San Diego Business Journal

Skyline 20 See Signs of Better Times Downtown

PROPERTY: Unknowns Could Make or Break the Momentum By Lou Hirsh Monday, March 18, 2013

Making Connections

“They especially wanted a place where they could collaborate and talk with other companies on a regular basis,” Turner said. He added that the arrangement could become more common at other buildings downtown, since space is limited in places like the tech incubator that Irvine Co. hosts at one of its other downtown towers.

Turner said Irvine Co. will be competing with its downtown rivals to add to its tenant roster later this year, since there are currently at least four firms each scouting for more than 30,000 square feet of space in the downtown market.

Wakeman said there are so far no major signs that talk of federal budget cutting is trimming demand for office space downtown. The U.S. Navy, for instance, has requirements for around 50,000 square feet downtown.

The Unknowns

The JLL report notes that unknowns include what becomes of the downtown footprint of entities such as the City of San Diego, which is mulling more than 500,000 square feet in lease commitments up for renewals in coming months; and Sempra Energy, which is considering relocating its downtown headquarters.

Market observers are watching to see whether potential changes for either of those parties result in footprint downsizings, which in coming years could erase downtown absorption gains seen in 2012.

According to JLL, the local Skyline 20 buildings have a combined 7.4 million square feet with a total vacancy rate of 17.3 percent at the end of 2012 — lower than downtown’s overall rate of 18.6 percent, though higher than San Diego County’s 16.1 percent.

The average asking rent for Skyline 20 properties was $27.46 per square foot, higher than downtown’s overall $24.72 and the countywide average of $25.56.

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