How Irvine Co.’s San Diego Foothold Could Impact the Market

Tim Olson

The Irvine Co. has bee aggressively buying office properties in San Diego this year. In the last 12 months, it has purchased 1 million square feet of office space. In some cases, the investor has purchased properties at record prices and with all cash. While the buying spree is certainly a telling sign of the strength and future growth of the San Diego market, it also could mean that the company will soon have enough market share to control rents.

“Anytime you have an owner that controls that much product in one market, from a tenant and landlord standpoint, they have market control over rents,” Tim Olson, managing director at JLL, tells GlobeSt.com. “Historically, Irvine has managed their buildings more for occupancy, meaning that they will drop rates drastically in a down market. They can also push rates drastically in an up market. From a tenant standpoint, their risk is how high are they going to push rates when vacancy rates begin to decline. In the last downturn, they dropped rents by 100%.”