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ESET Building Sells; Emerald Plaza Next; 110 Plaza Nearing 100%

Images by Nehrams2020 and Gregoryc03 via Wikimedia Commons.

By Jason Hughes

The ESET Building, located at 610 West Ash, sold last week for $55 million – or $309/SF based on the 177,500 SF size of the building. The building is 98% leased with ESET, an internet security technology firm (and also a Hughes Marino client), being the largest tenant. Blackstone was the seller, and a newcomer to San Diego, Gemini Rosemont, the buyer. In 2003, Glenborough Fund V (which was acquired in bulk by Blackstone) bought the building for $32.5 million or $183/SF.

Emerald Plaza, located at 402 West Broadway, hits the market for sale this week. Don’t bother touring or negotiating there, as prices have instantly been inflated by 15% or more to help justify the $275+/SF that RREEF (the real estate investment management division of Deutsche Bank of Germany) is likely hoping to receive from buyers. This is standard practice for building sellers: inflate asking rents to ridiculous levels with the hope that the “greater fool” theory continues to work.

Executive Complex, located at 1010 Second Avenue, is also getting very close to selling. Jamison Services, the owner of this building and the Chamber Building (the two absolute worst high rises in all of downtown), is praying that the above theory will work here as well. Jamison has let this building deteriorate to such a level that there are nearly weekly episodes of major problems (e.g. elevators not working, no hot water in the building for the last year, air conditioning goes out on sweltering hot days, electrical fires forcing evacuations – even though the San Diego Fire-Rescue Department HQ is located there (ironic!) – etc.). The City of San Diego occupies half the building, with another 25% vacant, and the remaining 25% wondering why they haven’t moved already. The likely buyer is known for its residential conversion prowess, but not office building ownership, so we’ll see what happens!

110 Plaza, located at 110 A Street (with the Commonwealth sign on the top), is nearing 100% leased. My client, the City of San Diego, has a lease under review for 165,000 SF, which will gobble up virtually every last vacant foot of space. As part of the deal, Forester Properties is expanding and remodeling the ground floor. If finalized, the City will occupy half the building, with the federal government occupying almost all of the remaining half, between Social Security and Immigration Services.

Lastly, I want to congratulate my long-time friend Nelson Ackerly. Nelson has been the senior leasing director for Irvine Company in San Diego for the last decade, and has just been recruited to head the region as senior vice president for Kilroy Realty, one of San Diego’s largest landlords (and a publicly-traded Real Estate Investment Trust). I wish Nelson lots of success with this new endeavor (but Nelson, if this blog reaches you, know that I won’t go any easier on you)!

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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