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Brokers give insights into year's large transactions

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San Diego commercial brokers provided some insight on how difficult or easy it was to close the deal Wednesday, during an NAIOP San Diego meeting titled "The Battle of the Brokers" at the Marriott Del Mar.

Program moderator David Thomas, of LBA Realty, set the stage by noting the commercial real estate market's cyclical nature.

"The markets go up and down. Trends may be long but don't last forever," Thomas said.

Bob Prendergast, of JLL (NYSE: JLL), handled the $154.9 million March sale of two office buildings in downtown San Diego for the Emmes Group of Cos. at 701 B St. and 707 Broadway.

He said one of the major challenges of the transactions were the presence of ground leases that had to be negotiated with multiple parties. The 707 Broadway building has 187,304 square feet. The 701 B St. building contains 560,329 square feet.

"One property is 85 years old and we had to deal with heirs," Prendergast said.

The other unusual aspect of the sales was the value of the B Street property.

Downtown San Diego rarely sees transactions of more than $100 million," Prendergast said. "The trends are improving and the capital markets helped bail us out."

Nick Psyllos -- an HFF (NYSE: HF) broker who handled the $295 million sale of a 1.05 million-square-foot Kilroy portfolio in Sorrento Mesa and Carmel Mountain Ranch to a Starwood Capital entity earlier this year -- said the office and industrial buildings were marketed both as a portfolio and individually as a backup plan.

While that latter plan turned out not to be necessary, the properties needed to be examined before a sale could go forward.

"It took about two years of looking at the assets before we had the sale," Psyllos said.

Louay Alsadek, of CBRE (NYSE: CBG) -- who handled the $18.09 million sale of the 98,987-square-foot Sorrento Canyon Technology Center to a unit of Legacy Partners in June -- said the property was 50 percent vacant in 2012, and is largely full today.

"We got a lot of offers on the property," Alsadek said. "Life science buyers were tops on the list."

Colliers International's Rick Putnam -- who handled the sale of the five-building, 493,898-square-foot, $57.65 million North County Corporate Center in Vista to a Cornerstone Real Estate Advisors unit in May -- said that property, which "has an excellent infill location," is running at about 91 percent leased.

Brad Tecca, of Cassidy Turley, in June handled the sale of a four-building 190,154-square-foot $ 41.15 million Sorrento Mesa portfolio sale to a partnership of DRA Advisors LLC and Cypress Office Properties.

With a heavy marketing campaign, Tecca and his team was able to take a property that had seen 50 percent of its leases roll over during a three-year period to 100 percent leased at the time of the sale.

"Tenants were flocking to these two-story buildings," said Tecca, who added that prospective buyers were just as interested.

"The number of offers we received were in double digits," Tecca said. "We had more offers than we knew what to do with."

Michael Roberts of Cushman & Wakefield, handled the $23.4 million sale of the 81,712-square-foot office building at 5770 Armada Drive in Carlsbad in December of last year. He said the building's value has been pushing $300 per square foot.

"We had 140 confidentiality agreements and more than 11 offers on the property," Roberts added.

The buyer of the Armada Drive property was Cole Real Estate Investments of Phoenix.

Randy LaChance, of Voit Real Estate Services, said the 70,000-square-foot Oceanside Commerce Center -- now owned by company president Robert Voit -- is in escrow.

"Bob Voit wants to redeploy his capital," LaChance said.

At the other end of the county, while Otay Mesa still has about 2 million square feet of vacant industrial space by most accounts -- and San Diego is not known as a distribution center -- LBA's Thomas said, "Otay Mesa is definitely a place to be as Mexico recovers."

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