San Diego Business Journal Kilroy Realty Corp. based in Los Angeles has acquired property in Little Italy for $42 million with plans to build an office tower on it.

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Kevin Nolen, Broker, Cushman & Wakefield

The property covers a full city block at 2045 Pacific Highway.
Kilroy plans to build a 275,000 square-foot office building on the 1.3-acres site, which is comprised of four separate parcels.
The site is adjacent to a 220,000 square-foot office building that Kilroy recently completed at 2100 Kettner Blvd.
“This was a rare opportunity for an investor/developer to acquire an extremely well-located piece of property just off the waterfront in downtown San Diego,” said Kevin Nolen, a broker with Cushman & Wakefield who helped broker the sale along with Mike Novkov, Tim Winslow and Jason Kimmel of Cushman & Wakefield.

Optimistic
The deal comes at a time of uncertainty in the office market as people begin to return to offices as the COVID-19 pandemic wanes.
The commercial real estate brokerage Colliers International reported that the office vacancy rate in San Diego County for the first quarter of 2021 averaged a little more than 14%, the highest it’s been since 2013 with 1,855 square feet of office space under construction.
The vacancy rate was the highest among top-of-the-line Class A office space at 16.4%.
Downtown San Diego had the highest vacancy rate in the first quarter – nearly 25.7% for Class A office space and 23.1% for Class B, according to Colliers.
Nevertheless, Colliers forecast that demand for office space would stabilize and possibly improve by years end as people are vaccinated for the COVID-19 virus and return to work.
Nolen said Kilroy’s plans for the property “speak to the optimism to fulfill the need for this area looking ahead.”
“This will be coveted project given that Little Italy and downtown San Diego waterfront is a limited and rare opportunity for developers to construct some of the city’s best-in-class office and life science projects due to the lack of available developable sites on Pacific Highway with scale,” Nolen said. “Tech and life science industries have been dominating the leasing activity throughout the county, which has largely been concentrated in first class, new office/life science developments at peak market rents.”

Commitment
Kilroy’s project will be competing with two other downtown projects that are wooing life science tenants – the redeveloped Horton Plaza and IQHQ’s project, also along Pacific Highway.
Nolen said Kilroy’s purchase of the property “further solidifies Little Italy as a place to live, work and play.”
“That coupled with other new office projects in this area is really a game changer for the job growth situation downtown in bringing that element (life sciences) maybe a little bit more away from the Central San Diego, UTC/Del Mar Heights area,” Nolen said. “It speaks a lot to the commitment of these big office and large life science developers that they firmly believe that workers will come back into the office, although it (the office) might be different.” The site is adjacent to a 220,000 square-foot office building that Kilroy recently completed at 2100 Kettner Blvd.
“This was a rare opportunity for an investor/developer to acquire an extremely well-located piece of property just off the waterfront in downtown San Diego,” said Kevin Nolen, who helped broker the sale along with Cushman & Wakefield who helped broker the sale along with Mike Novkov, Tim Winslow and Jason Kimmel of Cushman & Wakefield.

Optimistic
The deal comes at a time of uncertainty in the office market as people begin to return to offices as the COVID-19 pandemic wanes.
The commercial real estate brokerage Colliers International reported that the office vacancy rate in San Diego County for the first quarter of 2021 averaged a little more than 14%, the highest it’s been since 2013 with 1,855 square feet of office space under construction.
The vacancy rate was the highest among top-of-the-line Class A office space at 16.4%.
Downtown San Diego had the highest vacancy rate in the first quarter – nearly 25.7% for Class A office space and 23.1% for Class B, according to Colliers.
Nevertheless, Colliers forecast that demand for office space would stabilize and possibly improve by years end as people are vaccinated for the COVID-19 virus and return to work.
Nolen said Kilroy’s plans for the property “speak to the optimism to fulfill the need for this area looking ahead.”
“This will be coveted project given that Little Italy and downtown San Diego waterfront is a limited and rare opportunity for developers to construct some of the city’s best-in-class office and life science projects due to the lack of available developable sites on Pacific Highway with scale,” Nolen said. “Tech and life science industries have been dominating the leasing activity throughout the county, which has largely been concentrated in first class, new office/life science developments at peak market rents.”

Commitment
Kilroy’s project will be competing with two other downtown projects that are wooing life science tenants – the redeveloped Horton Plaza and IQHQ’s project, also along Pacific Highway.
Nolen said Kilroy’s purchase of the property “further solidifies Little Italy as a place to live, work and play.”
“That coupled with other new office projects in this area is really a game changer for the job growth situation downtown in bringing that element (life sciences) maybe a little bit more away from the Central San Diego, UTC/Del Mar Heights area,” Nolen said. “It speaks a lot to the commitment of these big office and large life science developers that they firmly believe that workers will come back into the office, although it (the office) might be different.”

Kilroy Realty
Founded: 1996
CEO: John Kilroy
Headquarters: Los Angeles
Employees: 267
Revenue: $898.4 million 2020; $837.6 million 2019
Stock Symbol: KRC (NYSE)
Notable: Kilroy Realty has more than $14 in projects it owns.
Website: www.kilroyrealty.com
Contact: cestevez@kilroyrealty.com; 858-523-0300