|
SAN DIEGO—Central San Diego's diverse economy and tremendous strength in the small-tenant segment are attractive to firms like BKM Capital Partners, which is focused on demising its larger spaces to capitalize on this changing environment, director of acquisitions Brett Turner tells GlobeSt.com. The firm and Canyon Partners Real Estate LLC recently acquired Ponderosa Technology Park, a 156,224-square-foot multi-tenant industrial property in the Kearny Mesa submarket of Central San Diego. The acquisition is the first investment completed by BKM in its programmatic joint venture with the Canyon Catalyst Fund, the CalPERS real estate emerging manager program managed by Canyon.
Ponderosa Technology Park includes eight buildings situated between the I-15 Freeway and the intersection of the I-805 and SR-163 freeways, a location that provides excellent access to the key commercial centers of San Diego County. The property was constructed in 1978; the JV plans to complete an extensive renovation and improve vacant suites to market ready condition.
Turner says, “Our comprehensive capital-improvement program will allow us to attract and retain high quality tenants. We also plan to improve the property's performance by leasing up vacant space, since the building is currently 87% occupied.” Planned improvements will address deferred maintenance to increase the park's aesthetics.
We spoke with Turner about the acquisition, the Kearny Mesa submarket and the firm's plans for San Diego.
GlobeSt.com: What stood out for you about the Ponderosa Technology Park acquisition?
Turner: The asset has great bones and a great location. Since 1999, the Kearny Mesa market has never been more than 6% vacant, due to its central location. It now sits at just 2.7% vacancy with rampant net absorption. With a tightening market, an outsized premium can be achieved by modernizing the asset. Through this joint venture with the Canyon Catalyst Fund, BKM has the opportunity to meet the market's strong demand by enhancing the asset. New paint, exposed materials, fresh landscape, modern signage and building creative tenant improvements are planned.
GlobeSt.com: How is the Kearny Mesa multi-tenant industrial market changing?
Turner: There is tremendous strength in the small-tenant segment, particularly below 10,000 square feet. BKM is focused on demising its larger spaces to capitalize on this changing environment.
GlobeSt.com: What other parts of San Diego are you eyeing for acquisitions?
Turner: BKM is attracted to the dynamic of Central San Diego due to its diverse economy. Our service sector tenants are poised to expand under a new administration's effort to increase defense spending, as well as growth in biotech and manufacturing.
GlobeSt.com: What else should our readers know about this acquisition?
Turner: It was our first acquisition through CCF. The CCF BKM partnership specifically targets industrial-property acquisitions in urban markets throughout California. The location of the Ponderosa Technology Park is a key benefit of the asset. The City of Kearny Mesa is moving towards increased density, creating an incentive for office and apartment developers to demolish multi-tenant industrial space, potentially limiting our competition. With the submarket already less than 3% vacant, rents have nowhere to go but up.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
