Three large downtown office complexes in San Diego, including Emerald Plaza, one of the best-known properties on the city’s skyline, have been purchased for $274.5 million by a Santa Ana real estate investment company.
Triple Net Properties bought the buildings ⎯ the 24-story Comerica Bank Building, the 22-story Golden Eagle Plaza and the 30-story Emerald Plaza ⎯ from San Diego-based Southwest Value Partners in one of the Southland’s largest commercial property transactions this year.
Emerald Plaza is the best known of the buildings, with its eight green hexagonal tower clustered around an atrium. Southwest Value Partners paid almost $70 million for Emerald Plaza, then known as Emerald-Shapery Center, in 1995.
The acquisition is Triple Net’s largest ever and makes the company the largest office landlord in San Diego’s central business district with more than 12% of its space, said broker Kevin Shannon of Grubb & Ellis, the real estate company that represented both sides in the deal.
Downtown San Diego office vacancy is about 10.5% roughly half the vacancy of downtown Los Angeles, according to Grubb & Ellis.
“New York, Washington and San Diego seem to be the three favored locations for a majority of investment capital right now,” Shannon said. San Diego is on everyone’s shopping list.”
Collectively the properties are 91% leased to tenants such as Liberty Mutual Insurance, Comerica Bank, the U.S. Navy and the city of San Diego.
Triple Net manages more than 19 million square feet of commercial properties. It specializes in real estate trades that are covered by Section 1031 of the federal tax code, under which the owner of an investment property who swaps it for a similar property does not have to immediately report a capital gain.
Emerald Plaza was part of a 1031 exchange, while the other two buildings were bought by G REIT Inc., a real estate investment trust managed by Triple Net that prefers to own properties anchored by government or government-oriented tenants.