Investors are Bullish on San Diego Office Sector

SAN DIEGO-Despite San Diego County office product performing below average and vacancy rates increasing 2.4% from December 2006, the large amount of capital that has entered the market as of late has led to new developments, higher rental rates and all-time-high purchase prices. According to CB Richard Ellis’ most recent San Diego office market report, most of the sector’s tenant and buyer demand is directed at well-located and designed class A properties.

Two of the largest deals to hit this office market are the $200-million sale of the 438,960-sf Pacific Center in Mission Valley by Maguire Properties and the $200-million acquisition by Wereldhave USA of the 23-story, 380,000-sf Advanced Equities Plaza in Downtown San Diego. The Equities Plaza acquisition is the first property investment that Wereldhave has engaged in on the West Coast. The firm decided to enter the West Coast market because of the area’s increasing economic activity. San Diego provided a viable option because the size of Equities Plaza will allow Wereldhave to build up a local management organization.

Wereldhave isn’t the only firm looking to establish or expand its presence in San Diego. According to the CBRE study, “San Diego employment growth will remain positive as moderate expansion is expected in overall employment as well as office employment.”