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New York investor acquires two downtown San Diego office towers

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A unit of New York City-based Emmes Group of Cos. -- which already owns two office towers here -- has paid a total of $155 million to acquire the downtown San Diego buildings at 701 B Street and 707 Broadway.

The 560,329-square-foot 701 B Street building, known as the "Darth Vader building" because of its black glass, sold for $120 million. The 187,304-square-foot 707 Broadway building was acquired for $35 million.

The seller of both properties were partnerships controlled by the Trizec unit of The Blackstone Group (NYSE: BX).

"These buildings were acquired when Blackstone acquired Sam Zell's Equity Office Properties [in late 2006]," said Lynn LaChapelle, a JLL (NYSE: JLL) managing director of capital markets.

LaChapelle, Bob Prendergast and Patrick Inglis, also with JLL, represented Blackstone in the transaction. The Emmes Group represented itself.

The buildings' leasing will continue to be handled by Matthew Carlson, J.P. Huntington and Brooke Giuffre, of Cushman & Wakefield.

According to a CoStar Group (Nasdaq: CSGP) report, the 701 B Street building, which was once known as the Imperial Bank Tower before Merrill Lynch took over the signage years later, was 87 percent leased at the time of the sale last month. The building, developed by the Trammell Crow Co. in 1982, was renovated in 2008.

The 560,329-square-foot 701 B Street building, known as the "Darth Vader building" because of its black glass, sold for $120 million. Photo courtesy of CoStar

The rent on the 701 B Street building is $28.30 per-square-foot per year, which translates to about $2.36 per-square-foot per month.

Major tenants at 701 B St. include Alliant Insurance Services, Arrowhead General Insurance Agency, the Law Firm of Lewis Brisbois, Bisgaard & Smith LLP and Merrill Lynch.

The building also includes the Pur Fitness Sports Club, Ida’s B Street Deli, an atrium meeting facility, 24-hour security and video conferencing.

The 707 Broadway building, once known as the Washington Mutual Building, was constructed in 1961.

The 707 Broadway building, recognized by BOMA San Diego as a renovated building of the year in 2002, is fully WiFi-enabled with fiber optic cable and DSL.

The building also features dual-pane windows and a 12-story, 792-space parking garage.

CoStar pegged 707 Broadway's current vacancy at 26.7 percent or more than a quarter empty. The property underwent a major renovation in 2010.

LaChapelle said 701 B and 707 Broadway share a common parking garage, and didn't seem to worry about the 707 becoming full.

"The 707 building is a great asset," LaChapelle said. "It has all that parking and it is in the middle of the IDEA (Innovation+Design+Education+Arts) District. I really believe that area is going to get a lot of traction. With new residential and digital media companies expanding that whole area is going to really open up."

The 187,304-square-foot 707 Broadway building was acquired for $35 million. Photo courtesy of CoStar

LaChapelle said the smaller floor plates at 707 Broadway are ideal for smaller companies.

Major tenants in the 707 Broadway building include Family Justice Center Alliance, Associated Technical College, Entropy Research and the Law Firm of Lowell & Robbin.

The Emmes Group already has a downtown San Diego presence.

In November 2012, a partnership controlled by the New York investment firm paid $135 million for the 553,715-square-foot 1 Columbia Place building (also known as Columbia Center) at 401 W. A St. CoStar put the occupany at 83.5 percent.

In August 2013, another Emmes partnership paid $35 million to acquire what is now known as 2 Columbia Place at 1230 Columbia St. That building is 95.6 percent leased, according to CoStar.

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JLL Executive(s):

Lynn LaChapelle

  • Managing Director

Jay Alexander

  • Managing Director

Stephen Holland

  • Managing Director

Bob Prendergast

  • Managing Director