Quality Trumps Cost for DT Office Tenants

SAN DIEGO—Downtown San Diego office tenants are no longer focused on just the low rental rates, but are looking at the intangible value of being in a quality building and location, Cushman & Wakefield office specialist JP Huntington tells GlobeSt.com. As we reported recently, Mesa West Capital has provided an affiliate of the EMMES Group with $130 million in first-mortgage debt to recapitalize 1 Columbia Place, a 556,000-square-foot, class-A office complex in Downtown San Diego. Huntington and his team have been named as the exclusive leasing team for Emmes' 1.45 million-square-foot downtown San Diego office portfolio, which includes Columbia Place. We spoke exclusively with Huntington about the portfolio and leasing trends he's noticing in Downtown San Diego office.

GlobeSt.com: What is unique about this particular portfolio you've been assigned to lease?

Huntington: EMMES has strategically acquired assets that are all unique and appeal to different types of customers. We are able to offer a variety of user experiences within this diverse portfolio, all while still offering the prime experience of being an EMMES customer. One of EMMES' core focuses is to provide a better working environment, which in return offers their customers the opportunity to create a great culture and enhance the ability to recruit and retain talented team members.

GlobeSt.com: What leasing trends are you noticing in Downtown San Diego?

Huntington: Downtown is experiencing what many other urban centers around the country are, which is a move to offer tenants/employees the ability to work and live in the same area. Tenants are no longer focused on just the low-cost economic opportunity. They are now focused on the intangible value received from being in a quality building and location that offers great visual appeal, amenities for its employees and great customer service. Most tenants' core business is not dealing with real estate, so it sure is nice to know that their landlord is focused on the fine details and providing a first-class environment. 

GlobeSt.com: Are new types of tenants entering the market?

Huntington: Downtown San Diego has seen organic growth from an existing tenant base, along with a trend of growing companies looking either to relocate or to open up secondary San Diego locations in the urban core. Over the last 18 months, we have seen technology and digital-media firms increase their presence Downtown, along with growth from more traditional uses like engineering and the legal sectors. One of the most exciting components of these positive trends is that many of these companies are a part of the ever-strengthening innovation community that is thriving in San Diego. We continue to expect strong growth in the innovation/technology sectors in Downtown San Diego.

GlobeSt.com: What else should our readers know about the Downtown San Diego office market?

Huntington: It is the hidden gem of the West Coast. Downtown San Diego has so much value that still has yet to be fully unlocked compared to some of the other major urban centers on the coast like San Francisco and Seattle. Our fundamentals are strong, and real estate prices from both a purchase and leasing perspective are still below peak pricing. We are excited about the future of this submarket since there is a lot of runway to continue positive urban growth that will be a strong benefit to most of the stakeholders in the community.