Blackstone’s EQ Office Sells San Diego Campus for $77M

October 7, 2024

Investment News Office San Diego More West

This property was 90 percent leased at closing.

Aerial view of Highlands Corporate Center, an office campus in San Diego. — Highlands Corporate Center comprises five office buildings completed in 1985. *Image courtesy of Harbor Associates*

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.

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.