Hines Affiliate Buys San Diego Office Portfolio

Hines portfolio at Liberty Station. Image courtesy of Hines

Hines Global Income Trust Inc. has acquired a four-building, 187,000-square-foot office portfolio in the Liberty Station mixed-use development, in the Old Town/Point Loma submarket of San Diego.

The low-rise office portfolio is situated at 2280, 2468 and 2488 Historic Decatur Road and 2750 Womble Road on the San Diego waterfront and is 93 percent leased.

The purchase price and the portfolio’s seller were not disclosed. However, Commercial Property Executive reported in early 2019 that the same four buildings were acquired by a joint venture of IDS Real Estate Group and Lionstone Investments from McMillin Cos. for $76.8 million.

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The 360-acre Liberty Station is a former training center that the Navy closed in 1997. The site currently includes an office district, numerous retail shops and restaurants, 349 residential units, a golf course, several public schools, and 125 acres of parks and recreation space.

Hines portfolio at Liberty Station. Image courtesy of Hines

Omar Thowfeek, Hines Global managing director of investments, said in a prepared statement that the San Diego area’s sizable labor pool for government and tech companies, combined with the prime location, make Liberty Station a strong long-term investment.

The San Diego office market has seen leasing volume grow by nearly 50 percent compared to last year, driven largely by tech and health care, though rent growth remains below the five-year average, according to a fourth-quarter report from Kidder Mathews.

Office property sales in 2021 hit a post-recession record of $2.7 billion, often resulting from demand by life science companies.

The Point Loma submarket has an average availability of 14.1 percent on an inventory of 2.8 million square feet. Total leasing activity in 2021 was a modest 76,000 square feet, and net absorption was a negative 54,600 square feet, also according to Kidder Mathews.

Diverse purchases

Hines also announced three additional recent acquisitions in Southern California.

Hines U.S. Property Recovery Fund acquired a 3.9-acre RV parking and storage site at 3130 S. Fairview St., in Santa Ana, Calif., near the ports of Los Angeles and Long Beach, Calif. Hines intends to redevelop the site for an 82,000-square-foot industrial facility, with delivery expected in mid-2023.

In an off-market transaction, Hines U.S. Property Partners Fund acquired a 112,000-square-foot manufacturing facility at 14191 Myford Road in Tustin, Calif. The property is fully leased for the next decade to a pharmaceutical manufacturer.

The same fund acquired the 203,000-square-foot JCPenney building at Westfield Culver City shopping center. Hines notes that it has added five other retail properties to its western region portfolio recently.