Daily Business Report — March 15, 2011
Downtown Office Investment Market Still Sluggish
The office investment market in Downtown San Diego continued its three-year malaise in 2010 and it will continue into the near future, according to Jones Lang LaSalle’s “Skyline20” report, which covers 20 Class A and B high-rise office buildings of at least 140,000 square feet in the Downtown area.
“No relevant institutional sales have occurred since 2008 when Wereldhave purchased DiamondView Tower for $161 million, or $524 per square foot,” the report states. “Much of the slowdown of sales activity can be attributed not only to the general economic decline which led to occupancy losses and diminishing values of properties, but also to the concentration of ownership by a single investor, The Irvine Co. The Irvine Co. owns six buildings containing 2.78 million square feet within the skyline, translating into nearly 40 percent of the inventory.”
Adds the Skyline20 report: “In late 2010 two properties came to market: Hines Interest’s 525 B Street and RREEF’s Emerald Plaza. Each asset is soliciting offers now and is appealing to a broad pool of domestic and international investors. Lack of outside tenant demand, state control over redevelopment funds, a potential new Charger football stadium and a potential new homeless shelter, and absorption of existing condominium supply will cool significant institutional investment activity in the near future.
As of the fourth quarter of 2010, the overall Downtown office market consists of 11.5 million square feet in 102 properties, making it San Diego’s largest office submarket. The overall occupancy is 81.4 percent, which is a slight decrease from the previous year’s occupancy of 83.6 percent. Within the Downtown submarket, the Skyline20 building set represents 20 high-rise office projects totaling 7.4 million square feet. Leasing activity within the Skyline20 building set accounted for 70 percent of signed deals Downtown in 2010.
Total vacancy in the Skyline20 inventory is 17.6 percent. Total vacancy ended the year 70 basis points higher than the fourth quarter 2009 vacancy of 16.9 percent after 52,000 square feet of negative net absorption. This was due to heavy contraction and consolidation among law and financial services firms which was balanced somewhat by occupancy gains seen from government and education tenants. Total availability — space being marketed for lease but not necessarily vacant — is 20.7 percent in the Skyline20 building set. The majority of deals being signed are renewals, expansions/downsizes, or tenants upgrading and taking advantage of market conditions within the submarket.
Boding well for future rental rate appreciation, the inventory of available sublease space has diminished considerably since its peak in the fourth quarter of 2008. Only 87,000 square feet of sublease space remains in the Skyline20, representing just 1.2 percent of the 20.7 percent overall availability. The majority of available subleases are expiring in the next 24 months and many have been marketed for well over a year. This indicates a relatively brief time horizon for the space to get subleased before it crosses over into direct vacancy.
C3 to Stage Panel Talk on Plaza de Panama Proposal
Citizens Coordinate for Century III will stage a panel discussion on March 31 on the proposal to remove vehicle parking in the Plaza de Panama in Balboa Park and return it to its original use as a gathering place for visitors. Part of the proposal, specifically the construction of a bypass bridge at the eastern portion of the Cabrillo Bridge, has generated extensive criticism from historic preservationists and others. The plan has been put forward by Irwin Jacobs. . If approved, the project is proposed to be completed by 2015 in time for the Centennial anniversary of Balboa Park.
The panel talk will be from 7:30 to 9:15 a.m. at the Holiday Inn at the Bay, 1355 North Harbor Drive, San Diego. Panelists include Vicki Estrada, principal partner at Estrada Land Planning; Michael Hager, president and CEO of the San Diego Natural History Museum; and moderator Mike Stepner, professor of architecture and urban design at the NewSchool of Architecture and Design.
Chairmen’s RoundTable Partners with Biocom
The Chairmen’s RoundTable has signed a partnership agreement with Biocom to strengthen the local business community. Chairmen’s RoundTable is a group of current and former CEOs that mentor and give advice to San Diego businesses on a pro bono basis. Biocom is a life science association representing more than 550 member companies. The two organizations share a common goal of strengthening the local business community through individual company success. “At the CRT we passionately believe that by helping individual San Diego companies reach their full potential we are helping the entire San Diego business community,” said Dave Cox, Chairman of the CRT. “Biocom mission follows this same philosophy so there is a natural fit between our organizations. In San Diego there are a large number of medical device and biotechnology companies, and we have mentored our share in the past. This partnership will make our services even more visible and accessible to the life sciences community.”
“The CRT is an excellent resource for our members,” said Joseph Panetta, president and CEO of Biocom. “We are always looking for people, programs and partners that can provide knowledge and guidance to our membership.”
Field Operations Chief
Chris Maston has been named the new field operations director in San Diego for the U.S. Customs and Border Protection (CBP). Maston previously was port director over the San Ysidro and Otay Mesa passenger ports of entry into the county. As the director of field operations, Maston will provide management oversight for all passenger and cargo operations within the San Diego field office, including the land border ports of entry on the California/Mexico border, as well as airport and seaport operations in San Diego. From October 2007 to January 2010, Maston served as the CBP port director at the Miami International Airport, directing a workforce of more than 1,300 employees.
Home Buying Seminar
San Diego County Credit Union will host a free home buying seminar from 9 a.m. to noon on March 19 at its administrative offices at 6545 Sequence Drive in Mira Mesa. The public is invited to attend. Free parking and refreshments will be provided. Seating is limited and reservations are required. For details and to reserve seat, visit sdccu.com or call (877) 734-2848. Real estate professionals and credit unionaffiliates will be on-hand to discuss the sometimes complicated home buying process. Attendees will learn about home loan pre-approvals and the home buying process before going shopping for a new home.
SCORE San Diego Small Business Workshops:
• March 17 – California Sales and Use Tax Basics – 5:30 to 7:30 p.m. at SCORE Entrepreneur Center (550 West C St., #550, San Diego 92101; pre-paid registration $29, $39 at the door).
• March 18 – Women’s Networking Breakfast & Exhibits – 8 to 11 a.m. at Morgan Run Resort & Club (5690 Cancha de Golf, Rancho Santa Fe 92091; Attendees: $30 by March 15, $40 thereafter; Exhibitors: $80 by March 15, $90 thereafter).
• March 19 – Introduction to Starting Your Own Business – 9 a.m. to 4:15 p.m. at National University – Kearny Mesa (9388 Lightwave Ave., San Diego 92123; pre-paid registration $69, $79 at the door).
• March 19 – Business Plan 201: How to Write a Winning Business Plan – 9 a.m. to 3:30 p.m. at National University – Kearny Mesa (9388 Lightwave Ave., San Diego 92123; pre-paid registration $99, $109 at the door).
• March 22 – Marketing & Contracting with Federal Government – 9 a.m. to 3 p.m. at National University – Kearny Mesa (9388 Lightwave Ave., San Diego 92123; pre-paid registration $69, $79 at the door).
• March 24 – Internet Marketing 302: Develop a Winning E-mail Marketing Success Strategy – 9 a.m. to noon at National University – Kearny Mesa (9388 Lightwave Ave., San Diego 92123; pre-paid registration $49, $59 at the door).
• March 25 – Professional Selling: Increase Your Business Sales Now! – 9 a.m. to 4 p.m. at National University – Kearny Mesa (9388 Lightwave Ave., San Diego 92123; pre-paid registration $69, $79 at the door).
• March 30 – Business Basics 101 – 9:30 to 11:30 a.m. at SCORE Entrepreneur Center (550 West C St., #550, San Diego 92101; No charge, please preregister).
• March 30 – How to Start a Nonprofit – 9 to 11:30 a.m. at The San Diego Foundation – Liberty Station (2508 Historic Decatur Road, #200, San Diego 92106; pre-paid registration $39, $49 at the door).
For more information, call (619) 557-7272 or visit score-sandiego.org.
The Business & Entrepreneur Center and the Small Business Development Center at MiraCosta College will offer free upcoming workshops to help businesses succeed. The workshops will be held at Vista City Hall, 200 Civic Center Drive, from 11:30 a.m. to 1:30 p.m. on the following dates:
April 5: Financing Options for Businesses: Direct lenders and the SBA will discuss financing options for a business.
May 3: Ways to Market A Business: Learn to identify the “right” customer for a business and easy ways to market your business to them.
June 7: Marketing A Business Using Google Tools: Learn how to use Google tools such as ad words, ad sense, Google trends and more.
Bring a lunch to the workshops. Drinks will be provided.
The Daily Business Report is produced by REP Publishing Inc., publisher of SD METRO, the North Park News, Kensington News and the West Coast Craftsman. (619) 906-4104.