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La Jolla commercial real estate activity picks up

With several completed transactions and more commercial properties in escrow, sales activity in the village of La Jolla is finally beginning to pick up.

“A lot of properties have sold and at good prices,” said Phil Wise, a Colliers International senior vice president.

He said these properties, some of which have languished for a long time, are once again wanted by investors -- even if they aren’t full.

The 35,997-square-foot Wall Street Plaza office and retail complex at 7863-7877 Girard Ave., that went through foreclosure in 2009, has reportedly been sold -- the property is on a ground lease -- to a Davlyn Investments partnership for $3.75 million.

Wall Street Plaza has more than 29,000 square feet of vacant space, according to CoStar (Nasdaq: CSGP), meaning it is only about 17 percent leased.

Tenants at Wall Street Plaza include Panera Bread (Nasdaq: PNRA) and Lawrence Poon Jewelry, but they are largely alone in an empty property.

John Hale, Davlyn Investments acquisitions director, said his firm plans to spend more than $2 million in upgrades to Wall Street Plaza with the intent of luring high-end boutique retail tenants.

“It’s basically in a shell condition today," Hale said, adding the new name hasn’t been determined. "It will be rehabbed and rebranded with a new name.”

Hale, who found the listing for the property on auction.com, said he hopes to have the work completed by summer 2013.

Hale, whose firm has acquired some $850 million in commercial and multifamily assets over the years, said that one of the big challenges will be putting retail into all levels of a three-story building.

He said the building’s high visibility should counteract any downsides, however.

"The building has certain challenges, but we believe that by renovating and rebranding the property we can reintroduce it to the market and capture the kind of high-end boutique operators who desire Class A retail space in iconic La Jolla,” Hale said.

Wise said even with the vacant space at Wall Street Plaza, La Jolla’s retail vacancy is now running at about 5 percent today.

That rate was higher than 6 percent by most accounts as recently as March 30.

Wise added the retail vacancy “will continue to fluctuate over the next 12 to 18 months until Wall St. Plaza, which currently comprises over a third of the current retail vacancy in the village, is renovated and becomes fully leased.”

CoStar (Nasdaq: CSGP) reported La Jolla’s office vacancy, which may have stood at more than 12 percent at the beginning of the year, has declined since -- ending at 9.5 percent at the end of September.

Meanwhile, several commercial properties sold in October alone, and more are in escrow.

The former two story, 25,464-square-foot Copley Office Building at 7776 Ivanhoe Ave. sold for $6.15 million to Ivanhoe Investors LLC, a unit of JMI Equity of La Jolla with Paul V. Barber as its member.

The transaction also included an adjacent 7,048-square-foot parking lot at 7752-7754 Ivanhoe Ave. The building is 100 percent leased, according to CoStar.

The two-story, 3,000 square-foot Shepherd Trust office/retail building at 1113 - 23 Wall St., sold last month for $1.6 million to Sunset Lending Management, LLC.

This isn’t the only former Shepherd Trust office property in the mix. The 4,713-square-foot office property at 7850 Ivanhoe has also sold for $1.6 million to a Collins Family Partnership entity.

The Collins family's Collins General Contracting has been selling hundreds of the thousands of building square feet in and around Sorrento Valley.

Another October sale was that of the two story 8,232-square-foot office and retail building at 1744 -1745 Girard for $2.2 million to Riverbed Property Enterprises.

Also in October, the two story 3,080-square-foot office property that has long served as the headquarters of Harman Realtors at 7835 Ivanhoe Ave., sold for approximately $2.1 million, according to county records.

The buyer is a limited liability corporation controlled by Horatio Valeiras, of La Jolla.

“In addition purchase negotiations are ongoing on several other landmark Village of La Jolla Properties,” said Wise, who did not elaborate further.

Wise said La Jolla’s retail market continues to slowly improve.

“With the exception of Wall St. Plaza there just are not any Girard Avenue vacancies from Prospect Street all the way to Kline (Street),” Wise said.

New retailers entering La Jolla are Kate Space and Lo Lo Calisto on Girard Avenue, near Prospect St. Sunglasses & More, and Y3 on Girard near Polo Ralph Lauren.

After being on the West side of Girard Avenue, La Jolla Music relocated across the street into space close to La Jolla Elementary. The “new” premises sat empty nearly 10 years.

Additionally, The Perfumery leased space next to Tile Nine, on Herschel Avenue just across the street from the Seaside Home furnishings store.

“It seems that with the opening of the Herringbone Restaurant in addition to the existing mix of Whisknladle, Puesto, Burger Lounge and Karl Strauss Brewery, along with Brooks Brothers, Seaside Home Furnishings and Tommy Bahama, the intersection of Herschel and Wall Street is becoming the 'action' street in the village,” Wise added.

Some buildings remain difficult to fill.

The 28,448-square-foot property at 1010-1012 Prospect St., which just went through a foreclosure, was at least 16.4 percent vacant, according to CoStar.

Tenants in the building include the Living Room Coffeehouse, EC San Diego, Integrative Imaging Systems, National Mortgage Associates and Re/Max.

The 60,921-square-foot La Jolla Bank Building (office and retail) at 888 Prospect St. has nearly half its space vacant, but Wise said owner Frederick Howe -- CEO of the Med-Impact pharmaceutical firm -- is in negotiations with a prospective tenant that would bring the property to almost, if not completely, leased.

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