Deep-Pocketed Investor Bets Big On Sorrento Mesa Creative Office
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TH Real Estate is an affiliate of Nuveen, an arm of investment giant TIAA.
"Creative product remains highly desirable for tenants and therefore investors,” Cushman & Wakefield Executive Managing Director Rick Reeder said.
The deal comes not long after the trade of another creative office property in Sorrento Mesa: Crown Realty & Development's $20.4M acquisition of the 62K SF The Oberlin from Bixby Land Co.
“The Yard is an adaptive reuse of a single-story building repurposed into a multi-tenant creative project with design elements focusing on employee experience," Reeder said.
The project’s design delivers natural light to indoor workspace with added oversized glass roll-up doors to enhance connectivity to an outdoor environment, taking advantage of the local climate, Reeder said.
The Yard also features electric vehicle-charging stations, a tenant electric bicycle program and is walkable to public transportation.
Reeder and colleague Brad Tecca in the company's San Diego office represented the seller, a joint venture of Locale Advisors and Long Wharf Capital.
On over 4 acres at 5825 Oberlin Drive, The Yard was developed in 1985 and underwent a significant upgrade in 2017. It is about 90% leased to a mix of tenants.
“The existing creative improvements at The Yard were designed to be reusable for future tenants and limit re-tenanting capital requirements," Tecca said, calling the strategy a "market-forward approach" in the Sorrento Mesa market.
“In Sorrento Mesa’s technology hub, demand for creative office space has surpassed traditional Class-A office projects with creative office conversions achieving strike rents and tenant velocity above Class-A averages," Tecca said. "We’ve tracked several tenants migrating to creative projects locally.”
Sorrento Mesa is attractive to tech but also other kinds of tenants. During the third quarter, for instance, Plaza Home Mortgage moved into 55K SF in Sorrento Mesa, and insurance broker HUB International moved into 24K SF in the submarket.
According to Cushman & Wakefield, Sorrento Mesa stands to see significant absorption next year from deals signed during Q3 and before.
Dexcom leased 84K SF at The Towers, while Brain Corp. will occupy 59K SF and First Associates will take 22K SF at Seaview Corporate Center. Curology signed a deal for 54K SF at the recently renovated 5717 Pacific Center Blvd., and Samsung will take 46K SF at Enclave Sorrento.
The third quarter's largest San Diego-area investment sale was partly in Sorrento Mesa (and also Rancho Bernardo), when Singaporean investor Ascendas-Singbridge acquired Starwood's 1M SF San Diego portfolio, along with properties in other parts of the country.