$450M SoCal Project Lands Government Tenant

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.

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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.