Follow the Leaders
Wireless giant Qualcomm Inc. continues to expand into leased sites throughout Sorrento Mesa and neighboring submarkets, and other big and small technology players are angling to be in Qualcomm’s vicinity.
A similar dynamic is playing out in the life-science hubs of Torrey Pines and Sorrento Mesa, where global firms like Shire Plc are expanding their presence and others in the industry are following suit, spurring building owners to make big investments in competitive upgrades to retain and attract tenants.
Elsewhere, van Betten said there are scattered situations where the needs of growing tenants are being met through build-to-suit arrangements, where the owner of the property is building specifically to accommodate a large tenant.
For instance, developer Hines has a tower under construction at UTC that will be fully occupied by LPL Financial, which is consolidating local operations now housed at several locations.
However, he said only the largest local office landlords — such as Hines, Irvine Co. and Kilroy Realty Corp. — have the land and other resources available to carry out build-to-suit projects such as high-rises.
Elsewhere in the county, land availability and new-construction financing remains constrained for most office developers. Even the largest developers remain hesitant in the current market to proceed with speculative building projects, preferring instead to have tenants lined up before breaking ground.
“You could see the possibility of spec building increasing in the next year or so, but with spec projects that investor is looking at a two-year lead time before that building could be finished and occupied,” van Betten said.