Lab Conversions Remain a Hot Target However
By Joshua Ohl CoStar Analytics
November 12, 2020 | 2:53 P.M.
As leasing volume across the San Diego office market has cooled to its lowest level in more than 20 years, office investment has followed course. Deal flow has fallen to levels not seen in the region since the Great Recession.
While the fourth quarter so far has shown a modest uptick in volume relative to the third quarter, it’s still on pace to fall far short of the average sales volume in 2018 and 2019, when quarterly sales volume averaged $600 million. So far, the three full quarters amid the pandemic are on pace to just fall short of quarterly averages over the preceding two years.
But even amid the pandemic, much like the area's industrial investment market, investors are increasingly attracted to San Diego's life science nodes, where they have the potential to convert older office buildings into lab space to accommodate the region's expanding biotech tenants.
In July, Alexandria Real Estate Equities purchased the Pointe at Torrey Pines for $97.5 million, or roughly $700 per square foot. The two-building campus had been owned and occupied by National University. It was the first office sale in Torrey Pines in four years. The submarket tends to have a more immobile tenant base since so many of the buildings are owner operated. The buyer is expected to demolish the building and redevelop the site into a life science campus after a short leaseback to National University. The buildings sit on more than 11 acres and were sold for land value. Because it sold for its land value and not the improvements, however, its sale price was removed from office volume totals that quarter.
Sorrento Mesa has accounted for one-third of office investment volume since the second quarter, with a haul north of $150 million across 10 sales so far. The largest of those was for The Foundry in October. The two office buildings total nearly 300,000 square feet and sit on almost 13 acres. Longfellow Real Estate Partners from Boston purchased the property from Shorenstein Properties for $130 million, or more than $460 per square foot. Longfellow targeted the buildings with the intention of converting them into lab space with work finishing up by the end of next year.
That was the third purchase by Longfellow Real Estate Partners in San Diego in 2020 and brings its local holdings to roughly 1 million square feet. Longfellow made its first investment in San Diego in 2018, with the goal of acquiring upwards of 2 million square feet of lab space in the region.
All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner of will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. Keywords: San Diego Commercial Real Estate For Sale, Commercial Property In San Diego, Commercial Real Estate In San Diego, San Diego Investment Real Estate, Commercial Property Management In San Diego, San Diego Commercial Property Management, Commercial Property Management San Diego, Managed Commercial Property San Diego, Commercial Property For Sale San Diego, San Diego Commercial Real Estate Leasing, Top Real Estate Agents in San Diego, Commercial Property in San Diego, Property Management Company San Diego, Real Estate Agent in San Diego, San Diego Commercial Real EstateReal Estate Agent Contact UsBrokerage, Property Management