Irvine Company, the Newport Beach-based real estate giant, is scaling back its presence in downtown San Diego once again by selling its fourth office property in the area within less than a year.
The company has sold its stake in the 24-story Wells Fargo Plaza for $40 million to the San Diego-based nonprofit Prebys Foundation.
This sale marks a significant 73% discount compared to the $148.3 million paid by Irvine Co. in 2004.
The decision to divest from downtown San Diego reflects Irvine Company’s strategy to concentrate investments in La Jolla and University Center Drive, an area noted for its burgeoning technology and biotech sectors.
A spokesperson for the company highlighted the importance of this shift, especially after they publicly expressed support for the University Community Plan Update, which emphasizes developing mixed-use districts designed to include more housing in the region.
Previously, the Irvine Company had a robust presence in San Diego, with a portfolio boasting more than 70 office buildings, including five in downtown, as well as 15 apartment communities encompassing over 10 million square feet.
Over the last five years, the company has reinvested upwards of $200 million into these properties to enhance their value.
In the 2004 transaction, the Irvine Company acquired Wells Fargo Plaza at approximately $284 per square foot.
In the recent acquisition, Prebys Foundation stated that the purchase of 401 B St. in downtown represents a strategic investment aimed at bolstering downtown as a dynamic center for business, the arts, creativity, and community engagement.
Grant Oliphant, CEO of Prebys Foundation, expressed confidence that a thriving downtown plays a vital role in shaping a community’s identity.
He remarked, “We believe downtowns play a critical role in shaping the identity, reputation, and spirit of a community, and this investment is just one way in which we are signaling our commitment to helping our downtown deliver on its potential.”
Oliphant further emphasized the pivotal moment for downtown San Diego, remarking, “With the purchase of 401 B Street, we are embracing the opportunity to help write its next chapter — one defined by innovation, connection, and civic renewal.”
The sale was facilitated by New York-based Eastdil Secured, while the Prebys Foundation was represented by Matt Carlson from CBRE.
Adam Edwards, a managing director at Eastdil Secured, noted that the process was competitive with several interested buyers before the final deal was made with the Prebys Foundation.
This move to divest from San Diego high-rises comes amid other recent transactions, including the September sale of Symphony Towers, another skyscraper in downtown San Diego, to Formosa Ltd.
The price tag for Symphony Towers was $45.8 million, translating to $84 per square foot, significantly lower than its pre-pandemic valuation.
Irvine Company had acquired the 34-floor office high-rise at 750 B St. for $124.3 million back in March 2003, marking a 63% discount in this most recent sale.
The company has also disposed of two more downtown properties, selling 101 W. Broadway for nearly $44 million and 225 Broadway for $48 million.
Despite the divestiture of its San Diego high-rises, the Irvine Company remains heavily involved in the broader office market.
Currently, the company oversees a staggering 54 million square feet of office space across regions including Orange County, Los Angeles, and San Diego.
Irvine Company is also positioning itself for future opportunities with a recent refinancing deal worth $1.5 billion for the MetLife Building, a 58-floor high-rise located in Manhattan.
Moreover, the company has settled its debt for the 60-floor office tower at 300 N. LaSalle in Chicago’s River North district.
Earlier this month, Irvine Company announced plans to invest over $25 million in renovations across three office properties situated in San Diego’s northern suburbs, specifically Eastgate and The Plaza in La Jolla, along with Canyon Ridge Technology Park in Sorrento Mesa.
They affirmed that “the greater San Diego metropolitan area will continue to be a key driver of Irvine Company’s ongoing success with the new reinvestment projects in La Jolla University Town Center and Sorrento Mesa.”
The company views these locations as essential hubs for attracting and retaining top talent, especially in the thriving sectors of technology and innovation.
In conclusion, while Irvine Company reduces its downtown San Diego footprint, it simultaneously reinforces its commitment to the greater area by redirecting investments towards promising locations in La Jolla and Sorrento Mesa, reflecting a broader trend within the commercial real estate landscape.
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