Keith: A property of this size doesn't trade very often on Miramar Rd. The last transaction of this size was in the Pyramid, the sale of 7310 Miramar Rd., which our office handled. This is a 100,000-square-foot, quasi-retail/office property that looks like pyramid. There were multiple parcels including a three-story office component with the other part traditional furniture store. This was a larger-scale-type retail center that wasn't designed for a Subway or Massage Envy. The smallest pads we can do there are 3,000 square feet to 5,000 square feet. It was initially designed as a furniture center. But nonetheless, it is a retail center, and the mixed-use nature is pretty rare. Ultimately, most buyers don't buy both office and retail, so we had to sift through potential buyers for owners who were experienced in operating both types of properties.

GlobeSt.com: How would you describe the market for mixed-use assets in the Miramar submarket?

Keith: There are no other mixed-use projects like this one with a combination of office and retail in the metroplex where the Pyramid is located. The second floor is quasi-office, and the downstairs is retail. There are a few projects with similar zoning and a mixed-use nature to them, but this one was two separate properties completely.

Some buying groups from a home-building background looked at it as a long-term land play, since multifamily is the hottest product type right now. We initially received offers and other interest from people looking at it as long-term land bank. It has 10-year leases with options coming due, so they figured they would scrape it and build apartments or figure out how to build apartments around the retail. At the end of the day, we had predicted the buyer would be a local Miramar person, someone who needed to understand the retail product we had. We felt that despite marketing this property to the whole world—we have almost 7,000 investors in our system—the buyer would be a local San Diegan who had experience owning and marketing in Miramar.

GlobeSt.com: What type of retail and what type of office typically does best in this market?

Keith: Miramar is probably center of the home-furnishings and home-improvement market of San Diego. It's in the middle of the county, and it's very furniture and interior-design heavy—flooring, marble and tile, kitchen and bath, you name it. The center was 90% furniture stores, and then the recession hit, and a lot of those guys began to have financial problems. In 2010 and 2011, there were vacancies, so the owners broadened their horizons, filling vacancies with more entertainment-type places like Nickel City, gaming places, jujitsu, a dance school. They renewed one of the existing restaurant leases and did a brand-new restaurant lease, adding 10,000 square feet of foot, entertainment and sports-type uses. Now, it's more of a lifestyle center. The newest tenant due to open up there is At Ease games, and Barrel Harbor Brewing in North County is opening an adjunct tasting room. It really has become less furniture and more diverse, recession-proof tenants.

GlobeSt.com: What else should our readers know about retail and office trends in Miramar?

Keith: The retail trends on Miramar Rd. in particular are going to continue to follow along with home improvement, furniture and specialty. But with so much space in Miramar being used for microbreweries—there are at least 15 in Miramar now, with a variety of sizes from AleSmith and Ballast Point to smaller breweries—there's more after-hours and weekend traffic in this market than ever before. It will drive food and mixed-brewery contexts.

MIRAMAR, CA—Once populated by furniture and home-furnishings stores, Miramar still features these tenants but has also made room for more lifestyle-oriented retailers and restaurants, Voit Real Estate Services broker Brandon Keith tells GlobeSt.com. Keith, along with Voit's Randy LaChance and Ryan Bracker, recently represented both buyer 8990 Miramar Landing LP and seller Miramar Commercial Center Ltd. in the $23.6-million sale of Miramar Landing, a 131,360-square-foot retail entertainment center, and the Clayton Building, a 39,170-square-foot, three-story atrium office building located in the Miramar submarket of San Diego.

According to Voit, this mixed-use portfolio presented a unique opportunity to acquire two institutional-quality assets in one of the most heavily trafficked thoroughfares in San Diego. Retail investments in San Diego are experiencing exceptionally high demand; vacancy rates are at a record low of 4.05%, and average rents are climbing steadily upward, driving investor demand and increasing competition in this space, Voit reports. While Miramar's office market has historically struggled in terms of high vacancy rates, the firm calls the Clayton Building one of the strongest office assets in the county, with a unique retail component on the ground floor.

We spoke with Keith about this transaction and about the changing nature of the Miramar retail and office market.

GlobeSt.com: What were the unique aspects of this particular transaction?

Keith: A property of this size doesn't trade very often on Miramar Rd. The last transaction of this size was in the Pyramid, the sale of 7310 Miramar Rd., which our office handled. This is a 100,000-square-foot, quasi-retail/office property that looks like pyramid. There were multiple parcels including a three-story office component with the other part traditional furniture store. This was a larger-scale-type retail center that wasn't designed for a Subway or Massage Envy. The smallest pads we can do there are 3,000 square feet to 5,000 square feet. It was initially designed as a furniture center. But nonetheless, it is a retail center, and the mixed-use nature is pretty rare. Ultimately, most buyers don't buy both office and retail, so we had to sift through potential buyers for owners who were experienced in operating both types of properties.

GlobeSt.com: How would you describe the market for mixed-use assets in the Miramar submarket?

Keith: There are no other mixed-use projects like this one with a combination of office and retail in the metroplex where the Pyramid is located. The second floor is quasi-office, and the downstairs is retail. There are a few projects with similar zoning and a mixed-use nature to them, but this one was two separate properties completely.

Some buying groups from a home-building background looked at it as a long-term land play, since multifamily is the hottest product type right now. We initially received offers and other interest from people looking at it as long-term land bank. It has 10-year leases with options coming due, so they figured they would scrape it and build apartments or figure out how to build apartments around the retail. At the end of the day, we had predicted the buyer would be a local Miramar person, someone who needed to understand the retail product we had. We felt that despite marketing this property to the whole world—we have almost 7,000 investors in our system—the buyer would be a local San Diegan who had experience owning and marketing in Miramar.

GlobeSt.com: What type of retail and what type of office typically does best in this market?

Keith: Miramar is probably center of the home-furnishings and home-improvement market of San Diego. It's in the middle of the county, and it's very furniture and interior-design heavy—flooring, marble and tile, kitchen and bath, you name it. The center was 90% furniture stores, and then the recession hit, and a lot of those guys began to have financial problems. In 2010 and 2011, there were vacancies, so the owners broadened their horizons, filling vacancies with more entertainment-type places like Nickel City, gaming places, jujitsu, a dance school. They renewed one of the existing restaurant leases and did a brand-new restaurant lease, adding 10,000 square feet of foot, entertainment and sports-type uses. Now, it's more of a lifestyle center. The newest tenant due to open up there is At Ease games, and Barrel Harbor Brewing in North County is opening an adjunct tasting room. It really has become less furniture and more diverse, recession-proof tenants.

GlobeSt.com: What else should our readers know about retail and office trends in Miramar?

Keith: The retail trends on Miramar Rd. in particular are going to continue to follow along with home improvement, furniture and specialty. But with so much space in Miramar being used for microbreweries—there are at least 15 in Miramar now, with a variety of sizes from AleSmith and Ballast Point to smaller breweries—there's more after-hours and weekend traffic in this market than ever before. It will drive food and mixed-brewery contexts.