SAN DIEGO—Location is everything, and this is especially true for Sorrento Valley, a San Diego submarket, whose proximity to three major freeways is enhanced by its research-hub locale, Parallel Capital Partners' CEO Matt Root tells GlobeSt.com. His firm is a San Diego-based real estate investment and operating company that owns commercial real estate property throughout the West, including the San Diego Collection, a portfolio of 12 office, lab and R&D buildings Sorrento Valley. Parallel recently announced that new and existing tenants within its San Diego Collection have leased more than 35,000 square feet in new and additional space, representing deals valued at more than $5 million. The leases include deals with MabVax Therapeutics, a leader in anti-cancer therapeutic and diagnostic products; Intrepid Studios, a developer of cutting-edge video games; and new tenant Hamari Chemicals, a pharmaceuticals manufacturer.

According to Root, with these latest transactions, the San Diego Collection is now more than 85% leased.  We spoke with him exclusively about the history of Sorrento Valley, his firm's investment strategy and why he remains bullish on this market—and San Diego overall.

GlobeSt.com: Can you touch on the history of Sorrento Valley and its importance to the San Diego economy overall? 

Root:During the 1970s and '80s, Sorrento Valley was zoned as a light-industrial market. Developers created a very stable and steady market for decades. As time passed, the functional obsolescence of the improvements for the growing tech, biotech and research uses created challenges for the market. In 2011, ownership transitioned from private developers to institutional ownership, and the Valley saw an influx of capital and a desire to reposition and repurpose the properties to more state-of-the-art life-science and creative-office uses. Today, Sorrento Valley is an integral part of San Diego's economy and a key R&D, life-science and commercial hub. As the economy improves, we believe the area will continue to gentrify and attract even more life science and high-tech industries.

GlobeSt.com: Why the area's evolution from an industrial to a high-tech and life-science hub? 

Root: Location, location, location. It starts with the confluence of the freeway system. Sorrento Valley is situated near to I-5, I-805 and SR-56 and is further enhanced by the proximity to UCSD, Sandford-Burnham Medical Research Institute, Scripps Research Institute, J. Craig Venter Institute and many others that create a synergy that cannot be replicated in other areas.

GlobeSt.com: What key factors have contributed to this market's success?

Root: Again, it all comes down location—and Sorrento Valley's close proximity to Sorrento Mesa, Del Mar, Torrey Pines and UTC/La Jolla. Sorrento Valley is at the very center of the premier real estate value submarkets in San Diego.

GlobeSt.com: What specifically drew you to invest here?

Root: The ability to acquire a critical mass of product in a market that is essentially completely built out, creating tremendous economic and physical barriers to entry.

GlobeSt.com: What do you envision here within the next few years?

Root: We foresee a continued upgrade of existing facilities to more creative-office and biotech uses. As rents rise in the adjacent markets, tenants are seeking more cost-effective solutions and the convenience of one- and two-story product that can be converted to more creative uses. 

Over the longer term, with a 2.0 FAR, properties in the Valley offer owners the chance to significantly increase the density of each site. Sorrento Valley provides tenants with more options than those available in the adjacent markets.
GlobeSt.com: Will low vacancy rate, high demand continue? 

Root: Historically, the occupancy rate in the Sorrento Valley market has been one of the highest and most stable in all of San Diego. Demand in the Valley will continue to be driven by the highly impacted adjacent submarkets of Del Mar, Torrey Pines, UTC/La Jolla and Sorrento Mesa, as well as the Valley's proximity to the freeway system.

GlobeSt.com: Do you see any challenges? 

Root: Nothing other than macro events that have the ability to impact all assets in the market.

We GlobeSt.com: Where is your company seeking new investments?

Root: continually seek out markets with high barriers to entry, a history of long-term job formation and a reputation for high quality of life. We focus largely on the western US and Hawaii and are actively seeking investments in Phoenix, Honolulu, Denver, Dallas and Southern California. We are especially bullish on the local economy given its diverse employment base and the high quality of life for which San Diego is known.