Petco Animal Supplies Inc. has paid a reported $33.08 million for a 303,000-square-foot industrial building at 10850 Via Frontera in Rancho Bernardo that it plans to transform and consolidate into its corporate headquarters.
As noted by The CoStar Group (Nasdaq: CSGP), which listed the figure for the sale, the seller of what's known as the Rancho Bernardo Corporate Center is a partnership of Kilroy Realty Corp. (NYSE: KRC).
Kilroy is a Los Angeles-based real estate investment trust that has been slowly reducing its presence in San Diego; however, it still owns about 4 million square feet of mostly office buildings in the area.
Petco, which had been wooed by Texas and retains a support center in San Antonio, has made it clear that it plans to remain in headquartered in the county.
The property was marketed by Jay Alexander and Ryan Grove of JLL (NYSE: JLL), but further details were unavailable.
The recently purchased building, which dates to 1982, has been marketed as a manufacturing center and a data center, as well as a possible corporate headquarters.
Unisys Corp. (NYSE: UIS) once fully occupied the space, but sold it to Kilroy for $24 million in September 2005.
Although the building has one of the largest remaining vacant contiguous industrial spaces in the county and the largest in the Interstate 15 corridor, finding a tenant has been difficult.
A JLL flier on the building says the 21-acre site would allow Petco, which will have about 650 employees at its new facility, to expand.
The employees will move from Petco-owned buildings in Miramar and leased spaces from other locations.
The building has 620 parking spaces with the potential for 429 more; it also has an onsite co-generation facility.
Petco spokeswoman Lisa Stark declined to reveal the work's projected cost, architect or general contractor, but said the rework is expected to begin by the year's end. Completion is tentatively set for fall 2015.
While it isn't clear whether Petco will go after a LEED (Leadership in Energy and Environmental Design) designation, the workspace will be positioned to maximize natural light and if possible, use "earth-friendly building materials."
"With the purchase and remodel of this facility, Petco hopes to invest substantially in creating an open and sustainable work environment focused on the long-term productivity, commitment and well-being of its employees and their pets," the company wrote.
“Petco has long been a major local employer in San Diego and supports a wide range of philanthropic and recreational activities in the area,” said San Diego Mayor Kevin Faulconer in a statement. “We’re thrilled they’ve renewed their commitment to the city and are creating an innovative workspace that will enhance the wellness of their employees and our community.”
Petco CEO Jim Myers said, "As part of our dual support center strategy, our San Diego Support Center will continue to work hand in hand with our San Antonio Support Center and our field and store partners across the country. San Diego has been our home for decades; this community has helped us grow and this new facility gives us the opportunity for continued growth in our hometown.”
Stark said the company hasn’t decided what to do with the office buildings it owns. These include a 43,000-square-foot office building at 8925 Rehco Road, a 43,000-square-foot office building at 8945 Rehco Road and a 69,166-square-foot building at 9125 Rehco Road in Miramar.
It also leases office space in Scripps Ranch and other locations.
Petco operates more than 1,300 primarily leased stores -- plus nine Pooch Hotels -- in the United States, Mexico and Puerto Rico. Stark said there are about 35 stores in San Diego County.
The company supports animal welfare causes through its nonprofit Petco Foundation and is renewing a naming rights deal for Petco Park.