In another large trophy-office deal for the SoCal market, Sunroad Enterprises has sold Sunroad Corporate Center, a three-building 302,289-square-foot office property in the University Town Center (UTC) submarket of San Diego, to The Irvine Company, according to a release from a representative of NKF Capital Markets sent exclusively to SoCal Real Estate. The rep would not reveal the sale price to us, but industry sources unrelated to the deal report that the price was $180 million.
According to a release from a representative of Irvine Company Office Properties, the three buildings are located at 4401, 4435, and 4445 Eastgate Mall, which was formerly known as Sunroad Corporate Centre; the new owner has renamed the property La Jolla Reserve.
Irvine Company’s release also says La Jolla Reserve is located near several of the firm’s workplace communities, including The Plaza, One La Jolla Center, La Jolla Square, La Jolla Center, La Jolla Gateway, and Eastgate, as well as other office and apartment projects. The statement says the project was built in 2001 and is 78 percent leased to firms including Banner Bank, Cooley LLP, Provident Insurance Group, Regus, Shell, and Systran.
Amenities at La Jolla Reserve include a new outdoor café, a game room, and a fitness studio with “spa-like” showers and a changing room, according to the Irvine Company release. It says the firm plans to enhance two lobbies and transform indoor and outdoor common areas into shared workspaces.
The purchase marks Irvine Company’s third in the UTC submarket in the past year, the release points out. In January, the firm acquired Gateway at Torrey Hills; in September 2017, it acquired Township 14. The company also owns six class-A towers in the Downtown San Diego market: One America Plaza, 101 West Broadway, 225 Broadway, 501 West Broadway, Symphony Tower, and Wells Fargo Plaza. Additionally, it owns workplace communities in San Diego’s Sorrento Mesa and Mission Valley submarkets, the statement says.
The NKF statement says Sunroad Corporate Center is situated in the heart of UTC, a major class-A office submarket and one of California’s top-performing coastal submarkets. It also says the property is situated on 8.06 acres at 4401, 4435 and 4445 Eastgate Mall and comprises three four-story, modern buildings that include a new fitness facility. According to the statement, “the buildings are joined together by an outdoor environment complete with a newly constructed pavilion” that includes a “unique ‘floating’ café and lounge and modern water features. Each building has its own subterranean, elevator-served executive parking facility as well as ample surface parking and a standalone parking structure.”
The release also says NKF Capital Markets’ co-head of US Capital Markets Kevin Shannon, along with executive managing directors Brunson Howard, Paul Jones, and Ken White, and senior managing director Rick Stumm represented the seller, while the buyer was self-represented. Sunroad has owned the asset since it was developed in 2001, according to the release.
Howard is quoted in the NKF release as saying, “This is a rare generational trophy asset. With an occupancy of 78 percent, there is immediate opportunity to add value with additional leasing activity and by pushing rents with more renovations.”
Shannon adds in the NKF release, “UTC is one of the top-performing submarkets in Southern California with an 8.1 percent overall vacancy rate and a huge barriers-to-entry story. The UTC submarket has significant tenant demand for class-A office space and this unique campus environment was very appealing to The Irvine Company.”
Other pluses for the center are the nearby $1 billion UTC Westfield Mall renovation and the pending completion of the Mid-Coast Corridor Transit Project, according to the NKF statement.
The transaction marks yet another large office deal for NKF Capital Markets this year. As we reported earlier in September, in the fourth $100-plus million office transaction in the Orange County market this year, Kelemen Company purchased The Atrium, a 302,877-square-foot, 10-story trophy office asset located at 19100 and 19200 Von Karman Avenue in Irvine, California, for $106.75 million from Barings Real Estate, part of Barings LLC, a representative of NKF Capital Markets reported.