrial Park in Phoenix, site of a two-building, 630,000-square-foot distribution center.

San Diego’s increasing demand

The suburb of Eastlake is the largest retail submarket in southern San Diego County, home to 2 million square feet of retail space with a 95 percent occupancy rate. The center is located within a mile of the planned Millenia development, also in Chula Vista, which will host 2,900 homes and 3.5 million more square feet of commercial space.

Newmark Chairman Pete Bethea and Senior Managing Directors Rob Ippolito and Glenn Rudy oversaw the transaction, negotiating on behalf of the seller. Ippolito said in a prepared statement that San Diego County is seeing residential and population growth coupled with tenant demand and limited supply, and added that the trend is expected to continue for the foreseeable future.

The post Crow Holdings Sells 60 KSF Portion of San Diego Retail Center appeared first on Commercial Property Executive.

Genesis Science Center. Image courtesy of JLL

A joint venture between Phase 3 Real Estate Partners Inc. and Bain Capital Real Estate has obtained $165 million in refinancing for Genesis Science Center, a four-building, 252,000-square-foot life science campus in San Diego. The three-year note with variable interest rate from Capital One pays off existing debt, public records show.

Senior Managing Director Tim Wright, Managing Director Todd Sugimoto and Associate Daniel Pinkus of JLL arranged the financing. The same brokerage team provided the developers with a $400 million loan last year, for the construction of another Genesis-branded campus.

An expanding life science campus

The partnership paid a combined $54 million for the campus in 2019, in three separate transactions financed with a $90 million loan from TPG Capital, according to CommercialEdge data. Brookfield Properties and Qualcomm were the sellers.

Genesis Science Center spans 13 acres and encompasses four low-story buildings completed between 1985 and 1991, ranging from 60,887 to 107,754 square feet. Amenities include an outdoor eatery, fitness center and conference center. Fairfield Residential, Neomorph, PassPort Technologies and iMatrix, among others, are tenants at the fully leased campus.

Located at 5510, 5550, 5580 and 5590 Morehouse Drive within the Sorrento Mesa biotech cluster, the recently renovated property is less than a mile from Interstate 805, connecting it to downtown San Diego. Notable companies in the area include Qualcomm, Aya Healthcare and Mesa Biotech.

The Genesis campus is slated for expansion as the developers are planning an 11-story, 365,000-square-foot R&D building to rise at 5530 Morehouse Drive. Delivery is expected in 2024.

Phase 3 currently owns over 4.5 million square feet of assets throughout San Diego, San Francisco and Boston, whereas Bain Capital’s portfolio holds over 6.8 million square feet of health-care properties. The joint venture develops and manages purpose-built properties in biotech markets under the Genesis brand.

The post Phase 3, Bain Capital Land $165M for San Diego Life Science Campus appeared first on Commercial Property Executive.

Following initial pandemic-induced woes, the office construction market has been finding its footing through the past year across all major U.S. markets. As of June, the U.S. office market saw roughly 151.1 million square feet of space under construction, with nearly 30 million square feet situated in the state of California, according to CommercialEdge data.

California remains the most populous state in the country, but the Golden State lost residents during the past two years. In 2021, some 117,552 residents were deducted from California’s population total, according to the California Department of Finance. Some of the complex components behind this decrease include lower birth rates, COVID-19 deaths and falling immigration rates, while relocation also played a significant role.

While companies return to work and reevaluate their long-term strategies, foot traffic in U.S. offices is up on a year-over-year basis, according to recent data from Placer.ai. In San Francisco, visits increased by 84.6 percent in June 2022, compared to the same period a year prior.

The top 5 markets listed below make up for roughly 95 percent of the under-construction office space within the Golden State.

5. Sacramento

Downtown Sacramento, Calif. Image courtesy of USFWS/Steve Martarano via Wikimedia Commons

The smallest market on the list, Sacramento has been gradually growing through the past cycle: in 2021, the metro area’s population reached nearly 2.2 million, 1.5 percent more than in 2020. In June, the state capital had 1.8 million square feet of office space under construction, while in 2021, more than 1.3 million square feet of office space came online in the market.

In February 2022, employment reached pre-pandemic levels and has been on the upswing. Unemployment has been constantly recovering as well, reaching 3.3 percent in April—less than half of the rate recorded a year prior and outperforming pre-pandemic levels.

The metro is also home to one of the largest office developments currently under construction in California, namely Richards Boulevard Office Complex. Developed by the California Department of General Services, the four-building project is slated to encompass nearly 1.3 million square feet.

4. San Diego

San Diego skyline. Image by Jill Wellington via Pixabay.com

Due to the high concentration of life science jobs within the metro, San Diego was among the U.S. markets that actually saw office vacancy go down during the past two years—along with Boston, the Bay Area and New Jersey. In June, the San Diego market had nearly 3.6 million square feet of office space underway, fourth in the state in terms of office construction.

In 2021, the metro added 1.4 million square feet of office product to its stock. So far this year, San Diego is falling behind last year’s numbers, with merely 157,263 square feet completed year-to-date through June.

As mixed-use projects prove their resiliency and gain popularity among developers nationwide, downtown San Diego’s first mixed-use tower also moved forward in its development back in February. The $400 million, 37-story tower dubbed West Downtown San Diego is set to encompass 270,000 square feet of office space, 19,000 square feet of retail and 431 luxury apartments, with delivery set for early 2024.

3. Los Angeles

Downtown Los Angeles skyline. Image courtesy of Adoramassey via Wikimedia Commons

Los Angeles’ office pipeline relative to existing stock was one of the lowest in the country in June, but the metro still had 5.2 million square feet of office space under construction. Last year, nearly 3 million square feet of space came online, while year-to-date through June already 2.2 million square feet delivered, outperforming last year’s figures through the same interval.

While L.A.’s development has been slow in the past months, office investment activity was one of the highest in the U.S. in the first five months of the year. Deals amounted to $1.9 billion, double the volume recorded within the same period last year.

Creative offices represent a significant portion of the Los Angeles office pipeline. In May, the Legendary Group announced its newest venture in the metro, a 350,000-square-foot speculative creative office tower to rise at 411 S Hewitt St, in the Art’s District. Gensler is behind the design of the 17-story Class A building.

2. San Francisco

San Francisco. Photo by Lili Popper via Unsplash

The San Francisco-Peninsula metro had 6.6 million square feet of office space under construction, comprising 6.0 million square feet of rentable space. In 2021, 4.9 million square feet of office space was completed, while year-to-date through June nearly 2.3 million square feet came online.

Foot traffic within San Francisco’s offices has also increased year-over-year, but lags pre-pandemic levels, according to Placer.ai. In June, foot traffic was 60.4 percent lower, compared to three years prior.

In 2021, the San Francisco market saw nearly 3 million square feet delivered, while year-to-date through June already 2.2 million square feet had come online. Life science pockets, such as Mission Bay and South San Francisco have been hotspots for office development, due to the heightened interest in lab space since the onset of the pandemic.

1. Bay Area

Bay Area. Image courtesy of Pixabay.com

East and South San Francisco Bay’s thriving office construction market is currently one of the best-performing in the country. The metro’s success is driven by its unmatched tech scene and thriving life science sector. Office vacancy is improving at a steadier pace than in the Peninsula and hit 15.3 percent at the end of May, down 320 basis points year-over-year. In June, Apple expanded its Silicon Valley footprint to a total of 800,000 square feet, committing to a newly constructed office campus in Sunnyvale, Calif.

In June, nearly 11.1 million square feet of office space was under construction within the Bay Area, nearly double the amount taking shape in San Francisco, the previous entry. In 2021, developers completed 4.1 million square feet of office product, while 1.3 million square feet came online year-to-date through June.

In early 2022, STC Venture moved into the final phase of development of Cityline Sunnyvale, a mixed-use, multi-phase project in downtown Sunnyvale, Calif. Construction broke ground on the third stage of the project, comprising two office buildings and a residential tower. Upon completion, the large-scale development is set to comprise 1 million square feet of office space.

The post Top 5 California Markets for Office Construction appeared first on Commercial Property Executive.

Heritage Industrial Park. Image courtesy of Rockefeller Group

Rockefeller Group has bought three parcels totaling 11.6 acres in Chula Vista, Calif., for the development of three industrial buildings totaling 201,200 square feet. HomeFed Corp. sold the three parcels for $7.3 million, according to San Diego County Records.

Voit Real Estate Services represented Rockefeller in the transaction. The construction on Heritage Industrial Park is set to begin in June and the project is scheduled for delivery by winter 2023.

The development will comprise three industrial buildings encompassing 104,900 square feet, 55,700 square feet and 40,600 square feet, each on a separate land parcel and up for lease or sale. According to Rockefeller’s Vice President & Regional Director Marc Berg, the company’s strategy for the project is to develop three buildings in the small to mid-size range, thus offering prospective users options in an area where vacancy rates for Class A industrial properties are low.

Located along Heritage Road, the development will be less than 3 miles east of Interstate 805, offering easy access into San Diego. It will also be less than 4 miles northwest of Brown Field Municipal Airport.

Heritage Industrial Park will be Rockefeller’s second development in South San Diego, following the completion and sale of Airway Industrial Park. Last month, the company also sold the 289,407-square-foot Val Verde Logistics Center in Perris, Calif., for $92 million.

The post Rockefeller Group Plans San Diego-Area Industrial Park appeared first on Commercial Property Executive.

1205-1225 Park Center. Image courtesy of Cushman & Wakefield

BentallGreenOak has added seven properties in northern San Diego to its industrial portfolio in California. Cushman & Wakefield brokered the sale, representing the undisclosed seller who sold the portfolio to BentallGreenOak for an undisclosed price.

The Class A industrial portfolio totals 614,020 square feet, which is split among seven manufacturing and distribution buildings that are all within a five-mile radius. The largest portion of the portfolio is Vista Distribution Center, a three-building distribution center that was built in 1990 with building sizes between 75,840 and 180,800 square feet. The remaining four free-standing buildings in Vista, San Marcos and Carlsbad range between 31,246 and 135,000 square feet and were built between 1988 and 2010.

READ ALSO: What’s Next for Industrial Real Estate?

According to Cushman & Wakefield, the portfolio is 100 percent leased to 11 tenants, including US Foods, Natural Alternatives International, Inc., 24 Hour Fitness, Dr. Bronner’s, Captek, Totally Bamboo and Service Partners. The industrial properties are located near Interstate 78 and the industrial corridors of Interstates 5 and 15, offering tenants easier access to Orange County, Central San Diego and Riverside County.

Aric Starck, vice chairman at Cushman & Wakefield, said in prepared remarks that the San Diego market has been seeing low vacancy for its industrial sector because of the strong demand from e-commerce and warehousing, manufacturing, R&D, defense and life science sectors. He added in his prepared statement that the demand has led to unprecedented leasing velocity and overall fundamentals.

However, BentallGreenOak isn’t just interested in building out its San Diego industrial portfolio. The company acquired a 1 million-square-foot bulk distribution warehouse in Jefferson, Ga. in October 2021, marking the firm’s second major industrial acquisition in the Atlanta area for that year. BentallGreenOak also set the record for the highest price ever paid for a single-building industrial property in Arizona after its acquisition of a 1.3 million-square-foot industrial facility in Glendale, Ariz.

The post BentallGreenOak Acquires San Diego Industrial Portfolio appeared first on Commercial Property Executive.

Fusion. Image courtesy of Cushman & Wakefield

RAF Pacifica Group has sold two Class A creative office and mixed-use properties in Carlsbad, Calif., with a combined value of $86 million. Cushman & Wakefield represented the seller in both recapitalization transactions. Clarion Partners and a private investor were the buyers.

The assets include:

• Fusion, a newly repositioned, 121,541-square-foot Class A creative office building;
• Lift, the city’s first-ever creative mixed-use development comprising 53,205 square feet across two Class A buildings.

Valuable assets within the San Diego office market

Clarion Partners acquired Fusion, valued at $54 million, using a $31.5 million, 10-year acquisition loan provided by Bellco Credit Union. The seller completely repositioned the property in early 2020 from a formerly industrial facility. Fully leased to Alphatec Spine, the two-story development also offers 547 parking spaces in a 4.5 spaces per 1,000 square feet parking ratio, according to CommercialEdge data.

In 2019, RPG paid $20.2 million for Fusion, according to the same data provider. The office property is located at 1950 Camino Vida Roble, less than half a mile south of McClellan-Palomar Airport. I-5, providing easy access into downtown San Diego, is less than 3 miles west. Several dining, retail and entertainment options are also available within a 1-mile radius.

Lift. Image courtesy of Cushman & Wakefield

Lift, which is valued at $32 million, comprises two buildings in the award-winning master-planned community of Bressi Ranch. According to public records, the private buyer assumed the existing debt on Lift, an $18 million loan provided by City National Bank in 2020.

Building A offers two floors of creative office space totaling 33,770 square feet, while Building B has 8,708 square feet of ground-floor restaurant space as well as 9,950 square feet of second-floor creative office space. The development also has 278 parking spaces, in a 7.7 spaces per 1,000 square feet parking ratio, according to CommercialEdge data.

Lift offers amenities such as a multipurpose lawn, outdoor barbecue areas, a fire room lounge, outdoor meeting hubs, as well as an amphitheater and rooftop decks. The properties are located at 6023 and 6021 Innovation Way, respectively, less than 2 miles northeast of Fusion, and are surrounded by several retail, entertainment and dining options. Current tenants at Lift, also brokered by Cushman & Wakefield, include Ezoic, Honma Golf and Coola Skincare.

Last month, a joint venture between Clarion Partners and LBA Realty sold The Esplanade, a four-building office complex in Phoenix. The deal was valued at $385 million, according to the Phoenix Business Journal.

The post RAF Pacifica Group Sells Suburban San Diego Assets appeared first on Commercial Property Executive.

Governor Pointe Business Park. Image courtesy of Newmark

Manulife Investment Management has closed on the $145 million disposition of Governor Pointe Business Park, a two-building office campus in San Diego, Calif. The property holds life science redevelopment potential, according to Newmark, which brokered the deal on behalf of Manulife.

The office park is fully leased, totaling more than 200,000 square feet at 6200 and 6220 Greenwich Drive. Situated in the University City submarket, the property also comprises surface parking, as well as a five-story parking structure. The two buildings last traded in 2015, when Kilroy Realty sold them as part of a $95 million portfolio transaction that included several office assets, according to CommercialEdge data.

The larger structure, situated at 6220 Greenwich Drive on a 6.2-acre plot, comprises 141,214 square feet. Mitchell International is leasing the entire building through October 2025, but recently put the property up for sublease. With 67 percent of the space currently available, a repositioning, even for life science use, would be convenient, according to the brokerage. The site also holds the potential for a ground-up life science development.

The other building at 6200 Greenwich Drive offers nearly 71,000 square feet and sits on a separate, 4.4-acre site. University of California, San Diego is the property’s sole tenant, under a lease set to expire in May 2026.

The Newmark team arranging the deal for the seller included Co-Head of U.S. Capital Markets Kevin Shannon, along with Executive Managing Directors Brunson Howard, Paul Jones and Ken White.

San Diego’s life science sector shines

San Diego remains one of the most sought-after locations for tech and life science firms on the West coast, Shannon said in prepared remarks. Last year’s life science venture capital funding in the U.S. amounted to $43.3 billion, according to a study conducted by Newmark research.

Last month, pharmaceutical giant Bristol Myers Squibb signed a long-term full-building prelease in San Diego’s University Town Center submarket. The 427,000-square-foot building is part of Alexandria Point, a more than 2 million-square-foot lab and office development by Alexandria Real Estate Equities Inc.

Breakthrough Properties is currently constructing a life science campus in the city. Dubbed Torrey View, the property will total roughly 500,000 square feet across three buildings. The developer landed its fist tenant in November 2021.

The post Manulife Sells $145M San Diego Office Park appeared first on Commercial Property Executive.

West Downtown San Diego. Image courtesy of Holland Partner Group, North America Sekisui House and Lowe

JLL is overseeing office leasing at West Downtown San Diego, a $400 million, 37-story mixed-use project that will feature 270,000 square feet of office space, 19,000 square feet of retail space and 431 luxury apartments. Located at 1011 Union St., the new development will be downtown San Diego’s first mixed-use tower when completed in early 2024.

The tower is being developed by Holland Partner Group, North America Sekisui House and Lowe. Los Angeles-based Lowe is leading the office development at West. JLL’s Tony Russell and Richard Gonor are leading the office leasing efforts.

READ ALSO: Top LEED-Certified Buildings in California in 2021

Mike McNerney, Lowe executive vice president, said in a prepared statement that West is a true transit-oriented development that reflects the ongoing evolution of San Diego as a commercial hub. The property is one block to a Metropolitan Transit System stop and four blocks to the Transit Center.

Commenting on the scale, design and complexity of the project, Brent Schertzer, managing director for Vancouver, Wash.,-based Holland, said they expect the tower’s development to further catalyze the booming downtown San Diego market. Located on West Broadway, the property is a two-minute walk to the Civic Center and four blocks from Little Italy.

West Downtown San Diego. Image courtesy of Holland Partner Group, North America Sekisui House and Lowe

Investors are also seeking out the downtown market. In June, Los Angeles-based Regent Properties made its first purchase in downtown San Diego, acquiring a portfolio of four high-rise office buildings for $420 million.

Project details

West Downtown San Diego is designed by Carrier Johnson + CULTURE, with Holland Construction serving as the general contractor. The property will have ground-floor retail space including specialty restaurants and shops and will offer indoor and outdoor dining. The first floor will be modeled after a contemporary hotel lobby and include a lounge, meeting room and variety of gathering spaces. The luxury apartments will be built atop several floors of office space.

The office portion will offer 39,000-square-foot floorplates, floor-to-ceiling glass and outdoor balconies for expansive views. The property will be able to accommodate a wide range of users from 25,000 square feet to 270,000 square feet. There are also future expansion options for as much as 870,000 square feet of office space on two contiguous blocks.

West Downtown San Diego. Image courtesy of Holland Partner Group, North America Sekisui House and Lowe

The ninth-floor amenities level and roof decks will provide panoramic views of San Diego and the Pacific Ocean. They will also have indoor/outdoor meeting spaces and green roof space with outdoor seating and entertainment areas. The property will also feature private workspaces, conference rooms, flexible spaces to accommodate a variety of events, state-of-the-art indoor/outdoor fitness and a dog run with specialty pet turf, seating, shade and dog wash.

West Downtown San Diego will be a WELL-certified project and has been designed to optimize health and wellbeing for residents, tenants and visitors. Tenant community engagement programs will be provided by the on-site property manager, Hospitality at Work.

Russell, a JLL managing director, said in prepared remarks as post-COVID tenants return to workplaces, they are seeking modern facilities, amenities and direct access to outdoor space. He said West will offer green initiatives, a healthy work environment, premier location in an amenity-rich environment and connection to the community.

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Hines portfolio at Liberty Station. Image courtesy of Hines

Hines Global Income Trust Inc. has acquired a four-building, 187,000-square-foot office portfolio in the Liberty Station mixed-use development, in the Old Town/Point Loma submarket of San Diego.

The low-rise office portfolio is situated at 2280, 2468 and 2488 Historic Decatur Road and 2750 Womble Road on the San Diego waterfront and is 93 percent leased.

The purchase price and the portfolio’s seller were not disclosed. However, Commercial Property Executive reported in early 2019 that the same four buildings were acquired by a joint venture of IDS Real Estate Group and Lionstone Investments from McMillin Cos. for $76.8 million.

READ ALSO: Top LEED-Certified Buildings in California in 2021

The 360-acre Liberty Station is a former training center that the Navy closed in 1997. The site currently includes an office district, numerous retail shops and restaurants, 349 residential units, a golf course, several public schools, and 125 acres of parks and recreation space.

Hines portfolio at Liberty Station. Image courtesy of Hines

Omar Thowfeek, Hines Global managing director of investments, said in a prepared statement that the San Diego area’s sizable labor pool for government and tech companies, combined with the prime location, make Liberty Station a strong long-term investment.

The San Diego office market has seen leasing volume grow by nearly 50 percent compared to last year, driven largely by tech and health care, though rent growth remains below the five-year average, according to a fourth-quarter report from Kidder Mathews.

Office property sales in 2021 hit a post-recession record of $2.7 billion, often resulting from demand by life science companies.

The Point Loma submarket has an average availability of 14.1 percent on an inventory of 2.8 million square feet. Total leasing activity in 2021 was a modest 76,000 square feet, and net absorption was a negative 54,600 square feet, also according to Kidder Mathews.

Diverse purchases

Hines also announced three additional recent acquisitions in Southern California.

Hines U.S. Property Recovery Fund acquired a 3.9-acre RV parking and storage site at 3130 S. Fairview St., in Santa Ana, Calif., near the ports of Los Angeles and Long Beach, Calif. Hines intends to redevelop the site for an 82,000-square-foot industrial facility, with delivery expected in mid-2023.

In an off-market transaction, Hines U.S. Property Partners Fund acquired a 112,000-square-foot manufacturing facility at 14191 Myford Road in Tustin, Calif. The property is fully leased for the next decade to a pharmaceutical manufacturer.

The same fund acquired the 203,000-square-foot JCPenney building at Westfield Culver City shopping center. Hines notes that it has added five other retail properties to its western region portfolio recently.

The post Hines Affiliate Buys San Diego Office Portfolio appeared first on Commercial Property Executive.

Torrey View. Image courtesy of Breakthrough Properties

BD’s lease will account for roughly 40 percent of the total available space at the upcoming campus, according to Breakthrough. Daniel D’Orazi, executive vice president & head of acquisitions for Breakthrough, told Commercial Property Executive that construction has started for the building, which is targeting completion in 2023. D’Orazi also said in prepared remarks that BD’s lease is indicative of the fast-growing demand for high-quality research space in San Diego.

READ ALSO: 4 Property Trends to Watch in 2022

BD will use the space at the new facility at Torrey View to further its research, development and operation capabilities as well as position the company for growth, Puneet Sarin, worldwide president for BD Biosciences, said in prepared remarks. Sarin added that BD selected Torrey View because the building allows for a flexible working environment that supports collaboration and innovation, and will help BD attract talent in the future.

Torrey View’s completion

Alongside the building that BD preleased, plans for Torrey View also call for two additional research and development buildings and a tenant clubhouse. D’Orazi told CPE that the campus will total approximately 500,000 square feet across the three buildings, which all share a targeted completion for 2023.

Torrey View. Image courtesy of Breakthrough Properties

The lease also comes more than a year after Breakthrough acquired the site for Torrey View in October 2020. The project team behind the life science campus also includes co-equity partner Mitsui Fudosan America, architectural firm FLAD Architects, general contractor Clark Construction and JLL, whose senior life science team in San Diego will assist with marketing and leasing efforts.

Upon completion, the 10-acre campus will feature indoor and outdoor communal areas, as well as conference and event facilities. Torrey View’s amenities will include a fitness center, multiple dining options, pickleball courts, surfboard and bike storage and onsite parking in a partially below-grade garage that will be covered by green spaces. Breakthrough will also add drought-tolerant landscaping, pedestrian and bicycle pathways, as well as outdoor gathering space. According to the developer, the campus has been designed to meet LEED Gold standards.

The post San Diego Life Science Campus Lands First Tenant appeared first on Commercial Property Executive.

North County Corporate Center. Image courtesy of Taylor Allan

North County Corporate Center, the largest pure industrial distribution park in North San Diego County at approximately 493,900 square feet, has come under new ownership. With the assistance of Newmark, Barings sold the 100 percent occupied, five-structure campus in Vista, Calif., to Black Creek Group in a transaction valued at $147.5 million.

The investment community was more than a little keen on NCCC. “There were over a dozen offers,” Jim Linn, executive managing director with Newmark, told Commercial Property Executive.

READ ALSO: Amazon to Open More Than 100 Properties in September

NCCC is an institutional-quality property that made its debut in 1999 as a $21.5 million development project of Master Development Corp. Barings had owned the asset since 2014 when, then operating as Cornerstone Real Estate Advisers, the company had purchased it for roughly $57.7 million. The seven-year-hold proved timely and incredibly fruitful for Barings.

“Land is in very short supply in the North County market, which is limiting supply and pushing the vacancy to an all-time low. The shortage of available space combined with the user demand is driving rental growth, which in-turn is increasing the sale price per square foot,” Linn said.

Today, NCCC’s five buildings, ranging in size from approximately 71,500 to 123,300 square feet, house a total of six credit tenants. With below market rents in place and staggered lease rollovers, the property offers the new owner a great deal of upside potential via the aforementioned rising rents.

Many buyers, little product

The industrial real estate sector’s run as an investor favorite across the country continues.

“Institutionally owned and maintained property in the top MSAs in the U.S. have a tremendous demand due to durability and increasing NOI of quality, functional assets,” Linn noted.

Sales activity in the U.S. industrial sector totaled $24 billion in the second quarter of 2021, marking a 92.6 percent jump from the height of the pandemic in the second quarter of 2020 and a quarter-over-quarter increase of 12 percent, according to a report by Newmark.

However, the rolling 12-month totals suggest industrial volume has trended lower since reaching a pre-pandemic height, which is due to an absence of opportunity as opposed to lack of investor interest. As a result, pricing reached a new average high of $123 per square foot in the second quarter of 2021.

“With a record 423.4 million square feet of industrial space under construction, the development pipeline will, in a certain respect, also function as an investment pipeline, offering new opportunities to investors hungry for industrial assets,” according to the Newmark report.

The post Black Creek Group Pockets $148M for San Diego Asset appeared first on Commercial Property Executive.

NorthBay Medical Office Building, 2470 Hilborn Road, Fairfield, Calif. Image courtesy of courtesy of Anchor Health Properties

Anchor Health Properties continues its expansion program with the addition of four Class A medical office buildings to its holdings, courtesy of separate transactions valued at a total of more than $100 million.

With the new purchases, the national health-care real estate company has grown its portfolio by an aggregate 210,000 square feet in high barrier to entry markets on the West Coast and in North Carolina.

READ ALSO: Top Gateway Markets for Office Vacancy

Anchor’s new additions include California’s NorthBay Medical Office Building and Vista Medical Plaza, located in Fairfield and Vista, respectively, as well as IDC Medical Plaza in Renton, Wash., and University City Medical Office Building in Charlotte, N.C.

Vista Medical Plaza, 2067 W. Vista Way, Vista, Calif. Image courtesy of courtesy of Anchor Health Properties

The company acquired all four properties through joint ventures with existing institutional equity partners in off-market transactions. With the closing of the purchases, Anchor has completed $330 million in MOB investments via 12 transactions year-to-date. It’s a pattern; the company has been highly acquisitive throughout the global health crisis.

“The COVID 19 pandemic put many marketed investment sales processes across U.S. commercial real estate asset classes on hold—including medical office—and rewarded those investment firms who were able to create their own opportunities,” James Schmid, chief investment officer & managing partner with Anchor Health Properties, told Commercial Property Executive.

“It helped Anchor to have complementary development and management / leasing platforms, which also helped generate investment leads. At a macro level, U.S. consumers started spending on health care as a basic need function almost immediately after lockdowns ended last spring, which reinforced the tenancy within medical office buildings and helped ensure operating performance over the past 12+ months.”

Property particulars

IDC Medical Plaza, 1412 S.W. 43rd St. Renton, Wash. Image courtesy of courtesy of Anchor Health Properties

NorthBay MOB in Fairfield, Calif., carries the address of 2470 Hilborn Road and is part of the San Francisco MSA. The approximately 29,600-square-foot, two-story structure first opened its doors in 2015 and counts NorthBay Healthcare and Retinal Consultants Medical Group as tenants. At the other end of the state, the two-story Vista Medical Plaza at 2067 W. Vista Way sits in the San Diego-area market, offering roughly 54,700 square feet. The MOB is leased to such names as United HealthCare, Rady Children’s, LabCorp, Greider Eye Associates and Blue Coast Cardiology.

IDC Medical Plaza’s Renton address at 1412 S.W. 43rd St., places it firmly in the suburban Seattle market. The approximately 59,200-square-foot property opened in 2005 and holds the distinction of being one of only two MOBs to be erected in the Renton submarket within the last 15 years. A host of tenants call the building home, including anchor tenants Providence Health and a Sight Partners-operated ambulatory surgery center.

University Place Medical Office Building, 8401 Medical Plaza Drive, Charlotte, N.C. Image courtesy of courtesy of Anchor Health Properties

University City MOB at 8401 Medical Plaza Drive in Charlotte completes the group of new purchases and at 66,500 square feet, is the largest of the collection. Novant serves as anchor tenant at the three-story property, which occupies a site that provides more than 2 acres of excess developable land for future expansion. Anchor will bring all four assets under its corporate umbrella, providing asset and property management services at the properties, in addition to spearheading leasing activities.

The road ahead

The MOB sector is a competitive business. New construction notwithstanding, the MOB market in the U.S. has a relatively limited supply of investable inventory, according to a 2021 report by Colliers International. Furthermore, the majority of that inventory, approximately two-thirds, can be found under the ownership of health-care systems and providers. Anchor, however, is undaunted by the investment community’s increasing fondness for the resilient sector. The company still has big plans for the rest of 2021.

“We have $300 million of new investments under our control and see the potential to close on significantly more than that if things break our way,” Schmid said. “Our growth trajectory continues to open new doors for the firm, and we look forward to sustaining and diversifying the growth in the coming months.”

The post Anchor Health Adds $100M in MOBs to Portfolio appeared first on Commercial Property Executive.

Sorrento Towers. Image via Google Street View

Prime US REIT is expanding its coastal footprint with portfolio additions totaling approximately 487,000 square feet. The Singapore-based office REIT has inked a deal to purchase the two-building Sorrento Towers in San Diego and One Town Center in Boca Raton, Fla., in two separate transactions valued at an aggregate $245.5 million.

READ ALSO: The Long, Uneven Road to Recovery

Twin seven-story buildings Sorrento Towers consisting of a total of approximately 294,000 square feet of Class A space carry the addresses of 5355 and 5375 Mira Sorrento Place in San Diego’s coveted Sorrento Mesa submarket. The sleek, glass-sheathed buildings first opened their doors in 1989 and last changed hands in 2018, when Shorenstein purchased them for $88 million, according to San Diego County Assessor Records. Shorenstein could not be reached for comment by deadline.

One Town Center, a 10-story tower in a market of mostly low-rise buildings, has stood out as a prominent Class A destination since it made its debut in 1991 as a development project of an entity of Crocker Partners, now CP Group. Crocker brought the roughly 193,000-square-foot asset back into the fold in 2014 via an $81 million acquisition deal. CP Group declined to comment on the pending transaction with Prime US REIT.

Coveting office assets from afar

The U.S. office sector, currently inching its way back from the pandemic-induced downturn, is not precisely the darling of the domestic investment community right now. However, cross-border investors have taken a shine to America’s office properties of late.

One Town Center. Image via Google Street View

“Foreign investment in the retail and hotel sectors remained limited, but sentiment improved for the office sector,” according to a first quarter 2021 capital markets report by CBRE. “Despite a 28 percent year-over-year drop in the first quarter investment volume, foreign investors increasingly allocated capital to growing office markets in the Sun Belt.”

Singapore, which increased its year-over-year investment in U.S. commercial real estate by 48 percent in 2020, remains highly active in the States, and some investors haven’t been at all shy about spending big in the office sector. In the first quarter of the year, Mapletree Investments acquired Uptown Station—a 397,000-square-foot, mixed-use office property in Oakland, Calif., that counts Square Inc. as its sole office tenant—in a transaction valued at a reported total of more than $400 million. 

The post Singapore’s Prime US REIT Buys Office Assets for $246M appeared first on Commercial Property Executive.

1 Columbia Place. Image courtesy of Regent Properties

A longtime owner of commercial real estate in the San Diego market, Regent Properties is making its first purchase in downtown San Diego, acquiring a portfolio of four high-rise office buildings for $420 million, or about $281 per square foot. The acquisition was the Los Angeles-based company’s first investment through its Regent Opportunity Fund V.

READ ALSO: Newport National Corp. Sells San Diego Campus for $68M

Regent Properties did not release the seller of 1 Columbia Place, 701 B Street, 2 Columbia Place and 707 Broadway. The San Diego Union-Tribune identified the former owner as Emmes Realty Services, a privately owned real estate investment advisor that bought the properties between 2012 and 2014 for a total of $325 million.

The properties total 1.5 million square feet of space, or approximately 16 percent of the entire Class A/B office inventory in downtown San Diego. The transaction also includes the 6th & A Parking Garage.

The previous owner had extensively renovated the portfolio’s common areas, including upgraded lobbies and amenities. Regent plans to add more hospitality-oriented improvements focusing on tenant engagement. Plans call for activating new fitness and conference centers, eateries and community gathering places such as outdoor terraces and wine lounges.

Matthew Benbassat, COO of Regent Properties, said in a prepared statement the new amenities would help attract and retain tenants. He said the real estate development and investment management firm is confident the curated tenant experiences combined with its ready-to-lease spec suite program will give tenants a reason to want to be at their properties.

Sam Kraus, executive vice president and head of acquisitions at Regent Properties, told Commercial Property Executive the company has conviction in the pending economic recovery and growth coming out of the pandemic and expects tenants and their employees will be returning to offices.

San Diego’s appeal

“Having analyzed migration data within the state of California, we also see a notable uptick in people moving from NorCal (Northern California) to San Diego. The city’s economic engine is strong and diverse—with life sciences and technology leading the charge,” Kraus said.

He also pointed to the city’s attributes, adding, “The climate, lifestyle, amenities and relative affordability for a West Coast city are all critical features which, we believe, will support San Diego’s post-pandemic economic outperformance in the coming years.”

Regent Properties, which is a vertically integrated operator and fund manager with investments concentrated in five Sunbelt markets, currently owns 13 other office and R&D properties in the San Diego region including two in the La Jolla submarket and eight in Carlsbad, Calif. The firm, which now has $1.8 billion in assets under management with the latest acquisition, also has office properties in the Dallas-Fort Worth, Houston, Denver and Phoenix markets. In March, the firm obtained a $61.7 million bridge loan to refinance Elevate 24, a two-building, 323,251-square-foot office property in Phoenix’s Camelback Corridor. Elevate 24 is one of the 12 office assets Regents Properties owns in the Phoenix region, according to CommercialEdge data.

“We’re looking to continue growing our presence in those markets, alongside our current initiative to grow the portfolio east of Texas,” Kraus told CPE.

CEO Eric Fleiss said in prepared remarks that Regent Properties is seeking to purchase more than $2 billion of assets over the next 24 months as it continues its push to acquire high-quality office projects across the Sunbelt.

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10641 Scripps Summit Court. Image courtesy of Cushman & Wakefield

Newport National Corp. sold Summit Pointe, a 146,626-square-foot creative corporate office campus on nearly 21 acres in San Diego to an undisclosed partnership for $68.4 million. The new ownership will be able to develop an additional 175,000 square feet of office space on the site.

READ ALSO: Healthpeak Eyes 3rd San Diego Life Science Project

Cushman & Wakefield brokered the sale with Executive Managing Director Rick Reeder and Executive Director Brad Tecca of the firm’s San Diego Capital Markets office representing Newport National, a Carlsbad, Calif.,-based real estate company. Leasing advisory was performed by Jay Alexander and Tim Olson of JLL and Chris Williams of CBRE. The buyer represented itself in the transaction.

Located at 10641 Scripps Summit Court in the Scripps Ranch submarket, the existing four-story building was completed in 2000 and is situated on an 11.5-acre parcel and the future development site is on a 9.5-acre parcel. Newport National acquired the property in November 2016 for $31.4 million from HD Supply Facilities Maintenance, which relocated to Atlanta, according to CommercialEdge and Yardi Matrix data. Mesa West Capital originated a $28 million first mortgage loan for the acquisition, renovation and stabilization of the office building. Newport National, which completely repositioned the property with interior and exterior renovations, used the loan proceeds for a new exterior entrance, lobby and common area upgrades, a new coffee bar, upgraded fitness center and a new training and events room.

In March 2018, TrellisWare Technologies, a major communications technology firm, signed a nine-year lease for 72,331 square feet at Summit Pointe, which is set alongside San Diego’s Interstate 15. The tenant uses the space for its corporate headquarters.

Value-add deal

Reeder said in a prepared statement the repositioning by Newport National had advanced the property to the top tier of office assets in the I-15 corridor and neighboring submarkets. The expansion through the new development will enable the new ownership to attract and retain world-class tenants seeking quality building environments, he added.

Tecca called the transaction an attractive value-add investment offering of an adaptive re-use of a traditional corporate office building. He noted in prepared remarks that the improvements made by Newport National were purposely designed and positioned to support expansion at the site for Summit Pointe Phase II.

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Rendering of new purpose-built lab building at Sorrento Gateway. Image courtesy of Healthpeak Properties

Citing demand from existing and new tenants, Healthpeak Properties Inc. is expanding its Sorrento Gateway campus in the Sorrento Mesa submarket of San Diego, Calif., with the construction of a 163,000-square-foot life science property. The Denver-based REIT expects to break ground on the five-story building in the third quarter and deliver it in the first quarter of 2023.

READ ALSO: Kilroy Breaks Ground on $940M Life Science Project

The Class A development will be adjacent to Healthpeak’s fully leased three-building, 196,000-square-foot Sorrento Gateway campus. The purpose-built lab building will feature cutting-edge design, expansive views, I-805 freeway accessibility, flexible and efficient floorplans and fitness and dining amenities.

Scott Brinker, Healthpeak president & chief investment officer, said in a prepared statement strong market fundamentals and tenant relationships combined with the demand from tenants gave the company the confidence to begin its next development in San Diego.

It will be Healthpeak’s third ground-up development in San Diego since 2020, following the successful preleasing of The Boardwalk and Callan Ridge campuses in the Torrey Pines submarket. In March, Healthpeak said it was planning to nearly double the current leasable space at its Callan Ridge campus by replacing an outmoded 90,000-square-foot building with two new Class A buildings totaling about 185,000 square feet. Callan Ridge is within Healthpeak’s 20-acre-plus Torrey Pines Science Park. On Monday, Healthpeak announced Turning Point Therapeutics Inc. had signed a long-term lease for the entire Callan Ridge project. The firm will be locating its headquarters at Callan Ridge at the end of 2022, upon completion of construction.

The Boardwalk, a 195,000-square-foot Class A lab and office campus in Torrey Pines, is also fully leased and slated for initial occupancy in the fourth quarter. Healthpeak began construction on the three-building campus in January 2020. The Boardwalk will have 110,000 square feet of ground-up development on both sides of an existing 85,000-square-foot property, which is being redeveloped.

The San Diego news comes several months after Healthpeak began construction of a five-story Class A lab sciences laboratory facility in South San Francisco, Calif. The Nexus on Grand development will total about 141,000 square feet, plus an adjacent parking structure.

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Pomerado Outpatient Pavilion

Pomerado Outpatient Pavilion, a 160,000-square-foot medical office building in San Diego’s suburb of Poway, sold in a sale-leaseback transaction. A publicly traded REIT paid more than $100 million for the Class A property. According to CommercialEdge information, the asset previously traded in 2010 for $74 million.

CommercialEdge data also shows Pomerado Outpatient Pavilion was the only medical office building larger than 25,000 square feet that has changed hands in San Diego metro since the beginning of the year. The building is also the largest medical office facility in Poway.

Cushman & Wakefield assisted the seller in the deal. Managing Director Travis Ives said, in prepared remarks, that the transaction provided Palomar Health with immediate access to capital for tenant improvements. In addition, the new master lease will enable the health-care system to save more than $2 million annually.

A Class A property

Developed by PMB and completed in 2007, the medical office facility is situated at 15611 Pomerado Road on the Palomar Medical Center Poway hospital campus. The property comprises a five-story building with an attached 1,170-space parking structure, as well as a pedestrian bridge connecting the outpatient pavilion and the hospital.

The multi-tenant pavilion also houses Palomar’s related multi-specialty group, Arch Health Partners, among other health-care providers.

Pomerado Outpatient Pavilion is less than 4 miles northwest of downtown Poway and some 23 miles from downtown San Diego.

Apart from Ives, the Cushman & Wakefield team representing the seller also included Managing Directors Gino Lollio and Scott Niedergang, with the participation of Director Joe Zurek. The first three brokers were also instrumental in the sale of a two-building, 42,857-square-foot medical office property in Temecula, Calif.

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As the pandemic dramatically changed the office landscape, California’s office market took a deep dive, leaving owners and occupiers uncertain about what the future holds. Despite the lingering unpredictability, office construction did not come to a halt in California.

According to CommercialEdge, the state’s development pipeline encompassed some 38.5 million square feet of office space as of April, and nearly 3.5 million square feet was delivered year-to-date. The list below highlights the largest office projects underway across California, based on CommercialEdge data.

Source: CommercialEdge

5. CityView Plaza – 200 Park Ave., San Jose

Jay Paul Co.’s project in San Jose aligns with plans to revamp the city’s downtown. The 20-story office tower is one of the major downtown office projects that are poised to reshape Silicon Valley’s skyline. The 879,000-square-foot development broke ground in November 2019 and is slated for completion by the third quarter of 2023. The project also marks downtown San Jose’s first speculative building in more than a decade.

Jay Paul Co. purchased the site at 200 Park Ave., along with a parcel at 282 S. Almaden Blvd., for a total of $100 million. The two sites, at the corner of Park Avenue and South Almaden Boulevard, are located across the company’s Cityview Plaza redevelopment, a 3.8 million-square-foot project that will incorporate six interconnected office buildings.

4. The RaDD – Phase I, San Diego

The RaDD, San Diego. Image courtesy of IQHQ

IQHQ, a life sciences real estate development company, is developing the $1.5 billion San Diego Research and Development District, the first urban life sciences-centric waterfront campus in San Diego. The RaDD will include office, lab, and retail space and occupy more than 8 acres spanning three entire city blocks. At 937 N. Harbor Drive, the first phase consists of a 950,000-square-foot, 28-story office building, expected to come online in the third quarter of 2023.

The pandemic bolstered an already favorable environment for life sciences. The metro is the third-largest life sciences market in the U.S., with an existing inventory of some 19.6 million square feet at the beginning of 2020, according to Cushman & Wakefield. The life sciences hub is one of the major economic drivers in the metro, generating $39.4 billion in economic output and providing more than 65,500 jobs, Cushman & Wakefield researchers noted.

3. First Street Tower of Oceanwide Center, San Francisco

The 1.5 million-square-foot mixed-use development will feature more than 1 million square feet of office space. Upon completion, the 61-story tower will also include first and second-floor retail space and 110 residential units. The project broke ground in 2016 and was originally anticipated for completion by 2021, however, due to economic uncertainties the development timeline has been delayed until 2025.

Oceanwide Holdings purchased the 1.2-acre site in 2015 for $296 million for the development of First Street Tower, although as the company encountered financial difficulties, it planned to sell the project. Initially, SPF Capital International agreed to pay $1 billion for the development, but the deal failed to materialize after several delays. Oceanwide Holdings then entered a new agreement with Hony Capital, but that deal also fell through earlier this year, The Real Deal reported.

2. Richards Boulevard Office Complex, Sacramento

The California Department of General Services (DGS) is developing a nearly 1.3 million-square-foot office complex on the southwest corner of Richards Boulevard and Seventh Street in Sacramento’s River District, known for its industrial past. The office complex will encompass four buildings, spanning 17.4 acres, and will be connected by a three-story bridge.

DGS has selected Hensel Phelps and ZGF, in partnership with Dreyfuss + Blackford, to design the office complex. The team is focused on pursuing sustainable design solutions while keeping in mind the River District’s industrial character. The project is designed to achieve zero net energy and zero net carbon for the entire site and is pursuing LEED silver certification. The Richards Boulevard Office Complex is slated for completion by 2024.

1. Adobe North Tower, San Jose

Adobe North Tower. Rendering courtesy of the City of San Jose

Adobe’s project at 333 W. San Fernando St. in San Jose is the fourth tower of the company’s global headquarters. The 1.3 million-square-foot development will include first-floor retail space and five levels of parking. The North Tower will be an all-electric building, which means that the facility will be powered from renewable sources such as wind and solar energy. This also aligns with Adobe’s goal of relying on 100 percent renewable energy by 2035. Additionally, the asset is designed to achieve LEED gold certification.

According to initial plans, the 18-story North Tower will be connected to the firm’s existing buildings by a pedestrian bridge extending over San Fernando Street. However, due to the pandemic, the company put the construction of the sky bridge on hold. Adobe also expressed uncertainty about whether it will complete the building’s interior, pausing plans until the company has a clearer image of its future physical office space needs.

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Cubic Corp.’s new headquarters. Image courtesy of Cisterra Development

Cisterra Development has completed Cubic Corp.’s new $100 million headquarters in San Diego. The two-building office campus totals 250,000 square feet and will be able to accommodate the global defense and transportation company’s 1,500 employees.

Located at 9233 Balboa Ave., the three-story structures are within a 15-minute drive of downtown San Diego, via interstates 8 and 15. The campus is LEED Silver certified, including efficient lighting, electric vehicle charging stations and solar panels. Cubic’s headquarters also has 687 parking spots, outdoor gathering spaces, a fitness facility and a basketball court. Whiting-Turner served as the general contractor and Ware Malcomb was the architect of the build-to-suit, Class A project.

READ ALSO: San Diego Creative Office Asset Lands $121M Refi

Before deciding to consolidate two separate office campuses into a new one, Cubic also considered development options outside San Diego. Eventually, the company opted to bring its San Diego-based workforce under the same roof in Kearny Mesa.

Cubic’s new office was completed under budget and ahead of schedule, according to a prepared statement from Steven Black, founder & chairman of Cisterra Development.

More changes ahead

Besides moving all its workforce in one centralized location, Cubic is set for other changes as well. Veritas Capital and Evergreen Coast Capital Corp., two New York-based private equity firms, entered into an agreement with Cubic to purchase the publicly traded company for $75 per share in cash. The transaction is expected to close in the second quarter of 2021.

Singapore Technologies Engineering Ltd. also made an offer to acquire Cubic, but the deal fell through due to regulatory impediments.

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Raceway Industrial. Rendering courtesy of Hines

Hines has purchased 16.4 acres of land for the development of Raceway Industrial, a logistics project in Carlsbad, Calif. This marks their first industrial land acquisition in the metro.

The company plans to develop a one-story, 249,000-square-foot warehouse on the site. Completion is scheduled for early 2022. The site is located between interstates 5 and 15, in the North County submarket.

Demand for industrial real estate exploded in 2020, primarily driven by e-commerce’s pandemic-induced boom. According to CommercialEdge data, the fourth quarter of 2020 had the highest sales volume of any quarter since CommercialEdge began collecting industrial data, with $11.9 billion in sales completed. The average price per square foot rose 18.2 percent year-over-year through January to $100.

Continued demand for industrial space is set to sustain rent growth and drive vacancy rates lower. In January, Ryan Cos. and DWS Group completed Vantage Point, a 533,950-square-foot logistics development in Poway, Calif., that is leased to Amazon. That same month, Hines sold an approximately 400,000-square-foot asset in Santa Ana, Calif. The facility traded for $113.5 million. The new deal comes almost half a year after Badiee Development completed the construction of a 50,150-square-foot adaptive flex industrial building in Carlsbad, with TFW acting as general contractor.

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Rendering of Nexus on Grand. Image courtesy of Flad Architects

Healthpeak Properties Inc., of Denver, is about to start construction of a five-story, Class A life sciences laboratory facility at 233 E. Grand Ave. in South San Francisco, Calif.

READ ALSO: The Life Science Industry’s Transformation

The Nexus on Grand development will total about 141,000 square feet, plus an adjacent parking structure. The purpose-built lab building reportedly will feature lab-ready building systems that will accommodate a variety of life science uses.

Healthpeak is also planning to densify its Callan Ridge campus, at 3020-3030 Callan Road in San Diego’s Torrey Pines submarket. The project will nearly double the current leasable area, by replacing an outmoded 90,000-square-foot building with two new Class A buildings totaling about 185,000 square feet.

Rendering of Callan Ridge. Image courtesy of FPBA

Callan Ridge, which is within Healthpeak’s 20-acre-plus Torrey Pines Science Park, will feature flexible floorplates, as well as a green roof deck with coastal and canyon views.

East, West and Texas

Nexus on Grand will be Healthpeak’s third ground-up development in South San Francisco since 2015, following The Cove at Oyster Point and The Shore at Sierra Point.

Healthpeak’s The Boardwalk project in Torrey Pines is slated for initial occupancy in the fourth quarter and is now 100 percent preleased. The three-building 195,000-square-foot lab and office campus got under way a year ago January.

Then, last June, Healthpeak began construction on a 116,500-square-foot medical office building for the Woman’s Hospital of Texas, in Houston.

In November, a joint venture of Healthpeak and King Street Properties started developing 101 Cambridgepark, a $170 million Class A lab facility in Cambridge, Mass.

And most recently, in December Healthpeak acquired Cambridge Discovery Park, also in Cambridge, Mass. A $720 million price tag bought Healthpeak a majority ownership stake in the three-building, 620,000-square-foot property, sold by a joint venture of The Bulfinch Cos., Harrison Street and National Real Estate Advisors. Bulfinch retained a minority stake and continues to manage the park.

The post Healthpeak Properties Surges in California appeared first on Commercial Property Executive.

7817 Woodley Ave., Van Nuys, Calif. Image via Google Street View

Rexford Industrial Realty Inc. spent the first month of the New Year making a handful of diverse acquisitions, shelling out $72.7 million on five assets in separate transactions. The collection, located in various Southern California infill markets, includes three industrial facilities totaling approximately 177,000 square feet, in addition to an industrial storage site and a redevelopment site.

READ ALSO: Logistics Rents Climb Amid COVID-19 Crisis: Prologis

Having closed 2020 with a slew of purchases, Rexford’s continuation of its shopping spree into 2021 dovetails with the REIT’s broader strategy. “We see a very substantial opportunity to consolidate well beyond our current 1.5 percent market share within our highly fragmented, exceptionally large infill Southern California industrial market,” Michael Frankel, co-CEO of Rexford Industrial Realty Inc., said during the company’s third quarter 2020 earnings conference call on Oct. 21, 2020.

Through the three newly announced transactions involving built properties, Rexford has enhanced its holdings by an aggregate 177,000 square feet in Southern California. For starters, the REIT increased its footprint in the high-demand Inland Empire with the addition of 5002-5018 Lindsay Court, a 65,000-square-foot, two-tenant building sited on nearly 3 acres in Chino. The property cost $12.7 million and will benefit from a repositioning and re-tenanting under the new ownership.

5002-5018 Lindsay Court, Chino, Calif. Image via Google Street View

Rexford also spent $20.2 million on the purchase of the 74,800-square-foot property at 17907-18001 S. Figueroa St., in Gardena, part of the Los Angeles–South Bay submarket. Currently 100 percent leased, the multi-tenant property also features 5.6 acres and offers upside potential via value-add repositioning or ground-up redevelopment.

In the Los Angeles–San Fernando Valley submarket, Rexford purchased 7817 Woodley Ave., a 36,900-square-foot property located on 1.6 acres in Van Nuys. The fully leased, single-tenant industrial building carried a price tag of $10 million, including the assumption of existing debt, and it completes the company’s Van Nuys Airport Industrial Center portfolio purchase of December 2020.  

The two remaining acquisitions include 514 E. C St. in Wilmington in the South Bay submarket, and 8888-8892 Balboa Ave. in San Diego. The property at 514 E. C St. is a fenced trucking and container storage facility featuring 2.5 acres of paved yard and a 3,400-square-foot office structure adjacent to the Port of Los Angeles. Rexford purchased the asset for $10 million in a sale-leaseback transaction with the tenant. And Rexford paid $19.8 million for the nearly 6-acre San Diego property at 8888-8892 Balboa Ave., where the REIT plans to develop a 120,900-square-foot Class A industrial building.

Rexford, which had completed 77 percent of its transactions in the first three quarters of 2020 by means of off-market or lightly marketed deals, closed each of the five newly announced purchases via off-market transactions. The company relied on cash on hand and 1031 exchange proceeds to finance the acquisitions.

Pandemic-era purchasing

While many investors have remained on the sidelines in favor of a wait-and-see approach amid the economic fallout from the COVID-19 health crisis, Rexford has remained highly acquisitive; the REIT continued bolstering its portfolio throughout 2020. “If you didn’t know the word COVID, you’d probably be thinking things were just pretty typical in terms of our business,” Howard Schwimmer, co-CEO of Rexford Industrial Realty Inc., said during the conference call. Rexford’s acquisition pipeline remains strong. In late January, the REIT entered into an agreement to purchase an 83-acre industrial property in Los Angeles County via a sale-leaseback transaction valued at $217.1 million.

Despite a certain degree of wariness among investors—industrial sector investment volume in 2020 was three-quarters that of 2019, according to a CommercialEdge report—Rexford does not expect to benefit from any pandemic-related fire sales. “There’s a significant amount of demand in the [industrial] market. Vacancy is still incredibly low. So, when you really look at the entirety of the market, there is not really any distress that’s out there,” Schwimmer added. “There’s a few things going on here and there, but that’s not leading to sellers thinking, because of the pandemic, they need to sell their real estate.”

The post Rexford Industrial Seals Deals Worth $73M appeared first on Commercial Property Executive.

AMP&RSAND

A joint venture between Westbrook Partners and The Casey Brown Co. has received a $121.3 million bridge loan from CIM Group for AMP&RSAND, a 342,742-square-foot creative office campus in San Diego. The new financing package pays down a $110.5 million loan, which Oaktree Capital Management originated in 2018, CommercialEdge data shows.

Cushman & Wakefield’s Rob Rubano arranged the loan.

The former home of The San Diego Union-Tribune, AMP&RSAND opened its doors in 2018 following an extensive redevelopment project to shift the asset from its previous use as a printing press into a creative office campus. The largest tenant, Encore Capital Group, became the property’s first after signing a full-floor lease in September 2018 for approximately 41,000 square feet. Another major tenant, QDOBA Mexican Eats, moved its headquarters to 34,000 square feet on the fourth floor in 2019.

Located at 350 Camino De La Reina in the Mission Valley submarket, the two buildings offer 37,852-square-foot average floorplates, 14-foot ceilings, a 5,000-square-foot fitness center and nine patios totaling 64,000 square feet of outdoor space.

Life sciences buoying market

San Diego’s office market struggled in 2020, with CommercialEdge showing that same-store asking rates dropped by a stunning 11.7 percent, the largest downshift nationwide. Mission Valley has not been immune. A fourth-quarter office report from JLL pegs the submarket’s net absorption at negative 260,000 square feet in 2020, with vacancy holding at 15.4 percent, well above the overall market’s 13.3 percent.

The market’s Class A assets have thus far remained resilient, though slowed leasing velocity amid tenant consolidations and downsizing are likely to intensify headwinds. Even so, San Diego’s life sciences sector continues to play an important role in the office sector’s health, amid escalating nationwide demand pushing rents ever higher.

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Energy upgrades earned 2 Columbia Place in San Diego a top Energy Star certification of 90. Image courtesy of EMMES

Inspired in large part by environmental, social and governance standards, investors and tenants are taking an unprecedented interest in the environmental scorecard of a commercial property. That was the primary driver behind EMMES Realty Services of California’s move to reduce energy consumption at 2 Columbia Place in downtown San Diego.

EMMES has owned and operated the 12-story office building in since purchasing it from LaeRoc Partners in 2013. Located at 1230 Columbia St., the 143,574-square-foot property was built in 1990 by Koll Development with architect Tucker, Sadler & Associates.

READ ALSO: Where Investment Strategy Meets ESG

In December, energy upgrades earned 2 Columbia Place a top Energy Star certification of 90 indicating that 2 Columbia Place is more energy efficient than 90 percent of comparable properties nationwide. Certified buildings must perform better than at least 75 percent of similar buildings under standards set by the U.S. Environmental Protection Agency. Performance must be tracked in EPA’s Portfolio Manager Tool, which compares performance to the national average, and this is verified by a third-party licensed professional architect or engineer.

At 2 Columbia Place, an Energy Star-certified mechanical schedule saves on energy consumption during work-from-home mandates. Image courtesy of EMMES

To earn recognition, EMMES Realty Services of installed a number of features to make 2 Columbia Place more energy efficient. A complete Direct Digital Controls (DDC) backbone was installed in 2018,  with upgrades to DDC and HVAC in half the building.

Advanced lighting control systems with occupancy and daylight harvesting sensors are incorporated throughout 65 percent of the building. Variable frequency drives reduce energy consumption of mechanical equipment, and parking and tower elevators have been modernized in the last two years. In addition, an Energy Star -certified mechanical schedule saves on energy consumption during work-from-home mandates.

READ ALSO: Reimagining the Workplace After the Pandemic

Operating features include a green cleaning program, green construction standards, a recycling program and electric vehicle charging stations. EMMES is in the process of implementing a cloud-based software system to control after-hours HVAC. That will allow tenants to submit HVAC requests on their smartphones.

EMMES also monitors daily energy consumption and evaluates  consumption changes after project upgrades or year over year,” noted Christine Takara, the firm’s director of customer experience.  “We can compare energy consumption savings after installing light sensors,” she told Commercial Property Executive.

Greening the inventory

Buildings account for almost 40 percent of global energy-related CO2 and will play a major role in a sustainable transformation, according to the U.S. Green Building Council. Today, about 60 percent of U.S. greenhouse gas emissions are caused by commercial, residential and industrial buildings—and these emissions contribute to climate change. For these reasons, commercial building owners and managers are expected to invest $960 billion globally between now and 2023 on greening their existing built infrastructure.

Energy Star-certified buildings save energy and money, and generate 35 percent less greenhouse gas emissions than typical buildings. According to Energy Star, if all U.S. buildings achieved that level of efficiency, total national emissions would drop by about 20 percent.

EMMES owns three other Energy Star-rated office high-rises in downtown San Diego: 1 Columbia Place at 401 W. A St., 707 Broadway and 701B at 701 B St.

Real estate properties both contribute to and be affected by sustainability challenges, Taraka noted.

“Therefore, we believe that consideration of environmental, social and governance factors are a key component in being a responsible investor,” she said. “ESG factors have the potential to influence the long-term financial performance of our real estate investments and are also a matter of good corporate citizenship.”

The post Meeting the Carbon Challenge: How a San Diego Standout Cut Its Footprint appeared first on Commercial Property Executive.

Vantage Point. Image courtesy of Ryan Cos.

Ryan Cos. and DWS Group have completed Vantage Point, a 533,950-square-foot logistics and distribution project in Poway, Calif., that is now entirely leased to Amazon. 

The partnership broke ground on the Class A, two-building development back in May 2019. At the time, the facility was the largest speculative project of its kind to rise in San Diego County in two decades.

The asset is located at 14400 and 14500 Kirkham Way, within the South Poway Business Park. The property is also within 6 miles from Interstate 15 and 22 miles from the metro’s downtown.

Vantage Point comprises 36-foot clear heights, 12 grade level ramps, 113 dock-high loading doors and three driveways, one for employee vehicles and the other for trucks. Amenities include six electric car charging stations with the infrastructure in place to expand to 127 stations and a bocce ball court. According to Ryan Grove, senior director of Real Estate Development at Ryan Cos., the development is LEED certified.  

Industrial activity has faced the effects of the pandemic better than most asset types, as online shopping fueled the need for more last-mile logistics space. According to the latest Marcus & Millichap report, North San Diego saw the average asking rate rise by 1.9 percent to $27.4 per square foot in the third quarter of 2020, the most significant gain among all of the metro’s submarkets.

The post Amazon-Leased San Diego Development Reaches Completion appeared first on Commercial Property Executive.

SecureSpace Self Storage Spring Valley. Image courtesy of InSite Property Group

Frontera Real Estate has sold A Storage Place, a 92,000-square-foot property in Spring Valley, Calif. InSite Property Group acquired the facility for $20.5 million, according to San Diego County records. The new owner has renamed the property SecureSpace Self Storage Spring Valley.

Located at 11902 Campo Road, the property opened its doors in 2019 and encompasses four buildings. Two commercial tenants also occupy space at the site. The facility features 800 units ranging between 25 and 600 square feet. The new owner intends to add more than 200 units once the asset is stabilized, according to Jake McMillan, digital strategist at InSite Property Group. The store has climate-controlled units, an on-site manager, Wi-Fi, video monitoring and drive-up access.

The seller and developer acquired the 6-acre site for $2.6 million in January 2018 from Attisha Enterprises. Inwood National Bank originated an $8.1 million construction loan for the project, Yardi Matrix data shows.

The facility is close to Jamacha Junction, at the intersection of State Routes 54 and 94, which has a daily traffic count of more than 60,000 cars. Downtown San Diego is 14 miles west. Additionally, there are at least eight other self storage properties totaling some 600,000 square feet within a 3-mile radius, according to the same data provider.

Earlier this month, InSite Property Group opened a 71,000-square-foot facility in Los Angeles. The company financed the development with an $11.1 million loan from Valley National Bank.

The post San Diego Storage Asset Trades for $21M appeared first on Commercial Property Executive.

San Diego Research and Development District. Image courtesy of IQHQ

Over the past month, San Diego was relatively quiet in terms of commercial real estate activity, though certain areas including the industrial sector continued to draw interest. Life sciences, one of the metro’s mainstays, also remained hot, with one of the sector’s developers closing a $1.7 billion equity raise targeting future developments. Read our November list of San Diego must-knows:

1. FINANCING – IQHQ raises $1.7 billion dollars for life science developments.

This is the second round of financing for the developer, which completed a $770 million capital raise earlier this year. CenterSquare Investment Management is among the new investors who participated in the latest equity raise. IQHQ’s portfolio includes approximately 4.4 million square feet of projects in Boston, San Francisco and San Diego. The company, formerly known as Creative Science Properties, made its first purchase in February, when it acquired a 285,000-square-foot laboratory building in Boston. In September, IQHQ broke ground on the first phase of a $1.5 billion life sciences campus in San Diego. Completion is scheduled for 2023.

2. DEAL – Elion Partners buys two facilities in $83 million West Coast deal.

The firm acquired two last-mile San Diego facilities in a four-property, 425,000-square-foot portfolio deal. The first asset is located at 2340 Cousteau Court in Vista. The 134,299-square-foot property is within 3 miles of McClellan–Palomar Airport. the The second facility at 6955 Consolidated Way encompasses 82,781 square feet. The $83 million trade also included more than 200,000 square feet near Seattle and in the Bay Area.

3. LEASING – Healthcare manufacturer leases entire industrial property. 

Rexford Industrial welcomed Quidel at a 106,400-square-foot asset in the Sorrento Mesa area. According to RENTV, the landlord recently completed $3.5 million in capital improvements. Located at 10015 Waples Court, the facility is within 2 miles of Interstate 805. Rexford purchased the property in 2019 for $21.3 million. Evan McDonald and Tom Mercer of Colliers represented the landlord in the 10-year lease agreement.

4. DEVELOPMENT – SENTRE completes renovation of creative office building.

The owner of Mosaic, the 60,313-square-foot property, added outdoor flex spaces, updated the building façade and implemented drought-resistant landscaping. The structure also boasts health and wellness improvements, such as an updated HVAC system and skylights. The tenant roster includes Interior Logic Group and Microsemi Corp., with JLL’s Tim Olson and Jay Alexander marketing the property’s available space. Located at 15822 Bernardo Centre Drive in Rancho Bernardo, the building is 1 mile from Interstate 15. SENTRE acquired the property for $14.2 million in 2019.

The post San Diego Commercial Real Estate Wrap-Up – November 2020 appeared first on Commercial Property Executive.

2340 Cousteau Court in Vista, Calif. Image via Google Street View

Elion Partners, of Miami, has acquired four last-mile industrial distribution assets on the West Coast, aggregating 425,000 square feet, for a total of $83 million. Elion reportedly intends to continue an investment strategy focused on first-, middle- and last-mile logistics properties, targeting core urban logistics hubs near large population centers in infill coastal markets.

READ ALSO: Supply Chain Resiliency to Boost Logistics Demand

The individual properties are:

• 2340 Cousteau Court, Vista, Calif., in the San Diego metro; 134,299 square feet
• 6955 Consolidated Way in San Diego; 82,781 square feet
• 33401 Central Ave., Union City, Calif., in the Bay Area/Alameda County; 94,976 square feet
• 6700 Hardeson Road, Everett, Wash., in the Seattle metro; 112,924 square feet

The sellers were not disclosed, but it appears that there were multiple companies, possibly separate sellers for each asset.

The addition of these assets provides the company with immediate operational cost-saving efficiencies, Shlomo Khoudari, managing partner at Elion Partners, said in prepared remarks.  

Elion expanded to the West Coast in April with the addition of James Lambert, who joined the firm from Amazon Logistics, as senior managing director of industrial investments.  

Accelerated e-commerce adaptation combined with the need for supply chain resiliency and diversification have been the primary demand drivers for the asset class, according to Lambert. As retailers and manufacturers increase their level of safety inventory and look to diversify their supply chains, strategically located distribution centers will be vital to their success, Lambert added in prepared remarks.

Just a bit of recovery

Separately, Elion announced the purchase of a 93,636-square-foot last-mile logistics asset in Florida, a former Bennett Auto Supply distribution center, at 3141 S.W. 10th St. in Pompano Beach, for $12 million.

The San Diego industrial real estate market bounced back in the third quarter with positive absorption of 876,800 square feet, versus negative absorption of 901,000 square feet in the second quarter, according to a recent report from Cushman & Wakefield.

Nonetheless, rents remain down compared with 2019. Countywide, the average asking rent for industrial space was $1.13 per month per square foot, triple-net, versus $1.18 per month 12 months earlier, also according to Cushman & Wakefield.

The post Elion Partners Expands West Coast Last-Mile Portfolio appeared first on Commercial Property Executive.

San Diego Research and Development District. Image courtesy of IQHQ

CenterSquare Investment Management is among the new and existing investors who participated in a $1.7 billion equity raise by life sciences developer IQHQ Inc. It is the second round of financing for IQHQ, which completed a $770 million capital raise earlier this year.

READ ALSO: Health Systems Lead MOB Trades in Q3: Report

IQHQ, which has offices in San Diego and Boston, said it is well positioned to continue expanding its development pipeline that already includes about 4.4 million square feet of life science projects in Boston, San Francisco and San Diego. Formed in February, the company formerly known as Creative Science Properties immediately began making strategic acquisitions of major development sites and assets in major life science markets. Its first purchase was a 285,000-square-foot lab and office building in Boston’s Fenway neighborhood acquired for $270 million in February.

In May, IQHQ acquired the 200,000-square-foot Innovation Park in Andover, Mass., in a $35.9 million deal. Two months later, IQHQ added Alewife Park, a 290,000-square-foot life sciences campus in Cambridge, Mass., in a $125 million sale-leaseback transaction with GCP Applied Technologies. Then in September, IQHQ broke ground on the first phase of the $1.5 billion San Diego Research and Development District, the first urban life sciences-centric waterfront campus in the city. The RaDD is being built on land at the Manchester Pacific Gateway mixed-use development site purchased from Manchester Financial Group. Phase One is expected to be completed by summer 2023.

CenterSquare chips in

Citing the San Diego development and Alewife Park acquisition, CenterSquare officials said its $158 million investment will improve IQHQ’s ability to execute on future transactions and provide an underpinning for the existing portfolio and balance sheet. Todd Briddell, CEO & CIO of CenterSquare, a Plymouth Meeting, Pa.,-based global real assets manager, said in prepared remarks the IQHQ management team has already executed on a highly scalable vision to deliver state-of-the-art office, lab and R&D space to premier tenants. Briddell said CenterSquare has confidence in both IQHQ and the strength of the life sciences sector.

Steve Rosetta, IQHQ CEO, said in a prepared statement CenterSquare’s experience in both public and private real estate investment will be a long-term asset to the IQHQ team. While the company did not publicly identify any other investors, the San Diego Union-Tribune reported Madison International Realty is also an investor in IQHQ. Rosetta said in a separate statement that the completion of what he termed a significant capital raise validates IQHQ’s solid strategy, exceptional team and success in identifying and securing premier life science projects and developments in top markets.

Jamie Graff, managing director, co-head of real estate at Raymond James, said in prepared remarks interest in the offering was exceptionally strong due to the momentum IQHQ has achieved since forming. He added the life sciences sector has remained steady and is projected to have continued growth.

The post IQHQ Raises $1.7B for Life Science Projects appeared first on Commercial Property Executive.

Founded in 2010, Stockdale Capital Partners specializes in the redevelopment and repositioning of assets in the Southwest, focusing on revitalizing urban properties of all types. It is also well-known for transforming distressed shopping centers into desirable high-tech, mixed-use office hubs, having previously worked on projects in Scottsdale, Ariz., and Los Angeles.

The Campus at Horton. Rendering courtesy of Stockdale Capital Partners

The company purchased Horton Plaza, a once-vibrant downtown mall, from Westfield in August 2018, with the intention of transforming the post-modern buildings into a life science destination encompassing 770,000 square feet of office space. The project will also include 300,000 square feet of specialty retail—half the space it was initially designed to include, due to the retail sector’s current decline.

The development team places emphasis on sustainability and improved energy performance, aiming for LEED Platinum, WELL Platinum and WiredScore certifications. When completed in early 2022, The Campus at Horton will house close to 4,000 high-quality jobs. Stockdale’s Leo Divinsky, managing director of asset management, elaborates on this large-scale project’s feasibility and green building practices, and the impact it has on California’s niche workforce.

READ ALSO: Life Sciences Real Estate Demand Thrives

The Campus at Horton represents the redevelopment of the post-modern Horton Plaza Mall into a high-tech office hub. What prompted you to convert this shopping center into one of the West Coast’s largest biotech and life sciences campuses?

Leo Divinsky, Managing Director of Asset Management, Stockdale Capital Partners. Image courtesy of Stockdale Capital Partners

Divinsky: The opportunity to acquire, reposition and expand Horton Plaza into a 10-acre urban mixed-use campus was appealing for a number of reasons. San Diego is one of the best cities in the country, a top-three life science cluster and a region that continues to produce a substantial number of science, technology, engineering and math graduates into the regional ecosystem amid a rapidly expanding footprint of tech firms. 

What is the current status of the project? Has the coronavirus outbreak impacted the project’s timeline?

Divinsky: Our $330 million construction loan was funded in March 2020. Exterior demolition is nearing its final stages and structural upgrades on the former Nordstrom building, where we are adding five stories, is underway.  We are fortunate that the pandemic has not impacted our project timeline.

Tell us more about the companies involved in the development and design process of this massive project.

Divinsky: The Stockdale development team worked on project design with architectural teams from Rios Clementi Hale and RDC Design Group. Structural engineering was handled by Miyamoto International. Turner Construction Co. is our general contractor. Our leasing efforts are being led by CBRE for the office space and Flocke & Avoyer on the retail front.

What makes The Campus at Horton stand out? Please elaborate on its sustainability features and design principles.

Divinsky: The project’s proximity to housing, transportation and entertainment, coupled with amenities including a health club, numerous restaurants featuring outdoor dining, experiential retail, more than 1 acre of activated open space highlighted by a chef-driven food hall, and the largest parking structure downtown offer a unique offering to both national and regional firms. The Campus at Horton combines the scalability, wellness and sustainable features that optimize the work-life balance employers are seeking.

The Campus at Horton. Rendering courtesy of Stockdale Capital Partners

We are currently targeting LEED Platinum, WELL Platinum and WiredScore Platinum certifications. A new energy-efficient central plant with heat recovery features, solar panels on most roof surfaces, battery storage and the first private blackwater system in San Diego are among the top sustainability features of the project.

Development seemed to be off to a difficult start, implying a necessary land-use change. What other challenges have you come across so far and how did you manage to tackle them?

Divinsky: Any project of this magnitude involves substantial planning, capital and execution. We received unanimous city council approval for our development in May 2019 and have worked to execute our business plan with abundant support from the downtown community. 

Although the pandemic has impacted existing commercial projects in terms of leasing demand in 2020, our timeline for project delivery in early 2022 allows our team to focus on the project’s build-out during this challenging period as we focus on completing this catalytic project.

READ ALSO: Repositioning Commercial Buildings Into Life Science Facilities

The project will encompass 300,000 square feet of specialty retail. Does this component incorporate anything from the original construction’s spatial layout?

Divinsky: All aspects of the project’s retail program have been optimized to accentuate the entertainment, dining and shopping experience of both campus employees and consumers with significant emphasis on outdoor spaces, simplified access and circulation, as well as the addition of tree canopies and lush landscape features. The Lyceum Theater along with a state-of-the-art health club, entertainment options on the project’s upper floors and dining opportunities through the site remain key project components.    

The Campus at Horton. Rendering courtesy of Stockdale Capital Partners

In which way does The Campus at Horton act as a revitalizing catalyst for downtown San Diego?

Divinsky: Horton Plaza opened to the public in 1985 and was immediately recognized as a top regional shopping destination in San Diego. We are excited to play a role in the reestablishment of this significant asset in the heart of downtown by creating a technology and life science-focused campus that meets the needs of job creators focused on attracting and retaining one of the top talent bases in the country. 

How do you expect the project to impact California’s biotechnology workforce and the region itself?

Divinsky: The top three life science clusters in the country include Boston/Cambridge, the Bay Area and San Diego. As demand continues to outpace supply in San Diego’s traditional biotech submarkets of UTC, Torrey Pines and Sorrento Mesa, we feel market conditions are extremely conducive for an expansion into San Diego’s urban core. The combination of an ideal urban location, project infrastructure and on-site amenities offers companies workplace solutions that are flexible, scalable and designed to enable their workforce to thrive.    

Stockdale Capital Partners has a history of repurposing malls into mixed-use structures. Tell us more about other representative projects you are currently working on.

Divinsky: The Galleria Corporate Center in downtown Scottsdale, Ariz., is another example of a major adaptive reuse project. The nearly 550,000-square-foot complex was acquired in 2013 and has been transformed into a top-tier office project for technology firms such as Yelp, Indeed and Zillow. The insights and experiences our team developed in accomplishing the transformation of that project are being readily applied to The Campus at Horton and other projects throughout our portfolio.

The post From Mall to Life Science: A Rising Trend appeared first on Commercial Property Executive.

Todd Holley, Senior Vice President, Voit Real Estate Services. Image courtesy of Voit Real Estate Services

Voit Real Estate Services signed an exclusive agreement with Tangerine Energy to lease or acquire 50 industrial warehouses or land sites per year over the next five years to house battery storage centers. These facilities would be located in areas with dense population, where energy pricing is highly volatile.

The collaboration marks one of Voit’s first formal expansions into the energy sector and meets the decision Tangerine Energy made more than a year ago to strengthen the battery storage market in California. The joint venture’s arrangement will primarily serve commercial property owners seeking stability, said Todd Holley, senior vice president in Voit’s San Diego office, as each warehouse or land site will be either acquired or fully leased by a credit tenant for a term of up to 15 years.

California has been implementing various strategies to reduce the imported energy, which puts pressure on demand for commercial properties situated near urban centers, as the need for power storage facilities increases. Typically, these buildings are industrial facilities of at least 40,000 square feet, which is significantly smaller compared to solar and wind farms. Because they require less space, power storage farms can be integrated into high-density areas that post high demand for energy. These facilities are anticipated to grow in importance over the next 10 to 15 years, as new legislation and energy goals will further strain the existing infrastructure and energy grid.

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San Diego skyline. Image by Jill Wellington via Pixabay.com

Over the past month, activity in San Diego’s commercial real estate sectors was muted, though certain sectors continue to attract investment. While traditional office properties are facing challenges, the two bright spots in the metro are industrial and life sciences assets. According to a recent CBRE report, San Diego’s life sciences inventory is seeing rising rents amid low vacancy, which is expected to continue into next year. Read our October list of San Diego must-knows: 

1. DEAL – Longfellow Real Estate buys office campus for $113 million.

Shorenstein sold The Foundry, a 280,365-square-foot asset comprising two buildings. JLL brokered the transaction. The property last sold two years previously as part of a $186 million local portfolio sale by PGIM Real Estate, according to Yardi Matrix. Longfellow plans to redevelop parts of the property as laboratory space. The first lab is slated for completion in 2021. Located at 9276 and 9330 Scranton Road, the buildings are within 3 miles of University of California, San Diego.

2. DEVELOPMENT – Westfield upgrades retail center with solar panels.

Westfield UTC is a shopping center located at 4545 La Jolla Village Drive, within 2 miles of Interstate 5. The property was upgraded with more than 2,800 new solar panels, which added to the existing energy system. The improvement was made in partnership with San Diego Gas and Electric. The tenant roster includes Apple, Allen Edmonds and Kendra Scott. In addition to its retail space, the property has a 23-story, 300-unit multifamily component. Westfield similarly upgraded one asset in Silicon Valley and another in Paramus, N.J.

3. FINANCING – Manchester Financial scores $212 million loan for Navy HQ.

The borrower secured the financing from Brevet Capital. The 373,000-square-foot property delivered in late September, and the Navy plans to employ 1,700 military and civilian personnel within the building. The 17-story project replaces a 1920s-era property that will be demolished next year. The structure is part of the 3 million-square-foot Manchester Pacific Gateway mixed-use development.

4. DEVELOPMENT – Lowe and Atlas Hotels complete renovation of 675-key resort.

Town and Country features a mix of one- and two-bedroom guestrooms with private balconies and five top-floor suites of approximately 1,100 square feet. Common-area amenities include a waterslide, fitness center and two swimming pools. The developers also expanded dining options at the resort, which includes a cocktail lounge and a restaurant. The renovated property also has 258,000 square feet of event and meeting space. The 40-acre urban resort is located on Hotel Circle North in Mission Valley.

5. DEAL – Unilev Capital acquires industrial asset for $14 million.

The National City property traded as part of a 1031 exchange. According RENTV.com, CBRE represented the seller, an institutional investor, and Unilev was self-represented. Built in 1969 and renovated in 2002, the 78,700-square-foot asset also includes office space. The facility at 131 W. 33rd St. is within 6 miles of downtown San Diego and 9 miles of San Diego International Airport.

The post San Diego Commercial Real Estate Wrap-Up – October 2020 appeared first on Commercial Property Executive.

Manchester Financial Group’s team at U.S. Navy’s Region Southwest Headquarters. Image courtesy of Manchester Financial Group LP

Manchester Financial Group LP, of San Diego, has received a $212 million term loan facility provided by funds managed by Brevet Capital, of New York. The loan proceeds were used to finance the development and construction costs of the U.S. Navy’s Region Southwest Headquarters in San Diego, which the Navy is moving into this month.

READ ALSO: San Diego Commercial Real Estate Wrap-Up – September 2020

The headquarters is in turn part of Manchester Pacific Gateway, a 3 million-square-foot, 14-acre mixed-use development with office, hotel and retail space on the San Diego waterfront and port district.

Completed at the end of September, the Navy regional headquarters is a 17-story, 373,000-square-foot Class A office that will accommodate 1,700 Navy and civilian employees. The project replaces a 1920s-vintage headquarters building that will be demolished starting next January.

Brevet is a specialty finance provider that focuses on the government sector. A Manchester spokesperson did not reply to Commercial Property Executive’s request for additional information.

Life sciences stays healthy

Also in late September, IQHQ acquired from Manchester five of the project’s seven blocks, on which IQHQ will develop the $1.5 billion San Diego Research and Development District, a life sciences campus that will include retail space and a museum. The blocks that Manchester is retaining feature a 1,035-key waterfront hotel and 1.9-acre plaza.

Manchester Pacific Gateway’s development manager is Dealy Development, the architect is Gensler, the civil engineer is Design Consultants, the general contractor is Turner Construction, and the landscape architect is KTU&A Landscape.

San Diego is the nation’s third-largest life sciences market, with a metro-wide inventory estimated at 19.0 million square feet, according to a June report from NGKF. And so far, it has been resilient to the effects of the pandemic: 95 percent-plus of rents were collected as of April, with lease rates and concessions on new leases remaining unchanged.

One new evolution in the market, NGKF says, is that “several new landlords have emerged with recent acquisitions of flex parks that they will re-purpose to traditional life science space.”

The average overall vacancy is about 7.1 percent, and about 13.4 percent if the transitional new developments are included, also according to NGKF.

The post Manchester Financial Group Lands $212M for Navy HQ appeared first on Commercial Property Executive.

Image courtesy of Unibail-Rodamco-Westfield

Unibail-Rodamco-Westfield, a global developer and operator of flagship shopping destinations, has completed the installation of solar panel arrays at three of its properties. Westfield Valley Fair in Silicon Valley, Calif., Westfield UTC in San Diego and Westfield Garden Plaza in Paramus, N.J., are now solar-powered.

The Valley Fair shopping center had nearly 3,800 solar panels installed in partnership with Pacific Gas and Electric. The collaboration boosted the existing solar power system to more than 8,000 panels and a capacity of 2.5 megawatts that can generate almost 3.9 gigawatt-hours of clean energy annually. The property is touted as one of the most productive shopping centers in the country, featuring a lineup of luxury boutiques and global brands such as Nordstrom, Macy’s, Louis Vuitton, Prada, Cartier and Balenciaga.

The UTC facility was also upgraded, with more than 2,800 new solar panels added to the existing system in partnership with San Diego Gas and Electric, and now totals some 3,500 panels. The system’s capacity rose to nearly 1.2 megawatts and can generate more than 1.9 gigawatt-hours per year. The outdoor retail resort’s tenants include Apple, Allen Edmonds, Kendra Scott and Vineyard Vines. The property also features a 23-story residential tower with 300 units.

The solar power system at Garden State Plaza was installed with Public Service Enterprise Group and consists of roughly 3,500 panels with a capacity of more than 1.3 megawatts that can generate 1.7 gigawatt-hours of energy yearly. The property has more than 300 shops and is anchored by Nordstrom, Macy’s, Neiman Marcus and Lord & Taylor.

The company now has seven shopping centers equipped with solar power installations. Its largest is the Westfield Topanga & The Village in Los Angeles, a facility that in 2018, had 15,000 solar panels installed, with a generating capacity of 4 megawatts, which made it the largest installation of its kind at any retail destination in California.

Sustained focus on sustainability

URW has launched a global environmental sustainability initiative, dubbed Better Places 2030, which signs up the company to achieve a 50 percent reduction of its carbon emissions by 2030 on a global scale. Measured emissions include direct and indirect ones—coming from construction, tenant energy consumption and other property operations, as well as employee and visitor transportation.

The company’s attention to sustainability has, so far, materialized into 10.6 megawatts of solar installations across the U.S. that can generate 16.7 gigawatt-hours of renewable energy. The use of solar panels also means a reduction of its carbon dioxide emissions by 11,800 metric tons per year.

READ ALSO: Giving Back to the Community

URW’s sustainability strategy includes several other factors, such as the integration of smart transportation infrastructure, which comprises public transportation connectivity, short-distance carpooling programs and electric vehicle charging stations. In addition, the company’s carbon-reduction strategy includes waste management, water conservation and LED lighting system—its LED retrofit projects in the country are estimated to save almost 40,000 megawatt-hours every year.

The U.S. Environmental Protection Agency has awarded URW the Excellence in Green Power Use, which made it a Green Power Partner. The recognition stands for outstanding use of green power through a diverse portfolio, including power purchase agreements, REC purchases and self-generation rooftop and carport solar projects. Combined, these purchases amount to nearly 147 million kilowatt-hours each year.

The post Westfield Upgrades Shopping Centers With Solar Power appeared first on Commercial Property Executive.

The Foundry

Longfellow Real Estate Partners has purchased The Foundry, a 280,365-square-foot office campus in San Diego. The sale marks the company’s third acquisition in the metro this year, bringing its portfolio to more than 960,000 square feet in less than two years, with the Creekside campus as its most recent addition. 

Shorenstein sold the two-building property at 9276 and 9330 Scranton Road. Yardi Matrix data shows that the asset last traded in 2018 as part of a $186 million portfolio acquisition from PGIM Real Estate. The transaction also included the Sorrento Towers, two buildings totaling 294,000 square feet adjacent to The Foundry.  

JLL Managing Director Nick Psyllos, Senior Managing Director Michael Leggett, Managing Director Lynn LaChapelle and Senior Direct Sach Kirpalani represented both parties. Longfellow worked with Senior Managing Directors Steve Bruce and Chris High of Newmark Knight Frank for agency leasing services.

The new owner will immediately start construction on a lab conversion project, which will deliver 25,000-square-foot floorplates and multiple floors at the property. The first lab is slated for completion in the last quarter of 2021, catering to a full range of life science tenants in the third largest biotech cluster in the country.

Upgrades to the amenities will include improvements to the lobby areas and outdoor common space, as well as a cafe, a fitness center and a conference facility. Additionally, tenants will be able to use the amenities at the nearby SOVA Science DistrictTM, Longfellow’s recently completed campus. These include a brewery, a fitness center and community outdoor space.

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