SAN DIEGO-The office/R&D building, located at 15330 Ave. of Science in the Carmel Mountain Ranch area of San Diego, was sold “as is” by San Diego-based Equastone. The buyer, a construction risk management company called, purchased the vacant property for $11 million.

“For a user, buying as is can be advantageous as they can reduce their occupancy costs by owning rather than leasing and [by] locking in a long-term, low cost loan because interest rates are very attractive right now,” explains David Bourne, Equastone’s chairman. “The cost of owning the building, which is mostly the cost of the mortgage, will be lower now than if they leased the property.”

An affiliate of Equastone, which specializes in opportunistic, value-add and core-plus investments, originally acquired the facility in July 1996 for $4.7 million. The property generated an annual return of about 33% before becoming vacant in 2006.

“We bought the property in the worst of times in 1996 [when] property values in San Diego for this kind of real estate had hit rock bottom prices,” Bourne says. “After the RTC debacle [Resolution Trust Corp., which liquidated insolvent savings and loans and sold the corresponding assets] and a mass downturn of San Diego’s economy, we enjoyed good cash flows during our ownership period and the building remained 100% leased from 1996 through 2005.”

However, over the past few years Bourne notes that Equastone could not successfully lease the facility at the rates it had hoped to achieve. Part of the reason was because the building’s extensive clean room and assembly facilities had become obsolete as potential tenants either moved operations overseas or found space in an industrial hub.

The company eventually allowed leases to expire and waited for the building to empty, a process that took two years.

“Once the building became truly un-leased, we had a window where we tried to [re-]lease it, but we were unsuccessful with those types of assembly and clean room tenants because San Diego and the I-15 corridor are not major centers for these products and a lot of it has gone overseas,” Bourne says.

Equastone also planned to redevelop the facility into a class A office but that too fell through because of the amount of money necessary for rehab.

“If you invest more money in the property, then you have to attract a tenant willing to pay more rent,” Bourne notes. “Therefore it was a pretty easy decision to sell, get a reasonably attractive price and not have to pay the costs of redevelopment.” plans to occupy both floors of the building, once a few improvements and renovations are complete.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.



Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join now!

  • Free unlimited access to's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including and

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.