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The former Amylin Pharmaceuticals headquarters has 363,000 square feet of sublease availability, according to Jones Lang LaSalle.

Life Science Mergers and Acquisitions

Hitting Commercial Real Estate Hard

Mergers and acquisitions in the San Diego life sciences sector over the past two years, while positive for the local biotech industry, have had an adverse effect on the commercial real estate market, according to Jones Lang LaSalle’s Life Sciences Group.

“As San Diego companies grow and mature, acquisition by big pharma is proving to be a more frequent occurrence and often times the need for real estate disappears as the companies are folded into the acquiring company’s portfolio,” said Grant Schoneman, vice president.

Since June of 2011, 14 companies have been the subject of M&A activity (with two pending). Half of the completed M&A deals resulted in companies relocating out of San Diego or combining local facilities, putting significant amounts of available space onto the leasing market.

While some of the vacancy created by M&A activity has been absorbed, large blocks of space still remain, as evidenced by the 363,000 square feet of sublease availability within the former Amylin campus, said Schoneman. Coupled with that, leasing activity throughout 2013 has been exceptionally slow. (Bristol-Myers Squibb bought Amylin Pharmaceuticals last year and closed its San Diego headquarters.)

“The lack of real estate activity and growth among the region’s more mature life science companies has been noticeably vacant,” said Chad Urie of the Life Sciences Group. “Throughout the first three quarters of 2013 there were only three completed transactions above 20,000 square feet. This lack of large tenant activity has been a large driver behind the total availability rate continuing to hover around 15 percent.”

The Life Sciences Group said large tenant activity is on the rise with seven active deals expected to close by the end of the first quarter of 2014.  Together, these pending transactions are expected to aggregate around 300,000 square feet of transaction activity.


Rendering of correctional facility to be built on Otay Mesa.

Rendering of correctional facility to be built on Otay Mesa.

Sundt Construction Contracted to Build

Correctional Facility on Otay Mesa

Sundt Construction Inc. has been awarded a contract to build a private detention center on a 35-acre site in Otay Mesa for Corrections Corporation of America (CCA). When completed in mid-2015, the new detention center will be a 350,000-square-foot, two-story facility that will include 1,200 to 1,500 prisoner beds, a kitchen, dining hall, exercise yard, administrative space and courtrooms. Construction is to begin this month. CCA has contracted with the federal government to provide detention services to the Immigration and Customs Enforcement and U.S. Marshals departments.

Sundt has previous jail construction experience and is currently working on the expansion of the Red Rock Correctional Center in Eloy, Ariz.

County Purchases Land for Open Space

The county of San Diego has enlarged the Lusardi Creek Conservancy by purchasing 31 acres of land adjoining it. The property, located on the west, east and south sides of Artesian Road, where the San Dieguito River and Lusardi Creek connect, will be maintained as open space. It contains sensitive maritime chaparral and coastal sage scrub habitat. The county purchased the land for $1.32 million from Charles and Diane Fingal. Colliers International in San Diego was the broker.

Judge Denies Pet Store Owners’ Bid to Overturn Anti-Puppy Mill Law

A federal judge has denied San Diego Puppy Inc.’s request for a temporary restraining order to stop the city of San Diego from enforcing its anti-puppy mill ordinance. In a ruling on Dec. 13, Judge Barry Moskowitz denied a TRO application filed by David and Veronica Salinas on behalf of San Diego Puppy Inc. The couple tried to stop enforcement of the ordinance so they could reopen their pet shop on Mission Gorge Road in San Diego and sell puppies. In their complaint, David and Veronica Salinas allege the ordinance violates the California and United States Constitutions because, they claim, it unfairly targets their business for closure.

In July, the San Diego City Council voted unanimously to ban the retail sale of dogs, cats and rabbits that have been housed and bred at substandard breeding facilities known as puppy mills or kitten factories, except for those originating from nonprofit rescue organizations. In order to be in compliance with the ordinance, pet stores will need to keep certificates that identify the sources of their animals and make them available to animal control officers, law enforcement, code compliance officials or other city employees.

The plaintiffs’ request for a preliminary injunction is scheduled for Feb. 19.

City Council to Vote on Setting Feb. 11

As Date for Mayoral Runoff Election

The San Diego City Council today will consider scheduling a Feb. 11 runoff election for San Diego mayor, which pits two of its members against each other. 

The date was proposed by City Clerk Elizabeth Maland, who said she had to take into account numerous factors, including giving the county Registrar of Voters up to 28 days to certify results of the Nov. 19 special election, allowing the state-mandated 29 days of early voting, and avoiding holidays. 

Councilman Kevin Faulconer was the top vote-getter last month with 42 percent. H’’ll face David Alvarez, who gained 27 percent. A recent poll showed the two in a dead heat for the runoff. 

The winner will finish the nearly three years remaining in the term of Bob Filner, who stepped down in disgrace Aug. 30. Council President Todd Gloria has been filling in since then. 

The registrar’s office estimates the runoff will cost between $4 million and $4.5 million. The city of Solana Beach has already scheduled an election for Feb. 11, so some costs could be shared, she said.

–City News Service Report

Consumer Electronics Association CEO

To Address Covario’s Annul Conference

Gary Shapiro

Gary Shapiro

Gary Shapiro, president and CEO of the Consumer Electronics Association, will keynote the annual InflectionPoint conference of Covario, a search marketing firm, on Feb. 5 at the Estancia Hotel and Resort in San Diego. Shapiro will use real-life examples in his opening morning remarks to give strategies for a successful global trade show. He calls this “Ninja Innovation.”  His most recent book, “Ninja Innovation: The Ten Killer Strategies of the World’s Most Successful Businesses,” is a New York Times bestseller.

Shapiro is also expected to address the latest issues and developments surrounding Ultra High Definition (or 4K) TV, wearable technologies, smart devices, and other initiatives from the CE industry.

Mission Creek Shopping Center

Mission Creek Shopping Center

Mission Creek Shopping Center Sold for $11 Million

C N A Enterprises Inc. has purchased the Mission Creek Shopping Center at 9430 Cuyamaca St. in Santee for $11 million. The seller was DYK Partners Inc. The 63,987-square-foot community center was built in 1993 and was fully leased at the time of sale. Tenants at the center include Food 4 Less, Tutor Time, Pizza Hut and Papa John’s.  Cushman & Wakefield represented the seller.

Moore Cancer Center Team Receives $4.8 Million Grant

A team of scientists led by researcher Thomas J. Kipps, professor of medicine and deputy director of research operations at UC San Diego Moores Cancer Center, has received one of six “Disease Team” awards approved last week by the California Institute for Regenerative Medicine. The purpose of the $4.18 milliongrant is to fund work that promises to move therapies out of the lab and into clinical trials in patients. The goal of the UC San Diego research team is to develop new therapies that specifically target a protein found only on the surface of cancer stem cells.

City to Look for Ways to Reduce Waste Going into Landfills

The San Diego City Council Monday directed its staff  to come up with a plan for reducing the amount of waste that goes into landfills and to eventually stop it altogether. The Miramar Landfill is running out of space, and the state is requiring municipalities to reduce its landfill-bound waste by 75 percent by 2020. In San Diego last year, about 68 percent of the city’s waste stream was diverted through recycling and other means. That figure that has been virtually unchanged over three years, according to city documents.

City staffers will develop the plan in detail and bring it back to a City Council committee next spring. The goal is to have the city divert all waste from landfills by 2040 through conservation, recycling and composting.

Pacific Imperial Railroad Names Chief Commercial Officer

Pacific Imperial Railroad is moving forward with plans to provide freight rail services to the Tijuana-Tecate region of Baja California by naming Charles M. Patterson as chief commercial officer. Patterson has 25 years of railroad experience in operations, sales and marketing roles with Class 1 railroads CSX and CN and with short line railroads Great Lakes Transportation and RailAmerica, where he was senior vice president and chief commercial officer.

In December 2012, Pacific Imperial Railroad signed a long-term lease with San Diego and Arizona Eastern Railway Company and the San Diego Metropolitan Transit System. This lease allows the railroad to operate the Desert Line between the U.S.-Mexico border crossing at Division, Calif., and the Union Pacific Railroad at Plaster City.

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Voice Your Opinion

We Want Your Opinions on San Diego’s Big Issues In the coming months, Probosky Research (one of California’s leading opinion research firms) will continue its partnership with SD METRO to survey San Diego residents about topics of interest to our readers. We’d like to throw open the door for suggestions for topics. What do you want to know? What do you think you know, but aren’t sure? What are you certain you know, but want to prove it beyond doubt? Ideally, we’d like to see questions that have to do with public policy.

Some areas may include Mayor Filner’s first 100 days job performance, should the city be responsible for economic growth and the creation of new jobs, how important are infrastructure improvements to our daily lives (streets and bridges, etc.), how important is water independence, how satisfied are residents with public transit or how do city residents value Balboa Park and other open spaces? Do you believe the City Council should revive the Plaza de Panama plan for Balboa Park?

You can email Probolsky Research directly with your ideas: