Daily Business Report — Nov. 29, 2011
METRO Movers to Watch
SD Metro is soliciting nominations for our annual Metro Movers to Watch awards, which will be published in January. Send your nominations to Rebeca Page at email@example.com. Nominate a man or woman you believe will make outstanding contributions in San Diego County during the new year. Nominations will close on Dec. 22.
Law Firm Lease Renewals Strong in Downtown San Diego
Law firms in San Diego leased 424,000 square feet of office space by mid-year 2011, with 77 percent of that occurring in Downtown San Diego because of the leverage tenants have after three consecutive years of occupancy losses. That’s according to Jones Lang LaSalle’s annual “Law Firm Office Perspective” report. It said that this strong activity comes after a banner year in 2010, when law firms leased 731,000 square feet of office space in San Diego.
While law firms in most major markets, including San Diego, continue to search for space efficiencies, they still play an important role in the overall health of the commercial real estate sector, occupying 17.1 percent of Class-A Downtown office space nationwide, the report said. In San Diego, law firms occupy 13 percent of office space in the four major submarkets of Downtown, University Towne Center (UTC), Del Mar and Mission Valley.
Currently, New York City boasts the most law firms leasing more than 50,000 square feet or more (117), closely followed by Washington DC (91), Chicago (54), Los Angeles (42) and Boston (33). San Diego has 15.
“Law firms in San Diego have a valuable but limited opportunity right now,” said Bill Fleck, senior managing director of Jones Lang LaSalle in San Diego. “Lease rates in most buildings are still at rock bottom levels, and landlords are motivated to sign credit-worthy tenants. On the flip side, however, very few large, contiguous blocks of space remain in the most sought-after submarkets and buildings, and San Diego has no new speculative Class A office construction in the pipeline that will break ground in the next 12 months.”
The largest leasing transactions to date by law firms in San Diego during 2011 happened exclusively in Downtown and include Robins Geller Rudman & Dowd’s 114,000-square-foot renewal (with contraction) at 655 West Broadway, Gordon & Rees’ 41,000-square-foot renewal (with contraction) at 101 West Broadway and Duane Morris’ 30,000-square-foot relocation to 750 B St.
The 2011 report found that law firm tenants are still able to negotiate discounts of at least five percent for direct-leased space and 25 percent or more for subleased space. While small to mid-size firms will see that trend continue for the foreseeable future, the window of opportunity may be closing for large firms with significant space requirements.
The San Diego average effective rent on all law firm deals signed in 2011 has continued to slide and is now $24.12 per square foot, a 30.3 percent decrease from the 2007 peak, according to the report. The decrease in rent correlates proportionately to the increase in activity seen in the Downtown submarket,where rents are the lowest among the four major submarkets included in the survey. However, the more sought-after spaces and submarkets, including Del Mar and UTC, commanded substantially higher rents.
Construction has reached the topping off point at the $80 million Hilton Carlsbad Oceanfront Resort and Spa. The resort is scheduled to open in June 2012 at a site overlooking Carlsbad State Beach. WaveCrest Hotels & Resorts is the operator. The property will feature 215 guest rooms, including eight suites. Amenities will include an ocean view swimming pool, dining at Chandler’s Restaurant, the Ocean Crest Spa, a fitness center and over 25,000 square-feet of indoor and outdoor meeting and banquet facilities. The resort is located at the corner of Carlsbad Boulevard and Ponto Drive.
Regents Bank Adds Vice President
Sean Puckett has joined Regents Bank’s Downtown San Diego office as first vice president and relationship manager. He has more than 12 years of banking experience in the San Diego market. Puckett previously provided business development, account management and commercial loan services for California Bank & Trust at its Downtown San Diego office and provided small business banking services for Union Bank. He has a bachelor’s degree from University of San Diego and is past president of the San Diego Regional Chamber of Commerce Business Alliance and of Laurels for Leaders Foundation.
College Offers Adult Reentry Program
The Grossmont College Adult Reentry Program will host “Recreate Yourself,” a free orientation meeting for adults interested in returning to school to learn a new career, earn a college diploma or upgrade workplace skills for a job promotion. It will be held from 9:30 a.m. to 12:30 p.m. on Dec. 6 in Building 34, Room 107, on the college campus. Admission and parking are free. Speakers will include current and former students who successfully returned to the classroom. Counselors will be on hand to answer questions. Information will be available on admission procedures, transfer programs and financial aid. Grossmont College is located at 8800 Grossmont College Drive in El Cajon. For more information, phone Nancy Davis at (619) 644-7615 or Susan Esparza at (619) 644-7697.
La Mesa Apartments Sold
Wang’s Growth LLC has purchased a 14-unit apartment building located at 5541-5543 Shasta Lane in La Mesa for $2.2 million. Built in 1979, the property has 14 two-bedroom and two-bathroom units. The seller, Hendershaw Family Trust, and the buyer were both represented by Rita Lancaster-Hannah of Colliers International.
The Daily Business Report is produced by REP Publishing Inc., publisher of SD METRO, the North Park News and the West Coast Craftsman. Contact: Manny Cruz (619) 287-1865.