San Diego Commercial Real Estate Wrap-Up – September 2020

East Village Quarter. Image courtesy of the City of San Diego

With new COVID-19 cases at a slight increase in San Diego County, state and local authorities remain cautious about reopening further. In late September, Governor Gavin Newsom issued an executive order allowing local governments to continue restricting commercial evictions through March of next year. In the meantime, San Diego’s commercial real estate activity picked up during the past month, with several major, billion-dollar projects unveiled. Life sciences continued to be a central driver for further developments and economic growth. Read our September list of San Diego must-knows:

1. DEVELOPMENT – Tishman Speyer, Ascendant Capital tapped for $1.4 billion redevelopment.

The joint venture plans to transform San Diego’s Tailgate Park into a 2 million-square-foot, mixed-use development called East Village Quarter. The developer could break ground on the project as early as 2023. Carrier Johnson + CULTURE is the project architect. Upon completion, East Village will have nearly 1.4 million square feet of office space, 612 market-rate and affordable apartments, 236,000 square feet of open space and 1,600 parking spaces.

2. DEVELOPMENT – Manchester Financial completes sale and development within master-planned community. 

The company sold an 8-acre waterfront site within the 12-acre Manchester Pacific Gateway, with Cushman & Wakefield brokering the deal. The buyer, IQHQ, plans to build The San Diego Research and Development District, a $1.5 billion life sciences campus. The asset is set to include office, laboratory and retail space. IQHQ expects to deliver the first phase of The RaDD by the summer of 2023.

Manchester Financial also completed the new Navy Region Southwest Headquarters within the area. The Navy plans to move into the 17-story, 373,000-square-foot Class A office building this fall. Demolition of its original 1920s headquarters is scheduled for January 2021.

3. LEASING – CBRE arranges leases on behalf of behavioral health company.

LifeStance Health worked with the brokerage’s Sean Fitzmaurice, Shane Macedo and Emmett Purcell to negotiate seven office leases and one expansion within the metro. The eight properties are located at 31573 Rancho Pueblo Road, 6386 Alvarado Court, 351 Santa Fe Drive, 2300 Boswell Road, 15611 Pomerado Road, 8950 Villa La Jolla Drive and 11515 and 12264 El Camino Real. The spaces range from 3,333 to 5,832 square-feet.

4.  FINANCING – NorthMarq arranges $15.5 million loan for industrial project.

The company secured the 11-year, construction-to-permanent loan with a life insurance company. The 125,865-square-foot asset is a build-to-suit project for Pepsi. The future distribution facility is situated on 10 acres. According to NorthMarq, the interest rate was fixed for the entire term at loan application, with the 15-month construction loan period being interest only. Senior Vice President Steve Hollister arranged the financing.

5.  DEAL – Longfellow Real Estate buys R&D asset.

Creekside is a three-building, 124,473-square-foot property located on 9 acres at 10220, 10240 and 10260 Sorrento Valley Road at the south end of Sorrento Valley. According to Yardi Matrix, EQ Office sold the asset for $42.7 million. The sale was subject to a $39.3 million loan, provided by Invesco Real Estate. CBRE and Newmark Knight Frank brokered the transaction, and NKF will continue to handle leasing efforts on behalf of the new owner.

6. DEVELOPMENT – JV to build new San Diego International Airport terminal.

The Turner-Flatiron partnership is slated to begin construction of the $2.2 billion project in late 2021. The 1.2 million-square-foot building will have 30 gates, constructed in two phases—the first slated for delivery in 2025, the second in 2027. The terminal will also include several sustainable and energy-efficient features, including redesigned taxiways and an underground fuel-delivery system.