Prentiss Banks on Rancho Bernardo Market With $18M Buy

RANCHO BERNARDO, CA-In a move to extend its presence into the local market, Dallas, TX-based Prentiss Properties Trust has picked up the Bluffs office asset here for $17.8 million.”It’s a market that they’ve wanted to expand into for awhile,” says Jay Alexander of Colliers International. Alexander, along with his Colliers International colleague Ryan Grove, acted on behalf of both parties in the recent transaction. They are also handling leasing at the building.Prentiss plans to hold the Bluffs as a long-term investment, according to Alexander. “Even though the space had some vacancy, the (new) owner looked at it and felt that it was a good risk to take,” he tells GlobeSt.com. The property was 72% leased at the time of sale and a contract that is currently out for signature will bring the occupancy rate up to 85%. At present, major tenants here include The University of Phoenix, Wachovia and First Choice Executive Suites. As Alexander explains, Prentiss believes that the building’s remaining space will lease up because of the dynamics of the I-15 market. “You’ve seen the vacancy rate for class A buildings drop from about 25% two years ago down to single digits now,” he says. In addition, “Prentiss feels that there’s going to be some short to mid-term rental growth in that market because of the lack of competitive spaces,” Alexander adds.Encompassing 68,600 sf, the Bluffs stands on a 3.4-acre at 16870 W. Bernardo Dr. The class A building stands four stories high and offers spaces ranging from 700 sf to full floors. It was constructed in 2001. Prentiss Properties Acquisitions Partners LP has acquired the facility from 16870 Bernardo Partners LP, in care of the McDonald Group. According to Alexander, the seller is a partnership that was formed specifically to develop the project and then sell it. “They bought the lot three years ago, constructed the buildings and felt that now was a good time to take advantage of the increase in prices for the properties,” Alexander says. Now that the deal has closed, the Bluffs asset has been contributed to Prentiss Office Investors LP, a joint venture between Prentiss and the Netherlands-based pension fund Stichting Pensioenfonds ABP.