LaSalle Pays $159M for Industrial Asset

The Campus at San Diego Business Park. Image courtesy of Cushman & Wakefield

Murphy Development Co., owner and original developer of The Campus at San Diego Business Park, has parted ways with the complex for the second time. With the assistance of Cushman & Wakefield, Murphy sold the approximately 669,000-square-foot, multi-structure asset to LaSalle Investment Management in a transaction valued at $158.5 million.

Sited on 37 acres in San Diego’s robust Otay Mesa submarket, The Campus consists of three buildings and is 98 percent leased to eight tenants, including Panasonic Corporation of North America.

“We had a tremendous amount of activity because of the scale of the opportunity and the depth of the market,” Bryce Aberg, executive managing director with Cushman & Wakefield, told Commercial Property Executive. “This was a highly competitive process with a broad landscape of investors from the local, regional, institutional and foreign capital.”

Cushman & Wakefield’s Jeff Chiate, Jeffrey Cole, Ed Hernandez, Mike Adey, and Zach Harman joined Aberg in representing Murphy in the transaction, while Andy Irwin and Joe Anderson of JLL provided leasing advisory services.

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Murphy began developing The Campus as a master-planned project for Sanyo Corp. in 1986, with the delivery of the complex’s first building, the 324,000-square-foot structure at 2001 Sanyo Ave. In 1992, Murphy added the approximately 208,000-square-foot 2055 Sanyo Ave. Fast-forward to 2010, and Panasonic acquires Sanyo. Seven years later, Murphy reacquires the approximately 532,000-square-foot, two-building industrial complex from Panasonic, for $27.8 million. Murphy immediately commenced a $15 million renovation of the property, gave the complex its current name, and began plans to develop a third building, the 137,000-square-foot 2065 Sanyo Ave., which delivered in 2020.

LaSalle is now in possession of a Class A complex that essentially established Otay Mesa as a premier industrial submarket.

Right sector, right market

Investors’ interest in industrial properties in the San Diego area is based, at least partially, on encouraging numbers. The market recorded its lowest-ever vacancy rate, 2.6 percent, in the third quarter of 2021, according to a Cushman and Wakefield Report, and logged its highest level of absorption on record, 4 million square feet. The record-level absorption, however, has quite a bit to do with Amazon’s 3.4 million-square-foot, build-to-suit project in Otay Mesa. Still, San Diego is firing on all cylinders, with asking rents on the rise and historically low vacancies on track to remain stable in the face of new construction.

However, buyers and tenants alike see much more in the San Diego market than statistics. “The main drivers to the marketplace are driven by the significant labor force and the ability to assemble sizable opportunities in San Diego,” Jeff Chiate, vice chairman with Cushman & Wakefield, told CPE. “San Diego is an extremely land constrained market with massive barriers to entry. Additionally, it has cross-border—U.S./Mexico—accessibility.”