“This campus is uniquely positioned with fully leased status to a premier roster of credit tenants and the ability to deliver a new building to the Del Mar Heights submarket where large blocks of contiguous space are in high demand,” says Rick Reeder, managing director with Cassidy Turley, who represented Kilroy and seller, Prudential Real Estate. “As the local, regional and US economies continue to improve, we expect to see further increases in tenant demand leading to a reduction in overall vacancy.”

That, he adds, “coupled with the fact that the next phase of new speculative development in Del Mar Heights is not expected for at least another three or four years, gives KRC a strategic window of opportunity to meet this expected demand.”

In August, GlobeSt.com reported that San Diego's key submarkets such as Carmel Valley, Sorrento Mesa, UTC, and Mission Valley will continue to see increases in effective rents. According to Colliers' Ron Miller, senior director of tenant advisory services, there is a lack of class-A full floor opportunities in the highly popular submarkets. Even with the traditional “summer slow-down” multi-tenant class-A office demand remains on fire in most major San Diego submarkets including Downtown, he says. “San Diego County's office market posted a strong 540,000 square feet of positive net absorption (demand) in Q2, causing the overall vacancy to drop to 13.4%, while increasing year-to-date net absorption to 817,000 square feet. Outside of the CBD there are few quality full floor class A multi-tenant options available.”

Peter Roth of Allen Matkins represented Kilroy in the acquisition. Linda Mitchell of the Lewis Roca Rothgerber firm represented the seller.