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Downtown Dirt 2013 Q1

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  • Bosa is in escrow to purchase the old Palladion building (west of Nordstrom along G Street in between Front and First). The plan is to demolish the existing building and then put a high-rise residential tower on the site (but not on the earthquake fault running through the NE portion of the site!).
  • Bosa is also rumored to be in discussions with The Irvine Company to buy back the lot (currently approved for a future high-rise office tower) on the NE corner of PCH and Broadway (just south of The Grande) to develop another high-rise condo tower. Back in 2007, Bosa sold the site to Irvine for a reported $60 million. Irvine had planned to develop 880 West Broadway, a Pei designed 685,000 sf office tower – but the office leasing market has been too soft to support developing the project.
  • The City of San Diego is looking to downsize it’s office space needs. In a comprehensive report done by Gensler, they estimate the that City’s third-party leased space needs could be reduced from 550,000 square feet down to 350,000 sf – saving nearly $5 million per year in rent. Further, the City’s Water Department can be moved to Kearny Mesa, to future City owned property, allowing for more long-term control of occupancy expenses.
  • Sempra is evaluating moving from their corporate headquarters at 101 West A Street. Final location alternatives include: (1) One America Plaza (in which case The Irvine Company would terminate numerous leases to provide the space; (2) La Jolla Centre III (an Irvine building yet to be built in the UTC area); (3) Sunroad’s building in Kearny Mesa off the 163 freeway; and (4) a new office tower being planned by Cisterra (developer of DiamondView Tower) to be built near Petco Park (currently zoned residential mixed use). It will be challenging to beat their existing location – as they get free parking, a fully-secured site, great signage, easy access, and they would apparently save more than $10 million on just the IT moving expenses. The current owner of Sempra’s building, Sandy Shapery, has no shortage of interest already in the tower – including two different luxury hotel chains. The City would also be a good future candidate given its proximity across the street to nearly all of the other City offices.
  • The new owners of the Bank of America Building are getting close to building a 6-story, 90,000 sf annex on the south side of the tower (along B Street) that would be very contemporary. It will completely change the look of the complex (which is a good thing!) and bring better dynamics to B Street.
  • Despite its mid-90% occupancy level at One America Plaza, there are 10 floors (and soon to be more) currently “available” through future committed move-outs (Latham & Watkins with 4 floors), Allianz Global Investors (3 floors of sublease available) and McKenna Long (former Luce Forward) also with 3 floors of sublease available).

Jason Hughes is founder of Hughes Marino, an award-winning commercial real estate company with offices across the nation. A pioneer in the field of tenant representation, Jason has exclusively represented tenants and buyers for more than 30 years. Contact Jason at 1-844-662-6635 or jason@hughesmarino.com to learn more.

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