Downtown San Diego Tower Trades for $110M
Commercial Property Executive, September 8, 2017
Rockwood Capital LLC has purchased, for $109.5 million, 600 B St., a 24-story, 359,278-square-foot, Class A office tower that covers one city block in downtown San Diego. The transaction was announced by HFF, which had marketed the property on behalf of the seller, a partnership between Lincoln Property Co. and Angelo, Gordon & Co.
HFF also arranged the acquisition financing for Rockwood Capital: an $81.2 million, three-year, floating-rate, interest-only loan with two one-year extensions, placed with HSBC Bank USA.
600 B St. features floor-to-ceiling windows; column-free, 15,000-square-foot floor plates; a lobby finished with flame granite pavers, wood paneling and stainless steel accents; and a three-level, 312-stall underground parking structure.
The Energy Star–rated tower is 89.7 percent leased to 33 tenants, including WeWork, the San Diego Union-Tribune, MiTek and law firm Robbins Arroyo. The property has a Walk Score of 99 and is close to more than 25 restaurants, nine banks, 600 hotel guestrooms, five trolley stops and 3,300 residential units.
The HFF investment sales team that represented the seller included Senior Managing Director Nick Psyllos, Senior Director Nick Frasco, Senior Managing Director Ryan Gallagher and Analysts Taylor Bergthold and Kara Mathis.
The HFF debt placement team representing the new owner included Senior Managing Director Aldon Cole.
“The buyer recognized the opportunity to acquire an asset that has a tremendous future with the resurgence of the downtown San Diego office market,” Psyllos said in a prepared statement. “It provides both long-term tenancy with the Union-Tribune and WeWork and a good mix of smaller tenants throughout the building to build on that momentum.”
As of press time, HFF had not responded to Commercial Property Executive’s request for additional information.
San Diego’s Office Market
The Class A office market in San Diego is seeing average monthly asking rents, currently $3.22 per square foot, full-service gross, nearing the 2008 market peak of $3.24, according to a second quarter report from JLL.
But in what appears to be the other side of the coin, the report notes that, while overall office absorption has been pallid, demand for Class B space has been booming, driven in particular by government clients and health-care and pharmaceutical companies seeking more affordable rents.
Class A space in the downtown submarket saw only 0.1 percent net absorption so far this year, on an inventory of almost 6.5 million square feet, resulting in an average total vacancy of 7.9 percent. Fortunately, there have been no completions downtown year-to-date, nor is there any office product in the pipeline.
By Scott Baltic