San Diego Office Tower Sold at 50% Discount to be Converted

Another downtown San Diego office tower has sold for a bargain-basement price, with the new owner planning to convert the financial district property to residential use.Ambient Communities, based in Encinitas, has acquired the 24-story tower at 530 B Street for $27.5M, or about $110 per SF, from Swift Real Estate Partners. San Francisco-based Swift paid nearly $58M for the building in 2017.Ambient is planning to convert the 58-year-old office tower into up to 180 residential units, the San Diego Union-Tribune reported. Robert Anselmo, a principal with the firm, told the newspaper that the building’s unique floor configuration as well as its low sales price made it a strong candidate for housing.“The fact that we were able to buy the building at an attractive price hopefully gives us an advantage to be able to provide an amazing product at a reasonable price,” Anselmo said. “We’re hopeful that with other office buildings re-trading at a lower basis that they will generate some new users in the downtown area.”The 250,000-square-foot tower at 530 B, located between Fifth and Sixth Avenues, currently is about 77% leased, but many of the floors will be completely vacant when leases expire next year. Anselmo said Ambient will convert floors into housing as they become available, adding that over time the entire building is likely to be converted into residential units.The developer, who is working with architect Carrier Johnson + Culture, plans to deed restrict an undisclosed number of units in the converted tower for low-income families.The 530 B tower, which opened in 1966 as the First National Bank Building, has uniquely high ceiling heights for a building of that era, as well as floor-to-ceiling windows that make it an attractive candidate for living spaces.Office tenants in San Diego’s B Street corridor have been downsizing and moving out of older buildings. Some of them are opting for a flight to quality on the west side of downtown, where in July, Holland Partner Group opened its 37-story West tower on Union Street, including 289,000 square feet of office space, as well as 431 residential units.The Irvine Company, San Diego’s largest office landlord, is offloading its iconic downtown office towers. In September, the firm sold the 34-story Symphony Towers, a downtown landmark that is home to the San Diego Symphony, to Formosa, Ltd. for $45.7M—which translates to $84 per square feet, which is nearly 70% less than the $134M Irvine paid for the property in 2003.Last month, Irvine Company disclosed it has tapped Eastdil Secured to market office towers at 101 W. Broadway and 225 Broadway, properties it acquired together in a 2005 transaction for $265M, or about $325 per square foot.The 20-story office tower at 101 W. Broadway, built in 1984 near the historic Spreckels Building, encompasses 452K square feet of office space and ground-floor retail. The building, which is about 77% leased, has Morgan Stanley as its largest tenant. The 22-story office tower at 225 Broadway, built in 1974 and overlooking Horton Plaza, encompasses 363K square feet of space that is 85% leased.San Diego’s downtown submarket registered an office vacancy rate of 25% and a total availability rate of 29.9% in Q3 2024, according to CBRE’s latest market report.San Diego’s office sales volume for the first three quarters of 2024 totaled $447M, a year-over-year drop of 34%, with an average price of $196 per square foot, according to CommercialEdge data.