This year’s top 15 commercial property leases in San Diego County cover a combined 721,600 square feet of office space. The various tenants include national defense contractors, law firms and educational institutions searching for large contiguous office space.
The largest lease so far this year, according to Bethesda, Md.-based CoStar Group Inc., a provider of information and marketing services to the commercial real estate industry, was signed by Lockheed Martin Corp., also based in Bethesda, in June. Lockheed signed a five-year lease for 157,800 square feet of U.S. Green Building Council Leadership in Energy and Environmental Design-certified space at the three-building Horizon Tech Center at Scripps Ranch for an undisclosed sum. Horizon Tech Center is still under construction and is expected to be completed in February 2009.
Jay Alexander, senior vice president of brokerage services with Colliers International Property Consultants Inc. and tenant representative on the lease deal, has worked with Lockheed for several years now. Alexander represented the defense contractor when it signed a lease for 30,000 square feet of space in Kearny Mesa five years ago. Lockheed now occupies more than 85,000 square feet of space in San Diego in five buildings with three different landlords.
“The big deal is just as easy or just as hard as the small deal,” said Alexander. “It is just as important to them as it is to a small tenant. It is all about understanding the tenants’ needs and presenting properties that meet their needs.”
He said that in almost every large deal there was an option for another less expensive space, but finding the best space that meets the tenants’ needs is often the priority.
“The No. 1 thing for big tenants like Lockheed Martin or National Penn isn’t that they want the cheapest rent,” said Alexander. “It is that they want to be close to where the employees are. That they want to offer an environment that lets them keep people, keep them happy and help recruit others.”
Alexander also worked with Lockheed on a 121,000-square-foot lease renewal at Bridge Pointe Corporate Centre in the Golden Triangle this month and on a separate renewal with JPMorgan Chase & Co. for 129,000 square feet of space on behalf of RREEF Real Estate office property in Rancho Bernardo.
Expansion Plans
Local technology developer General Atomics signed leases or purchased 750,000 square feet of space, all of which are Poway properties, in the past 18 months. Leases are for 150,000 square feet of office space, 400,000 square feet of manufacturing space and 100,000 square feet of warehouse space. General Atomics also purchased a 100,000-square-foot building in Poway for future growth.
“There are a tremendous number of large lease transactions going on right now that are chipping away at vacancy,” said Alexander.
San Diego-based Bridgepoint Education signed a lease for 147,500 square feet of space in Kilroy Sabre Springs in February. The lease for property near Interstate 15 and state Route 56 continues through 2018.
Chris Hobson, a broker with the Office Properties Division of Grubb & Ellis|BRE Commercial, was the broker tenant representative on the Bridgepoint lease.
Hobson has represented Bridgepoint on transactions for the past six years. He explained that the private education company recently tied three subleases into one lease at Kilroy Sabre Springs for approximately 150,000 total square feet in addition to the 147,500-square-foot lease signed earlier this year. This brings Bridgepoint’s total space at Kilroy Sabre Springs to 300,000 square feet in two buildings of the three-building complex.
“I have maintained the relationship with Bridgepoint for the past six years,” explained Hobson. “Their first office was 7,000 square feet in Poway. So things have escalated rapidly.”
The Lockheed and Bridgepoint Education leases far exceeded the No. 3 lease on the 2008 list of Top Commercial Real Estate Leases. Third on the list is International law firm Paul, Hastings, Janofsky & Walker LLP’s lease for 55,500 square feet of office space at La Jolla Commons Office Tower in March.
Brian Ffrench, senior vice president and branch manager of real estate services firm Studley Inc. in San Diego, recently represented Entriq Inc., a local digital media company, on a significant lease for 22,200 square feet of space in Palomar Heights Corporate Center in Carlsbad earlier this year.
Favorable Terms
Ffrench, like Alexander and Hobson, has a long-standing relationship with the tenant. He has represented the Carlsbad-based firm for seven years.
“We were able to leverage Carlsbad’s soft market to get very favorable transaction terms,” said Ffrench.
Leases that did not make the list include the renewal by Texas Instruments Inc. for 52,600 square feet of space in Sorrento South Corporate Center in Sorrento Mesa and the renewal by San Diego-based Santarus Inc., a specialty pharmaceutical firm, for 24,500 square feet of space in Kilroy Centre Del Mar in Carmel Valley.
In addition, CB Richard Ellis announced that national defense contractor BAE Systems leased 80,000 square feet at Liberty Station, the former Naval Training Center site in Point Loma. The 10-year lease, announced Aug. 19, is valued at $31 million.
Don Mitchell, Scott Kincaid and Jill Morton represented the landowner and developer McMillin Commercial, a unit of The Corky McMillin Cos. Gene Sachs, Glenn Friedrich and Russ Sande of the San Diego office of CresaPartners LLC, a corporate real estate advisory firm, represented BAE.
