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7/26/17
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Paragon Real Estate Fund, LLC closed on a sizable San Diego-area office acquisition, paying $34 mil for Art Center Block, which consists of five office buildings totaling 132.9k sf. The asset, situated on an entire city block in downtown San Diego’s East Village, was sold by Carleton Management Inc. and The Downtown LLC (Bishop Family).
Art Center Block is a full city block bounded by Park (12th), 13th, F and G Streets. The five office buildings range from one to four stories and were built between 1924-1971. The NewSchool of Architecture and Design occupies 51% of the total office building square footage. The property also includes the former HangTen clothing manufacture facility. The other office space is 97% occupied by several creative office tenants.
CBRE’s Kevin Mulhern and Rachel Parsons represented the seller in the deal. CBRE’s Scott Peterson and Bill Chiles of the Capital Markets’ Debt & Structured Finance team arranged a $23.6 mil, short term, floating loan on behalf of Paragon Guggenheim.
“Owning an entire city block in downtown San Diego’s largest and fastest growing neighborhood is a rare opportunity with tons of potential,” said, Mulhern. “Directly east of the property is the planned East Village Green Park, a 4.1-acre park owned by the city and planned for future development. The property is also zoned for multifamily development which could lend itself to potential redevelopment in the future.”
“East Village is one of the most vibrant and dynamic communities in San Diego,” said Ricardo Jinich, Paragon Co-Founder. “Art Block provides much needed creative office space and has great potential as a future development site. This acquisition more than doubles our footprint in downtown San Diego and reaffirms our long-term commitment to the area.”
Art Center Block is centrally located one block from the Park and Market trolley stop providing easy transportation access throughout downtown and other submarkets. Additionally, the property is within minutes of all of San Diego’s famous attractions including Petco Park, Balboa Park, San Diego Zoo, San Diego Bay, Embarcadero Park, San Diego Central Library, Convention Center, San Diego City College and the San Diego International Airport.
According to CBRE Research, San Diego office market fundamentals were trending positively this quarter. Office vacancy in downtown is down 350 basis points year-over-year and asking lease rates are up 5.9% year-over-year. Also, Makers Quarter, a new speculative multi-tenant building, broke ground in the East Village in May 2017.
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