Shorenstein Sells San Diego Office Building In Life Sciences Hub For $146M
The buyer was the Singapore-based Prime US REIT. The new owner is planning a series of upgrades to the complex, called Sorrento Towers, including additions to outdoor meeting areas and WiFi enhancements, according to Newmark.
The sale price of the 296K SF property represented a per-SF price of $492.70 — well above the median sale price for comparable Sorrento Mesa office properties, which is approximately $341 per SF, according to data from Crexi.
Shorenstein bought Sorrento Towers in 2018 for $88M. The Class-A property spans two seven-story buildings at 5355 and 5375 Mira Sorrento Place. The complex was built in 1990 but has undergone a number of renovations. Over the past two years, Shorenstein invested $16.7M in the property via tenant improvements. The towers are about 98% occupied.
Sorrento Mesa is home to San Diego’s largest concentration of tech companies, including telecommunications businesses, according to Newmark, which announced the sale. But the area has also become a magnet for life sciences users, who are drawn by rents that are lower than in nearby hubs of Torrey Pines and University Town Center, the San Diego Business Journal reported last year.
Sorrento Mesa is one of the few submarkets in the nation where the liquidity now is better than it was prior to the onset of the coronavirus pandemic, Newmark co-Head of U.S. Capital Markets Kevin Shannon said in a statement. Shannon attributed that to the life sciences sector snapping up existing office inventory, a trend that is playing out across San Diego.
A June report from CBRE found that over half of the under-construction life sciences projects were conversion projects. Though the report didn't specify from what sectors those projects were converted, older office buildings are often the targets of these conversions, a Q2 office report from Newmark noted. In October, Shorenstein sold another two-building Sorrento Mesa office property, The Foundry, to Longfellow Real Estate Partners for just such a conversion, CoStar reported.
Shannon, along with Newmark Executive Managing Directors Brunson Howard, Ken White and Paul Jones, represented Shorenstein in the transaction. KBS is the U.S.-based asset manager for the Prime US REIT portfolio and sourced the property on behalf of the portfolio.