SAN DIEGO—NNN leases are fairly common in headquarters, single-tenant office, R&D and lab space in San Diego County and in many markets nationwide, Drawbridge Realty's VP investments Chris Elmendorf tells GlobeSt.com. After the company's recent $61-million acquisition of three buildings here net-leased to Northrop Grumman, we spoke exclusively with Elmendorf about the deal and the appeal of triple-net leases that aren't necessarily retail oriented.

GlobeSt.com: How prevalent are office transactions of this size in San Diego?

Elmendorf: Transactions of this size are fairly unique in San Diego County since the opportunity to acquire corporate campuses consisting of multiple buildings does not occur very often, although there have been some recent portfolio trades. Typically, most opportunities are stand-alone office or R&D buildings. The opportunities that allow one to create a campus environment through multiple buildings or future development generally have strong long-term value.

GlobeSt.com: Do you anticipate more of these?

Elmendorf: We do continue to expect to see large portfolio and campus opportunities. We expect more to follow in the near term and will continue to look for these opportunities throughout our target markets including San Diego.

GlobeSt.com: We see a lot of NNN retail leases, but how common are NNN office leases, particularly in this market?

Elmendorf: For the corporate-headquarters and single-tenant office, R&D or lab market, the leases are generally NNN. This is true in San Diego County, and this is consistent with the 2.5 million-plus square feet that Drawbridge Realty owns and manages.

GlobeSt.com: What are the advantages of a NNN lease for office tenants?

Elmendorf: In general, these buildings are single-tenant NNN-leased buildings. The advantage of this type of structure is that the tenant controls everything. From security, access, shipping and receiving to interior improvements, direct billing with the utility providers, etc., everything is based upon what works best for the tenant's business and provides for an easy and efficient operation.

GlobeSt.com: What else should our readers know about this transaction or the office market in San Diego in general?

Elmendorf: We continue to see strong fundamentals with the Greater San Diego County area. We do not see an overabundance of excess supply or sublease space that has traditionally held the market in check in previous cycles. That, coupled with continued expansions, is creating limited options for companies and continued rent growth. This is why we believe Spectrum will be a solid, long-term investment given its high-quality location and construction in multiple buildings totaling more than 180,000 square feet.