Irvine Co. added nearly half a million square feet of midrise space to its already-sizeable San Diego County office portfolio over the past three weeks through a pair of acquisitions that real estate sources estimate around $365 million combined.
The deals include at least one transaction that market watchers indicate could be a record breaker in terms of a per square foot price for the area.
The Newport Beach-based investor and developer this month disclosed the purchase of Paseo Del Mar, a three-building complex in the Del Mar Heights area that totals about 235,000 square feet.
The buildings are about 20 miles north of downtown San Diego, near the University of California-San Diego. They were built in 2006 and are fully occupied; tenants include Dowling & Yahnke LLC, Bank of Southern California, Pillsbury Winthrop Shaw Pittman LLP and Sheppard, Mullin, Richter & Hampton LLP.
Irvine Co. bought it from Germany-based real estate investor Union Investment, brokered by Eastdil Secured LLC’s Adam Edwards, Brian Russell and K.C. Scheipe. Union Investment’s main stakeholder is DZ Bank AG, which is based in Frankfurt, Germany.
Terms of the sale were undisclosed by the buyers and sellers.
When the property was listed for sale this past summer, commercial real estate trade publication Real Estate Alert indicated that Union Investment was seeking a price in the $700-per-square-foot range, or about $165 million.
Such a price would be a record high for the affluent office market in and around Del Mar Heights, where Irvine Co. already has a large presence.
Sources familiar with the transaction tell the Business Journal that the sales price likely came in around the estimate.
La Jolla Reserve
Late last month, Irvine Co. bought Sunroad Corporate Center, another three-building complex that’s about six miles south of Paseo Del Mar, closer to La Jolla. Its offices total 302,000 square feet.
Built in 2001, the complex is 78% leased to tenants including Banner Bank, Cooley LLP, Provident Insurance Group, Regus, Shell and Systran.
Irvine Co. renamed the project La Jolla Reserve.
It was sold by locally-based institutional real estate investor Sunroad Enterprises in a deal brokered by Kevin Shannon and Brunson Howard of Newmark Knight Frank.
Terms of the deal were also undisclosed; real estate sources tell the Business Journal that La Jolla Reserve sold for about $675 per square foot, or a bit more than $200 million.
That’s well above the norm for recent office sales in Orange County. High-end, well-leased buildings around John Wayne Airport have been trading closer to $400 per square foot.
Sales of other high-end offices in the vicinity of La Jolla Reserve have been approaching $500 per square foot, according to area brokerage data.
New Heights
The recent San Diego buys mark the third and fourth acquisition for Irvine Co. since September 2017. It’s also built new offices in the region over the past few years.
The company added about 1 million square feet for its regional portfolio over the past 13 months through acquisitions, and now has about 9 million square feet in the county.
It’s San Diego’s largest office landlord, as it is in OC, where its portfolio runs well in excess of 20 million square feet.
Irvine Co. has a number of high-rise properties to its name in downtown San Diego, as well as investments in the Mission Valley area.
“The Irvine Co. continues to view the San Diego region as a world-class innovation center with unparalleled lifestyle attributes to attract top talent across all high-growth industries,” said Doug Holte, president of the company’s office division, following the Paseo Del Mar acquisition.
Real estate sources suggest that more could be in the works for Irvine Co. as one of the area’s trophy properties in the La Jolla Commons office development is reportedly to be on the market.
Irvine Co. is presumed to be a potential buyer of the La Jolla Commons tower, which would be its largest buy in the area in several years and push its recent buying spree past $1 billion.
