Demand for R & D;, Industrial Space in S.D. Continues Growing
Burnham Pacific Properties Inc., the San Diego-based real estate investment trust whose board of directors voted last month to liquidate, is proceeding with employee layoffs and property sales, a company official said.
Meanwhile, the company on Sept. 12 retained DDR Real Estate Services Inc., a subsidiary of Developers Diversified Realty Corp. of Cleveland, to oversee the liquidation of Burnham. It also appointed Jay Schottenstein, co-chairman of its board of directors. Schottenstein, who is chairman of Schottenstein Stores Corp. and Value City Department Stores, both based in Ohio, led a group of investors who earlier this year sought to gain control of the company and oust Burnham’s management because of what the group said was a dramatic loss in the value of its shares.
Another member of the investors group, Michael L. Ashner, was also appointed to Burnham’s board of directors. The group controls approximately 9.8 percent of Burnham’s stock, said Scott C. Verges, interim CEO. Ashner is CEO of Boston-based Winthrop Financial Associates, a real estate management company.
The company closed a sale escrow for Santee Village Square, an 81,785-square-foot strip shopping center in Santee, on Aug. 30, said Verges.
He replaced J. David Martin, who resigned last month after a five-year term as leader of the company that saw Burnham’s common stock price plummet from $12 to $5 a share. The company trades on the New York Stock Exchange under the symbol BPP and its price has since recovered to slightly more than $6 a share this past week.
In addition to selling the Santee shopping center for $6.5 million, Burnham also closed on the sale of a 36,000-square-foot leasehold interest it held in the Bear Creek Shopping Center in Redmond, Wash., for $3.5 million, he added. The company made about $270,000 selling the two and proceeds will be used to reduce debt and provide working capital, he said.
The company also entered into a sale agreement early this month on 15 other properties with Prudential Real Estate Investors Inc. The purchase price for those assets was $355 million, he said.
Layoffs are also under way at Burnham, as the company tries to reduce its operating expenses.
The company will eliminate 46 jobs, close its Portland, Ore., Seattle and Sacramento offices, and reduce the size of its San Francisco and San Diego office staffs, Verges said.
He expected the cutbacks to save about $6 million a year.
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Need Grows: Demand for research and development and industrial space in San Diego County continues to grow, a real estate brokerage official said.
“After a record 4 million square feet of net absorption in 1999, the San Diego County industrial market continues to move at an exceptionally fast clip with more than half that amount already absorbed as of June 30,” said Jay Arnett, a senior vice president with Burnham Real Estate Services of San Diego.
“Given year-to-date activity, as well as projected net absorption through the end of the year, the industrial market should easily match last year’s record high.”
In a just-released mid-year 2000 study, the company said 2.24 million square feet of industrial space was absorbed. That compares with 3.9 million square feet in 1999. The vacancy rate rose to 13.5 percent as well, but is beginning to decline, Arnett said.
The research and development market, which absorbed 857,000 square feet in 1999, saw 859,000 square feet of space absorbed in the first six months of this year. The research and development vacancy rate in the county now stands at 12.8 percent, down from 15.7 percent at the end of 1999, he said.
Bits And Pieces: D.A. Shields Inc. of San Diego has been awarded the tenant improvement contract for Greystone Technologies Inc. at the Interstate Corporate Plaza, 4950 Murphy Canyon Road.
Send construction and real estate news to Arthur S. Grupe at agrupe@sdbj.com.
