Hoffmann: I have a lot of experience in R&D, and we're definitely seeing developers develop creative office out of R&D property. They're adding more amenities, outdoor amenities and roll-up doors, and creating the cool creative-office environment people are looking for. There are a tremendous number of conversions from R&D toward office in that type of product. It can boost rents more toward office than industrial rents. That's a trend that continues, and it started several years ago. This trend is also morphing into pure office buildings, where companies are taking out ceiling tiles and exposing ducting; it started in R&D and is going into pure office buildings, even traditional financial users.

GlobeSt.com: What are the biggest challenges office owners face in leasing today?

Hoffmann: In Carlsbad, there's quite a bit of available product here, so really differentiating yourself with amenities in terms of updating dated buildings that are older is important. There are a lot of transitions, new ownership purchases, and the new owners are putting money into them and pushing rents. The hurdle is going to be getting the new levels of rents. which in B locations is a challenge, to get higher rents, even with amenities.

GlobeSt.com: What else should our readers know about any of these sectors in San Diego?

Hoffmann: The cost of tenant improvements continues to skyrocket. Improvements used to cost X and now cost X times 2. It's Title 24—every time you pull a permit it triggers an upgrade in lighting and other areas, which adds to bottom line before you even get started. The cost of improvements has gone up substantially.

SAN DIEGO—Title 24 upgrades are causing bottom-line costs to increase even before improvements are made to office space, Kidder Mathews SVP John Hoffmann tells Globest.com. Hoffmann recently joined the firm's San Diego office, where he will specialize in office, medical and R&D sales and leasing. A veteran broker with more than 25 years' experience in the San Diego commercial real estate industry, Hoffmann has successfully negotiated more than 1,500 leases and sold more than 30 properties totaling more than 1.4 million square feet. Prior to joining Kidder Mathews, he was with Colliers International. We spoke exclusively with Hoffmann about his new position and the trends he is seeing in his areas of specialization.

GlobeSt.com: What are you looking forward to accomplishing in your new role with Kidder Mathews?

Hoffmann: It's the culture of the company that brought me here—it's a smaller, more entrepreneurial company, A lot of the people I've worked with in the past have come over here. It's an independently broker-owned company, so we make all the decisions.

GlobeSt.com: What trends are you seeing in medical and R&D properties in the San Diego market?

Hoffmann: I have a lot of experience in R&D, and we're definitely seeing developers develop creative office out of R&D property. They're adding more amenities, outdoor amenities and roll-up doors, and creating the cool creative-office environment people are looking for. There are a tremendous number of conversions from R&D toward office in that type of product. It can boost rents more toward office than industrial rents. That's a trend that continues, and it started several years ago. This trend is also morphing into pure office buildings, where companies are taking out ceiling tiles and exposing ducting; it started in R&D and is going into pure office buildings, even traditional financial users.

GlobeSt.com: What are the biggest challenges office owners face in leasing today?

Hoffmann: In Carlsbad, there's quite a bit of available product here, so really differentiating yourself with amenities in terms of updating dated buildings that are older is important. There are a lot of transitions, new ownership purchases, and the new owners are putting money into them and pushing rents. The hurdle is going to be getting the new levels of rents. which in B locations is a challenge, to get higher rents, even with amenities.

GlobeSt.com: What else should our readers know about any of these sectors in San Diego?

Hoffmann: The cost of tenant improvements continues to skyrocket. Improvements used to cost X and now cost X times 2. It's Title 24—every time you pull a permit it triggers an upgrade in lighting and other areas, which adds to bottom line before you even get started. The cost of improvements has gone up substantially.