Daily Business Report-Dec. 10, 2019
Kaiser Permanente medical office building on Vandever Avenue, San Diego. (Credit: Kaiser Permanente)
San Diego boasts fourth-highest
medical office rent in the U.S.
Strong fundamentals have increasingly made U.S. medical office real estate a favorite of institutional investors, keeping investment volumes at high levels and capitalization rates low this year in relation to conventional offices, according to a new report from CBRE.
San Diego ranked fourth in highest medical office rent in the nation, at approximately $35 per-square-foot. The region also placed fourth in fastest rent growth, at 6.7 percent year-over-year. Additionally, San Diego had the tenth-lowest vacancy rate year-to-date ending in the second quarter in 2019, at 6.3 percent.
“San Diego’s strong medical office market is indicative of a broader, national trend,” said Tom Turner, a vice president at CBRE in the San Diego region. “The combination of the inevitable demographic trend of an aging population and the increased focus on health care cost control will almost certainly maintain the growing momentum for outpatient medical facilities.”
CBRE’s report cites several factors behind the continued popularity of medical office, including a steady vacancy rate at 10.3 percent despite a 10-year high in construction completions in the second quarter, a sustained increase in average asking rents since 2013, and strong demand for health-care services due to an aging population and other demographic trends.
As a result, transaction volume for medical office buildings stands 50 percent higher this year than before the recession, though it has receded from its early-2018 peak. Foreign investors, domestic institutions and real estate investment trusts are steadily getting more active the medical office market. Cap rates — a measure of a property’s income as a percentage of its price — for medical offices have pulled even with those of conventional offices after years of registering higher.
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Grand opening set for January for
renovated San Diego Mission Bay Resort
San Diego Mission Bay Resort, the city’s newest luxury resort and spa, announced its grand opening is set for January 2020, after completing a $21 million reimagination and renovation.
Located on the waterfront of Mission Bay Park, the 357-room year-round lifestyle destination resort was formerly known as the Hilton San Diego Resort & Spa.
“The newly unveiled San Diego Mission Bay Resort will appeal to couples, families, leisure and business travelers alike by offering effortless elegance with activities and comforts of the barefoot chic, vibrant San Diego lifestyle,” said Scott Colee, Noble House’s chief marketing officer.
San Diego Mission Bay Resort’s grand opening debuts the comprehensive $21 million transformation of its guestrooms, the resort’s expansive conference center, and the executive board rooms.
Pebblebrook Hotel Trust, which owns the San Diego Mission Bay Resort, is requesting approval from the city of San Diego to invest an additional $10.5 million into the lobby, restaurant, and the expansive public spaces. The resort is operated by Noble House Hotels & Resorts,
San Diego Mission Bay Resort has a 4,000-square-foot outdoor pool area, five tennis courts, spa and fitness center, gift shop, restaurant, and poolside grill. Additionally, the Mediterranean-style hotel provides over 16,000-square-feet of interior meeting and function space and 9,600-square-feet of outdoor meeting space.
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Coalition announces support for policy
to increase affordable housing stock
Members of a coalition of community, business, labor, and housing development leaders announced their support for updates to the city’s Inclusionary Housing regulations proposed by Council President Georgette Gómez.
The update will be considered by the City Council today at 2:00 p.m. The update will amend the city of San Diego’s Inclusionary Housing regulations to require the development of on-site affordable housing units as part of new residential and mixed-use development and condominium conversions, or the payment of an in-lieu fee.
“Inclusionary housing should be balanced between developers being able to draw a profit and the need to increase affordable housing options for so many of our families who have been left behind,” said Ramla Sahid, founder and executive director of Partnership for the Advancement of New Americans. “This inclusionary housing ordinance achieves this compromise and is a step in the right direction. It’s also one strategy to a multifaceted housing crisis.”
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Escondido Charitable Foundation breaks
ground on welcome arch over Grand Avenue
Escondido Charitable Foundation (ECF), an affiliate of The San Diego Foundation, has broken ground on the welcome arch over Grand Avenue at Centre City Parkway. The arch, which will be named “The Giving Arch” in recognition of the generosity and community spirit of Escondido residents, is expected to be completed by spring 2020.
Thanks to an anonymous gift from an Escondido resident, the 40-foot by 108-foot structure is a gift to the city from ECF and will welcome residents and visitors to Escondido. The design of The Giving Arch reflects the architectural lines of Escondido City Hall and the philanthropic spirit of the community.
“The Giving Arch pays homage to the spirit of what we do at the Escondido Charitable Foundation and the anonymous donor who entrusted us with carrying out a project like this that fosters community pride and identity,” explained Lisa Ruder, board member at ECF.
The project has generated individual donations that will be recognized with personalized plaques on the arch’s pillars. All donations toward The Giving Arch project will be used for future community enhancement projects, as well as emerging, yet unforeseen needs in Escondido.
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Judge Laura S. Taylor reappointed to Ninth
Circuit Bankruptcy Appellate Panel
The Judicial Council of the Ninth Circuit has reappointed United States Bankruptcy Judge Laura S. Taylor of San Diego to an additional three-year term on the Ninth Circuit Bankruptcy Appellate Panel, or BAP. This panel resolves appeals arising out of bankruptcy court decisions in the circuit’s nine western states. Judge Taylor’s new term will commence Dec. 31, 2019.
Taylor was appointed as a bankruptcy judge for the Southern District of California in January 2008, and served as chief bankruptcy judge of her court from October 2012 through September 2019. She was appointed to the BAP on Dec. 31, 2012, and has served as chief judge of the BAP since July 2019.
Prior to her appointment to the bench, Taylor had a long career with Sheppard, Mullin, Richter & Hampton LLP, most recently serving as an administrative partner for its San Diego office. She took a leave of absence from 1995 to 1998 to work with the San Diego Volunteer Lawyer Program to develop and implement a program for children with special educational needs.
A native of Winston-Salem, N.C., Taylor received her bachelor’s degree in English and political science from the University of North Carolina at Chapel Hill in 1979, graduating Phi Beta Kappa and with Highest Honors, and her juris doctor in 1983 from Duke University, where she served on the school’s moot court board.