owner/user office investment opportunity | san …...fast and easy interstate 805 freeway access...

Owner/User Office Investment Opportunity | San Diego, CAOFFERING MEMORANDUM

2 COLLIERS INTERNATIONAL

GREENWICH DR

GOVERNOR DR

SHOREHAM PL

The information contained herein, including an pro forma income and expense information (collectively, the “Information”) is based upon assumption and projections and has been compiled or modeled from sources we consider reliable and is based on the best available information at the time the brochure was issued. However, the Information is subject to change and is not guaranteed as to completeness or accuracy. While we have no reason to believe that the Information set forth in this brochure, underwriting, cash flows, valuation, and other financial information (or any Information that is subsequently provided or made available to you) contains any material inaccuracies, no representations or warranties, express or implied, are made with respect to the accuracy or completeness of the Information. Independent estimates of pro forma income and expenses should be developed before any decision is made on whether to invest in the Property. Summaries of any documents are not intended to be comprehensive or all-inclusive, but rather only outline some of the provisions contained therein and are qualified in their entirety by the actual document to which they relate. You understand that the Information is confidential and is furnished solely for the purpose of your review in connection with a potential investment in the Property. You further understand that the Information is not to be used for any purpose or made available to any other person without express written consent of Colliers International. This offering is subject to prior placement and withdrawal, cancellation, or modification without notice. This publication is the copyrighted property of Colliers International and/or its licensor(s). ©2016. All rights reserved.

TABLE OF CONTENTSThe Offering 04 Offering Summary 04

Offering Highlights 05

Property Details 06

Site Plan 10

Floor Plan 11

Market Overview 12 Governor Park Overview 13

Demographics 14

Lease Comparables 16

San Diego Office Market 18

San Diego County Overview 21

Financials 28 Rent Roll 29

Operating Expenses 29

Tenant Profiles 30

Rent vs. Own Analysis 31

TOM WILCOXSenior Vice President

Lic. No. 00872520+1 858 677 5345

[email protected]

JAY ARNETT, SIORSenior Vice President

Lic. No. 00482177+1 858 677 5354

[email protected]

4350 La Jolla Village Dr., Ste. 500San Diego, CA 92122

Lic. No. 01908588+1 858 455 1515 MAINcolliers.com/sandiego

*Please do not disturb tenants.


OFFERING SUMMARYColliers International, as exclusive advisor to seller, is pleased to present the opportunity to acquire 6336 Greenwich Drive (the “property”), with an interior gross area of approximately 17,533 square feet per current BOMA Standards. This multi-tenant office building is located in the prestigious Governor Park submarket area of the Golden Triangle, one of the most dynamic office markets in the county. Surrounded by the premier business centers and executive housing in University City, La Jolla, and Carmel Valley, 6336 Greenwich Drive is easily accessed by I-805, State Route 52, and I-5. The building enjoys excellent visibility to Greenwich Drive. The ambiance of Governor Park is enhanced by unusually extensive landscaping and uncrowded setbacks. Some of the major occupiers of space in Governor Park are DPR Construction, Guild Mortgage, UCSD, Ware Malcomb Architects and the United States Postal Service. As the smallest office building in Governor Park, 6336 Greenwich Drive is uniquely positioned to accommodate a small company looking to own and occupy their own building.TH

E O

FFER

ING

5THE OFFERING

OFFERING HIGHLIGHTS > Rare Small Owner/User Building Rare opportunity to own and occupy a small office building within the highly desirable Golden Triangle. Suite A, with approximately 6,623 usable square feet, is available for the new owner/occupant.

> Distinctive Architecture Craftsman-style construction in the tradition of Frank Lloyd Wright, featuring operable windows, with each tenant having an exterior premise entry.

> Preferred Corporate Location The building is located within the premier master-planned Governor Park submarket area, which offers close proximity to the first-class amenities of University Town Center and the newly renovated Westfield UTC mall, featuring over 150 stores and restaurants.

> Highly Functional Design Multi-tenant building allows for an owner/user to expand or reduce their occupied portion of the building.

> In-Place Rental Income with Potential Upside Current tenant income helps reduce ownership costs. In-place rents are below market in a high demand, low vacancy central office submarket. Tenant spaces are approximately 20% smaller in size than allowable per current BOMA Standards and rental rates are also 20% below market.

> Exceptional Freeway Access Fast and easy Interstate 805 freeway access with rapid interchange connections to Highway 52, Highway 56, Interstate 5, and Interstate 15.


PROPERTY DETAILSAddress: 6336 Greenwich Drive, San Diego, CA 92122

Building Description: 6336 Greenwich Drive is a single-story office building consisting of an interior gross area of ±17,533 square feet featuring operable windows, showers in the men’s and women’s restrooms, and a central landscaped courtyard. The building is sprinklered.

Signage: The building offers the ability to brand your company and the building in a highly visible way with major street signage.

Year Built: 1984

Land Area: 1.18 acres

Parking: 56 spaces, including two handicapped spaces

Zoning: IP-2-1

APN: 348-031-06-00

Tenants: The current owner will vacate Suite A consisting of approximately 6,623 usable square feet, which, over time, may be combined with other contiguous space as the adjacent tenant’s leases expire.

Lease Expiration Suite Tenant SF*01/31/2020 A Current Owner ±6,623 SF12/31/2017 C Caliber Associates ±1,135 SF12/31/2020 D Lyons Accountancy Group ±4,751 SF06/30/2022 E Edward Jones ±957 SF09/30/2019 F REA/RealNex ±1,078 SF*Based on new usable square foot measurements.

Price: $5,750,000.00

Financing: Conventional and possible SBA 504 financing available (See Own vs. Lease analysis on page 31)

7THE OFFERING

GREE

NWIC

H DR

LAKEWOOD ST

GOVERNOR DR

NOBEL DR

LA JOLLA VILLAGE DR

PACIFIC OCEANUCSD

La Jolla

Westfield UTC


PROPERTY DETAILSCONSTRUCTION COMPONENTS

> Type Garden office building with a surface parking lot

> Foundation Reinforced concrete

> Floors Concrete slab

> Structure Standard wood frame

> Stories One

> Exterior Walls Reinforced concrete

> Windows Fixed glass and operable windows, in wood frames. Energy efficient double pane windows.

> Access Each suite has at least one exterior door

> Telco/Fiber The building has telco fiber connectivity provided by AT&T and broadband connectivity provided by Spectrum (Time Warner).

INTERIOR COMPONENTS

> Walls The typical walls are drywall finished with paint or wallpaper.

> Ceilings The ceiling type varies but typically consists of suspended T-bar grid with lay-in 2 by 4-foot acoustic panels (2 by 2 feet in Suite A).

> Floor Covering Non-padded commercial grade carpeting, and vinyl.

> Restrooms One set of recently renovated (October 2015) five-fixture, men’s and women’s restrooms, which include showers, and another set of two-fixture restrooms on the west side of the building.

> Doors Interior doors are typically solid-core wood

> Tenant Improvements The tenant improvements in Suite A include a lobby-reception area with built-in reception desk, vaulted ceiling, with skylight; a large conference/ boardroom; a kitchen; a meeting room; an executive office with a conference area; several private offices; and an open office area. There is also a private patio contiguous with Suite A. The other suites have standard office build-outs, some with reception areas, open work areas, private offices, and break rooms.

9THE OFFERING

EQUIPMENT & MECHANICAL SYSTEMS

> Fire Protection The building is fully equipped with fire sprinklers and alarm.

> HVAC Fully heated and air-conditioned, with 14 newer roof-mounted package units. Most units were installed new in April 2013. Tonnage varies between 2 to 5 tons per unit. All individual suites are separately thermostatically controlled.

> Plumbing Standard plumbing consisting of copper supply lines and plastic drains

> Electrical/Lighting Most of the building is equipped with LED lights. The service is 110/120 volts, 3-phase, 4-wire. Lighting fixtures are typically recessed fluorescent.

> Electrical Meters There are seven (7) electric meters serving the building, one of which is a house meter.

SITE IMPROVEMENTS

> Landscaping The property is attractively landscaped and is well maintained on a regular basis. There is a flag pole in the central courtyard. Most irrigation on conservation drip system.

> Parking There are fifty-six (56) striped surface parking spaces; including two (2) handicapped spaces. 3.85 spaces per 1,000 usable square feet. There is unrestricted street parking directly in front of the building.

BUILDING STYLE & FUNCTION

> Architectural Style The building is reminiscent of the architectural style of Frank Lloyd Wright, and the Craftsman style of architecture.

> Functional Design The property exhibits a good functional design with multiple entry points from the exterior. Owner’s Suite A occupies the most prominent location within the building, and it has good appeal as a corporate headquarters or regional office. The building offers maximum floor plan flexibility and therefore works well as either a single or multiple occupants building.

> Quality & Condition As a “pride of ownership” owner, the building has been maintained in good condition.


SITE PLAN

GR

EENW

ICH D

RIVE

Suite E±957 USF

Suite D±4,751 USF

Suite C±1,135 USF

Suite F±1,078 USF

RR

Suite A±6,623 USF

11THE OFFERING

FLOOR PLAN

Suite E±957 USF

Suite D±4,751 USF

Suite C±1,135 USF

Suite F±1,078 USF

Suite A±6,623 USF


GREENWICH DR

SHOREHAM PL

GOVERNOR DR

ENDERS AVE

MA

RKET

OVE

RVIE

WPACIFIC OCEAN

La JollaPacific Beach

Governor Park Office SnapshotAll Office Markets & Classes, Q2 2017

Q2 2017 Q2 2016 Change

Overall Vacancy (incl. sublease) 8.4% 7.2%

Net Absorption SF -3,488 86,418

Under Construction SF 0 0

Average Asking Rent (FSG) $2.66 $2.51

Net AbsorptionYTD

4,143 SFTotal Vacancy RateAll Product Types - Q2 2017

8.4%

13MARKET OVERVIEW

GOVERNOR PARK Population and EmploymentGovernor Park is located within the University Community Plan Area and according to multiple sources, has a population within a 3 miles radius of 105,440. The population is highly educated; 96.2% of adults over age 25 are high school graduates and 65.2% are college graduates.

As of 2015, the population was 7,343 within a one mile radius of the subject property and 271,135 within a five mile radius.

Housing and IncomeThe property is located in an affluent community with high household incomes and primarily newer, upscale housing constructed during the past three decades. According to a report prepared by Colliers International’s analysts, the average household income in 2016 is $121,723 within a one mile radius of the property and $95,098 within a three mile radius.

The median 2016 home value was $785,125 within a one mile radius and nearly $1,100,000 within a three mile radius of the property. The average apartment rent within the 92122 zip code is approximately $2,166 per month.

RetailUniversity City/La Jolla is home to two upscale shopping centers. Westfield UTC, a regional mall, currently undergoing a massive renovation and La Jolla Village Square, containing over 1.35 million square feet of retail space. In addition, the UTC area is home to nine other regional shopping centers, seven groceries, 2,500 hotel rooms, and thousands of apartments and condos.

Property OverviewThe 6336 Greenwich Drive building is ideally situated in Governor Park, an upscale business park located in the southeastern portion of the “Golden Triangle”, one of the premier commercial real estate locations in Southern California. Bounded on the east by Interstate 805, on the south by State Highway 52, Governor Park has access to Interstate 5 and Interstate 15 via State Highway 52, suburban San Diego’s major east-west freeway. With this superb location and county wide access, Governor Park avoids the congestion of the University City portion of the Golden Triangle, but still benefits from its abundant amenities and a high profile. Governor Park is geographically adjacent to La Jolla, University City, Carmel Valley and Del Mar.

Office MarketGovernor Park, a 19 building business park with ±905,141 square feet of rentable space, is one of San Diego County’s strongest and most desirable office markets. In contrast to neighboring Sorrento Mesa and UTC, Governor Park has a history of lower than average vacancy rates, which as of the end of the 2nd Quarter 2017 stood at 8.4% for all buildings. Originally developed during the mid 1980s, Governor Park contains garden style office buildings along with newer multi story buildings oriented towards corporate users. This submarket is perceived as a Class “A” and upscale Class “B” office market and so fractionally commands higher lease rates than the buildings in the competitive Kearny Mesa and Sorrento Mesa submarkets. Rents have increased significantly and steadily in both Governor Park and UTC over the past 5 years. Governor Park is also home to many technology, construction, architectural and real estate related companies.

The Golden Triangle, in which Governor Park is strategically located, is one of Southern California’s most desirable office markets, with over six million square feet of office space. This larger submarket has become a technology, legal, real estate and financial center, with major tenants such as Illumina, Morgan Stanley, Northern Trust, Wells Fargo Bank, Co-Star, and Barney and Barney. Gleaming glass high rises have mushroomed along the region’s central corridor in the past three decades, giving the Golden Triangle a skyline to rival Downtown San Diego’s.


Proximity to, Biotech Centers, Medical Facilities, and Miramar Industrial AreaAdjacent to Governor Park/University City on the east lies Miramar, one of San Diego’s premier industrial areas. To the north lies Torrey Pines, UTC and Sorrento Valley and Sorrento Mesa, creating the hub of San Diego’s thriving biotechnology/life sciences community, third largest biotech center in the nation. Prominent biotech tenants include Illumina, Arena Pharmaceuticals, Genentech, BDV Bioservices. The community also has outstanding medical facilities including UCSD Medical Center, Scripps Memorial Hospital, the world famous Scripps Clinic and related research facilities.

Higher EducationLa Jolla is home to the University of California San Diego boasting 16 Nobel laureates on faculty and a rating of 7th best public university in the world. Currently, enrollment at the campus is 35,821, including medical students at UCSD’s School of Medicine.

Entertainment and TourismUniversity City/La Jolla is an entertainment Mecca. Cultural centers such as La Jolla Playhouse and Mandeville Theater at UCSD are located in the area. In addition, upscale restaurants, cinemas and an ice skating rink at University Towne Centre are all located within a short distance of the property.

La Jolla is also home to the world famous Scripps Institute of Oceanography and Stephen Birch Aquarium. Major hotels including the Hyatt Regency, Marriott and Embassy Suites are located in the vicinity, and new hotels are planned.

Future OutlookAs one of San Diego’s most dynamic and desirable office markets, Governor Park is expected to enjoy continued growth in the future, attracting major corporate tenants as the region establishes its reputation as a premier Class “A” office market.

Westfield UTC and Trolley Line ExpansionIn mid-2015, construction began on a $585 million renovation of Westfield UTC, a premier retail, dining and entertainment destination located less than 3 miles from Governor Park. Scheduled for completion in October 2017, the expansion will result in a new, larger Nordstrom department store, five-level parking garage, and transit center tied into the planned San Diego Trolley extension. The 1.1 million square foot mall will grow by 395,000 square feet of retail space, 15,000 square feet of event space, and a 300-unit high rise condo development. Upon completion, the Westfield renovation will enhance the relaxed, sophisticated outdoor, pedestrian oriented destination that celebrates the best of La Jolla in a true coastal resort setting. Additionally, the Mid-Coast Trolley service is being extended to the UTC area with service anticipated to begin in 2021.

15MARKET OVERVIEW

Population (2016)

Avg. Household Income (2016)

5 MI

271,135

7,343

$121,723

$104,966

3 MI 1 MI

$95,089

105,440


LEASE COMPARABLES

Property Address Lessee SizeStart Date

Lease TermStart Rate

Eff. RateAnnual Inc.

ConcessionsTIA/SF

Class

6363 Greenwich Dr.Stes. 100/150/200

UCSD 33,854 SF 08/01/201893 mos.

$2.79 Net of E$2.97 Net of E

3%4 mos.

$45/SFB

Comments: Direct expansion of existing sublease space (6363 Greenwich, Suites 100/150/200). Sublease was to expire 7/31/18. Expansion commencement 8/1/18 for 93 months. Transaction includes 24,405 SF of new space (6333 Greenwich, Suites 100/107).

6333 Greenwich Dr.Stes. 100/107

UCSD 24,405 SF 01/03/2017 $2.70 Net of E$2.94 Net of E

3.25%7 mos.

$45/SFB

Comments: Transaction includes 24,405 SF of new space (6333 Greenwich, Suites 100/107) and 33,854 SF of sublet spaces (6363 Greenwich, Suites 100/150/200) they currently occupy going direct 8/1/18. Start rate at 6333 is $2.70; 6363 is $2.79. Rent abated for 1/3/17-8/2/17 (7 mos.)

5075 Shoreham Pl.Ste. 100

Rubin Insurance Agency, Inc. 2,716 SF 12/01/2016 52 mos.

$2.35 + E$2.28 + E

3%4 mos.

$21/SFB

Comments: Lessee relocated from 6363 Greenwich Dr. in Governor Park


Ignite Visibility 2,355 SF 10/01/2016 20 mos.

$2.40 + E$2.31 + E

3%1 mo.

$3/SFB

Comments: New short term lease.


Reachlocal, Inc. 1,287 SF 10/01/2016 61 mos.

$1.90 + E$1.94 + E

3%None

NoneB

Comments: New

17MARKET OVERVIEW

Property Address Lessee SizeStart Date

Lease TermStart Rate

Eff. RateAnnual Inc.

ConcessionsTIA/SF

Class

6256 Greenwich Dr.Stes. 250 & 260

Lee Hecht Harrison LLC 4,978 SF 07/01/2016 63 mos.

$2.95 FS$3.04 FS

3.5%3 mos.

$37/SFN/A

Comments: Lessee relocated from the UTC area.

5075 Shoreham Pl. ReNew Lending 3,274 SF 06/01/2016 51 mos.

$2.35 + E$2.33 + E

3%3 mos.

$7/SFB

Comments: New lease.

6256 Greenwich Dr.Ste. 151

ScienceMedia Inc. 4,044 SF 01/01/2016 36 mos.

$2.70 FS$2.57 FS

3.5%3 mos.

NoneN/A

Comments: This was an early lease renewal of an existing tenant.

6333 Greenwich Dr.Stes. 270 & 280

Integrity First Financial Group, Inc.

7,874 SF 12/01/2015 42 mos.

$2.40 + E$2.17 + E

3.5%6 mos.

$8/SFB

Comments: Second renewal of a long term tenant.

5075 Shoreham Pl.Stes. 240

Alzheimer’s Association 5,100 SF 02/01/2017 84 mos.

$2.35 + E$2.38 + E

3%None

TBDB

Comments: Expansion


Wieland-Davco Corp 1,863 SF 09/01/2017 36 mos.

$2.50 + E$2.58 + E

3%None

TBDB

Comments: Renewal


SAN DIEGO OFFICE MARKET

Behind the Numbers

> Positive net absorption of 1.68 million SF countywide in 2016 pushed demand to its strongest level since 2005.

> Overall average asking rental rates countywide in Q4 reached the highest rate in eight years ($2.58/SF/month).

> “Co-work” and “creative office” conversions will continue through 2017, providing flexible and non-traditional options in a steadily tightening market.

Net AbsorptionYTD

(158,087) SF

San Diego County Office SnapshotAll Office Markets & Classes, Q4 2016

2Q 2017 Q2 2016 Change

Overall Vacancy (incl. sublease) 11.77% 12.57%

Net Absorption SF (27,913) 193,284

Under Construction SF 759,899 247,597

Average Asking Rent (FSG) $2.63 $2.47

3.6%

UnemploymentSD County - Nov. 2016

Under ConstructionQ4 2016

759,899 SF

Total Vacancy RateAll Product Types - Q4 2016

11.77%

Total Job Growth - Last 12 Months

Job GrowthSource: Bureau of Labor Statistics, 12-month change (11/2015-11/2016), San Diego County

Professional & Business Services Financial Activities

20,000new jobs

increase1.4%

0.5%

1,100new jobs

3.6%

2,600new jobs

Trend Forecast & OutlookWhile San Diego County started off with negative demand for the first half of 2017, the level of negative activity is not indicative of change in the market dynamics. In fact, several large blocks will absorb in the second half of the year such as Illumina in UTC and government offices for the City of San Diego in Downtown.

Leasing activity remains steady, albeit at a 22% lower rate than the same period last year. Some of the decrease in leasing activity can be explained by an increase in lease renewal activity, since lease renewals aren’t always captured in leasing activity (comparables and transaction activity are not always available). Lease renewal activity typically results in no net absorption change since many tenants are inclined to control rent costs by not having relocate or expand.

Net absorption in 2017 will likely remain in positive territory. It won’t nearly have the magnitude as the years from 2010 to 2016 when absorption averaged 1.1 million SF annually. Absorption will likely be around a half-a-million SF with vacancy falling to about 11%.

19MARKET OVERVIEW

Oceanside

Carlsbad

I-5Corridor

Vista

San Marcos

Escondido

RanchoBernardo

Poway

ScrippsRanch

Miramar

GovernorPark

KearnyMesa

RoseCanyon/Morena

CampusPoint/UTC

La Jolla

SorrentoMesa

Mission Gorge

Mission Valley

SorrentoValley

CarmelValley

TorreyPines

Uptown

CBD

Pt. Loma/Sports Arena

South Bay

East County

SAN DIEGO COUNTY Office Market Areas

Central County

CBD

I-15 Corridor

North County

South/East County

SITE

Net AbsorptionDemand was notably flat during Q2 2017 in San Diego County as measured by 27,913 SF of negative net absorption. Most submarkets had relatively level demand considering only two of the 26 submarkets exceeded more than 20,000 SF of negative or positive net absorption. Notable positive absorption included the occupancy of Global One Ventures into a 30,632 SF build-to-suit at 6125 Paseo Del Norte in Carlsbad. Also in Carlsbad, Proficio occupied 1555 Faraday Ave. (+21,399 SF). In Kearny Mesa, Berkley Insurance occupied the second floor (+23,418 SF) of 9797 Aero Drive.

Rancho Bernardo posted the greatest absorption decline for a second consecutive quarter (-51,024 SF). The large driver was 57,420 SF that became vacant in the former Sharp Rees-Stealy building at 16950 Via Tazon. Mission Valley had the second most negative absorption (-30,851 SF). This was caused primarily by both Centerside I and Valley Corporate Center having several tenants vacate for a combined 39,969 SF of negative net absorption during the quarter.

VacancyCountywide vacancy of 11.8% in Q2 2017 was nearly unchanged from the prior quarter, which amounted to a 7 basis point increase. The vacancy rate was comprised primarily of direct vacant space (10.9%) with minimal sublease space (0.9%). Overall vacancy in Downtown stood at 15.3% - down from 15.5% in Q1 2017 and due to 16,156 SF of net absorption. In addition to any other activity next quarter, vacancy in Downtown will drop by almost 1.4% when the City of San Diego vacates 1010 2nd Avenue and expands into 101 Ash Street. This will also push down Downtown Class B vacancy to around 25% assuming demand remains at the same pace. Downtown Class A vacancy continues to make significant demand gains – standing at 8.0% at the end of Q2. This is 477 basis point drop from a year ago (12.79% in Q2 2016).

New SupplyIn Q2 2017, a total of 30,632 SF was completed countywide. This consisted of the aforementioned build-to-suit for Global One Ventures in Carlsbad. As of quarter-end, there were 11 buildings totaling 759,899 SF under construction. Of that total, 512,133 SF is expected to be completed in the second half of 2017. This includes two buildings totaling 90,335 SF at Torrey Point in Carmel Valley, a 13,200 SF building in La Mesa, the 60,000 SF building at North City in San Marcos where 40,000 SF is preleased to Pima Medical Institute and the 316,262 SF three-building i3 campus for Illumina on Executive Drive in the UTC submarket. Finally, Westfield UTC’s shopping center expansion will include a 32,336 SF office building for CBRE.

All 247,766 SF of space currently under construction that will be completed in 2018 is speculative development. Additionally, grading started on Kilroy Realty’s 1.1 million SF mixed-use One Paseo project in Carmel Valley. The two-building 280,000 SF office portion will commence construction later this year.

21MARKET OVERVIEW

SAN DIEGO COUNTY San Diego County is the south-westernmost county in California. It occupies 4,526 square miles with approximately 70 miles of coastline. Spaniards settled the San Diego County area in 1769 through the founding of Mission San Diego de Alcala (in Old Town San Diego) and Mission San Luis Rey de Francia in 1798 (in Oceanside).

San Diego experienced a population boom during World War II as the U.S. Pacific Fleet was relocated here from Pearl Harbor. San Diego became a key base of operations for the Marine Corp and the Navy. Bombers were manufactured here by Convair during the war. Since the end of the war, throughout the cold war, and until present day, San Diego has remained the base of operations of numerous defense contractors that fuel one of the largest industrial sectors of the local economy. Some of the largest defense employers include General Dynamics / NASSCO, Northrop Grumman, and SPAWAR.

At the end of the cold war in the early 1990s, San Diego saw a significant reduction in the defense industry. This included the BRAC closure of the Naval Training Center (NTC) in Point Loma and the General Dynamics facility west of SR-163 in Kearny Mesa. Both locations have since been redeveloped into successful mixed-use projects. The retraining and utilization of these high-skilled and high-tech former defense workers during this period created a substantial workforce for companies in the communications, software, computer and electronic manufacturing industries. The defense manufacturing sector still remains a large proportion of the San Diego workforce, but the employment base has become more diversified.

San Diego County has the second largest biotechnology sector in the country. Over 12.1 million square feet of wet lab space is concentrated primarily in Torrey Pines, Sorrento Mesa, Sorrento Valley, UTC, Carlsbad and Oceanside. This sector benefits with its close-ties with UCSD, The Scripps Research Institute (TSRI), The Salk Institute, and The Burnham Institute.

San Diego has some of the finest climate in the country with moderate temperatures in the mid-70s year-round. The temperate weather coupled with incredible destination locations such as the San Diego Zoo and Zoo Safari Park, SeaWorld, Legoland, beautiful public beaches, and world class championship golf courses make San Diego a top tourist location.

Transportation in San Diego County is concentrated around a highly accessible highway network including four interstate highways and numerous state highways. Interstates 5, 15, and 805 provide access to cities and communities in the north, central, and southern parts of the county while Interstate 8 connects central San Diego with the eastern most cities and communities in the county. San Diego International Airport / Lindbergh Field is the primary airport serving business, tourist, and freight traffic. Additionally, Amtrak rail service connects San Diego with Los Angeles and coastal cities as far north as San Luis Obispo. Finally, light-rail services such as the Coaster (coastal cities), The Sprinter (north county cities), and the San Diego Trolley (Central San Diego and South bay) provide daily mass transit options to workers, shoppers, and tourists.


DEMOGRAPHICSSan Diego is the second most populous county in California and ranks fifth in the nation with 3.29 million residents as of 2016. By 2020, the population is expected to grow by 4.5% to nearly 3.44 million residents. The population growth rate was 10.0% from 2000 to 2010.

The median age of San Diego County residents is 35.5. Over the next 35 years, the median age is slowly expected to increase to 38.9 by 2050. Minors under 18 years old account for 21.9% of the population while seniors 65 and older account for 13.1%.

ECONOMICSThe San Diego County unemployment rate decreased by 0.3% in February 2017 to stand at 4.2%. This is also 0.7% lower than it was a year-ago. The state rate decreased to 4.2% (-0.3%) and the national rate decreased to 4.1%, down 0.4%.

The San Diego-Carlsbad-San Marcos Metropolitan Statistical Area (MSA) encompasses the entire county of San Diego with its cities and unincorporated areas. The total civilian labor force stands at 1.58 million people. Of that, 1.44 million people are employed in nonfarm industries.

Demographics

San Diego is the second most populous county in California and ranks fifth in the nation with 3.29 million residents as of 2016. By 2020, the population is expected to grow by 4.5% to nearly 3.44 million residents. The population growth rate was 10.0% from 2000 to 2010.


12.6%

10.0%

6.2%

4.5%

12.2%

5.6%2.813.10

3.293.44

3.854.07

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2000 2010 2016 2020 2035 2050

% C

hang

e

Popu

latio

n (M

illion

s)

San Diego County Population Trends

Change Over Last Period (%) PopulationSource: SANDAG (3/2017)

Under 56.5%

5 to 1715.4%

18 to 2411.0%

25 to 3416.3%35 to 44

13.1%

45 to 5412.9%

55 to 6411.6%

65 & Over13.1%

Population by Age

Source: SANDAG (3/2017)

Population by AgeSource: SANDAG (1/2016)

San Diego County Population TrendsSource: SANDAG (1/2016)

Demographics

San Diego is the second most populous county in California and ranks fifth in the nation with 3.29 million residents as of 2016. By 2020, the population is expected to grow by 4.5% to nearly 3.44 million residents. The population growth rate was 10.0% from 2000 to 2010.


12.6%

10.0%

6.2%

4.5%

12.2%

5.6%2.813.10

3.293.44

3.854.07

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2000 2010 2016 2020 2035 2050

% C

hang

e

Popu

latio

n (M

illion

s)

San Diego County Population Trends

Change Over Last Period (%) PopulationSource: SANDAG (3/2017)

Under 56.5%

5 to 1715.4%

18 to 2411.0%

25 to 3416.3%35 to 44

13.1%

45 to 5412.9%

55 to 6411.6%

65 & Over13.1%

Population by Age

Source: SANDAG (3/2017)

The various national, state, and local government agencies are the largest employers in the county. For example, the University of California and the United States Navy each employ over 30,000 people each. However, San Diego has several prominent companies that employ thousands of employees each. The biggest companies tend to be hospitals, communications, and defense companies.

San Diego continues its economic recovery that began in 2010 with increased growth over the last seven years. In 2016, San Diego’s gross metro product (GMP) had positive growth of 3.2%. Moody’s Economy.com (April 2017) forecasted a growth rate of 2.7% in 2017 – equating to $208.9 billion – compared to a 2.2% increase for the nation.

23MARKET OVERVIEW

San Diego continues its economic recovery that began in 2010 with increased growth over the last seven years. In 2016, San Diego’s gross metro product (GMP) had positive growth of 3.2%. Moody’s Economy.com (April 2017) forecasted a growth rate of 2.7% in 2017 – equating to $208.9 billion – compared to a 2.2% increase for the nation.

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

% A

nnua

l Cha

nge

Gross Metro/Domestic ProductAnnual Year-Over-Year Change

San Diego (GMP) United States (GDP)Source: Moody's Economy.com (4/2017)

Forecast

Gross Metro/Domestic ProductAnnual Year-Over-Year ChangeSource: Moody’s Economy.com (4/2016)

Economics

The San Diego County unemployment rate decreased by 0.3% in February 2017 to stand at 4.2%. This is also 0.7% lower than it was a year-ago. The state rate decreased to 4.2% (-0.3%) and the national rate decreased to 4.1%, down 0.4%.

The San Diego-Carlsbad-San Marcos Metropolitan Statistical Area (MSA) encompasses the entire county of San Diego with its cities and unincorporated areas. The total civilian labor force stands at 1.58 million people. Of that, 1.44 million people are employed in nonfarm industries.

0%

2%

4%

6%

8%

10%

12%

14%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

5/20

17

Annual Unemployment RateNot Seasonally Adjusted – May 2017

San Diego California United States

Source: Bureau of Labor Statistics and California EDD (7/2017)

250.8 235.3 217.6 203.2 190.3 107.7 80.5 75.2 58.5 23.6 0.3

2.5%

0.6%-0.9%

1.9%

-0.9% -0.2%

6.9%

3.7%

7.3%

1.3%0.0%

-8%-6%-4%-2%0%2%4%6%8%10%12%

0

50

100

150

200

250

12-m

onth

% c

hang

e

Tota

l Em

ploy

men

t (00

0s)

San Diego County EmploymentTotal Nonfarm – May 2017

Total Employment (000s) 12-month % change

Source: Bureau of Labor Statistics (7/2017)

Annual Unemployment RateNot Seasonally Adjusted - November 2016Source: Bureau of Labor and Statistics and California EDD (11/2016)


SAN DIEGO COUNTY LARGEST EMPLOYERS

Median Age

35.32015 Average

Household Income

$69,346

Employment Rate

95.3%Population

±3.2 Million

SAN DIEGO COUNTY: BY THE NUMBERS

Source: San Diego Business Journal 2016 Book of Lists

# Employer Employees1 University of California, San Diego 30,6712 Sharp HealthCare 17,8093 Scripps Health 14,8634 Qualcomm 12,1865 City of San Diego 11,3476 Kaiser Foundation Hospital 8,4067 UC San Diego Health 7,4388 San Diego Community College District 5,9029 General Atomics 5,480

10 Rady Children’s Hospital 5,12911 YMCA of San Diego County 5,10212 San Diego State University 5,03713 Sempra Energy/SDG&E 5,02514 Palomar Health 4,46715 Northrop Grumman Corp. 4,38816 SeaWorld San Diego 4,19017 General Dynamics NASSCO 3,57618 University of San Diego 3,48319 BD (Becton, Dickinson and Company) 3,33020 Solar Turbines Inc. 3,12921 Veterans Affairs San Diego Healthcare System 3,12122 Barona Resort & Casino 3,15023 Grossmont-Cuyamaca Community College District 2,60024 Tri-City Medical Center 2,18925 Sycuan Casino 2,153

25MARKET OVERVIEW

WHY SAN DIEGO?

The cornerstone to everything San Diego is its Mediterranean climate. The City was voted as one of the ten best climates by Farmer’s Almanac and selected as one of the two best summer climates in America by The Weather Channel. San Diego’s climate allows for residents to enjoy year-round outdoor recreation and provides over 70 miles of coastline for sunbathing and surfing. Home to world-class resorts, golf courses and sporting activities, enthusiasts have the luxury of year-round activity.

The San Diego region provides numerous cultural, visual and performing arts organizations that entertain and educate San Diego residents and visitors. Performing arts are hosted at premier venues such as the San Diego Civic Center, La Jolla Playhouse, San Diego Repertory/Lyceum Theatre, North County Performing Arts Center, Old Globe Theatre and other venues. San Diego is dedicated to the arts, science and history with world-class museums located within Balboa Park. With a vibrant history dating back to the 17th century, the city has evolved into a productive set of residents, venues and businesses that takes pride in being the birthplace of California.

San Diego is home to the MLB San Diego Padres, the San Diego Sockers and host to a variety of world class sporting events such as the 2008 U.S. Open Golf Championship at Torrey Pines Golf Course. With an array of facilities to accommodate events ranging from rugby to soccer to the NFL Super Bowl championships residents have year-round professional events to enjoy.


TOP INDUSTRIES

CleantechSan Diego is the most concentrated major metropolitan region for cleantech employment in the US.

Information & Communication TechnologySan Diego ICT companies have a growing global footprint and touch nearly all aspects of San Diego’s robust economy.

AerospaceHome to some of the world’s largest aerospace, aircraft, and research and development companies, San Diego is a North American aerospace hub.

MaritimeWith 70 miles of coastline, a strong Navy presence and innovative technology firms, San Diego has emerged as a hub for maritime technology.

HealthcareAcademic medical centers and clinically-focused hospitals provide high-quality primary care and specialties that have achieved national stature.

DefenseSan Diego is home to the largest concentration of military in the world and the largest federal military workforce in the United States.

27MARKET OVERVIEW

Life SciencesA major driver of the innovative local economy, the region has more than 1,100 life sciences companies and more than 80 research institutes.

CybersecuritySan Diego’s entrepreneurial talent and proximity to customers have enabled its cybersecurity companies to become leaders in the industry.

Research InstitutionsThe San Diego region is recognized globally as a center of scientific breakthroughs and discoveries.

TechnologyRecognized as one of the leading high-tech hubs in the U.S., San Diego’s innovation economy is anchored by established companies such as Intel, Sony and Hewlett Packard.

ManufacturingWith a highly-skilled workforce, robust training programs,and proximity to Mexico, San Diego is a hub for advanced manufacturing companies.

Key UniversitiesSan Diego’s higher education institutions conduct groundbreaking research, train the region’s workforce, and provide a human capital infrastructure that enables the region to compete for investment and jobs on a global level.

Sports & Active LifestyleWith miles of coastline, near-perfect weather, and R&D expertise, San Diego provides an optimal environment for not only participating in an active lifestyle, but also developing equipment for it.

Conventions & TourismA central economic driver, San Diego’s convention and tourism industry is one of the region’s three core traded economies and employs more than 170,000 people.

Source: San Diego Regional Economic Development Corporation


FIN

AN

CIA

LS

29FINANCIALS

Suite Number

Usable Square Feet Tenant Lease Rate Monthly Rent

Lease Commencment/ Lease Expiration

Recapture (SDG&E)

Suite A 6,623 New Owner TBD TBD TBD TBDSuite C 1,232 Caliber Associates $1.95 FS $2,400.00 1/1/2015 12/31/2017Suite D 4,751 Lyons Accountancy Group $1.95 FS $9,264.45 1/1/2017 12/31/2020Suite E 1,127 Edward Jones $1.89 + E $2,084.95 7/1/2015 6/30/2022 $248.00 Suite F 945 REA/RealNex $1.75 + E $1,653.75 10/1/2014 9/30/2019 $208.00

$15,444.85 $456.00

Real Estate Taxes ($5,750,000 estimate) $69,000.00

Building and Parking Lot Maintenance $7,000.00

Landscaping $10,000.00

Fire Insurance $4,746.00

Janitorial $24,000.00

Water $9,600.00

Gas and Electric $39,840.00

Trash $8,400.00

Association Dues $420.00

Total Annual Expenses $173,006.00

OPERATING EXPENSES

RENT ROLL


TENANT PROFILES

Edward Jones serves nearly 7 million investors from 11,000 offices around the country, more than any other investment firm in America.

They attribute a great deal of their success to their principles and personal, long-term approach to investing. They have consistently been ranked among the best companies to work for by FORTUNE magazine. Edward Jones is a privately owned company and has been in business for more than 90 years.

www.edwardjones.com

Real Estate Assistant (REA) is the leading software development company for project, property and client tracking CRM system developed by commercial real estate professionals

for commercial real estate professionals. REA was founded in 1980 and is privately held. In May 2014, REA became part of RealNex whose mission is to transform the global real estate market by aggregating and integrating a portfolio of existing data base systems and solutions.

www.gorea.com

Caliber Associates was founded in 1988 by Steve Hoshberg to provide executive search services exclusively for the Life Sciences Industry. They have

conduct strategic searched for clients in the pharmaceutical, biotechnology, diagnostic, medical devices and related healthcare industries. Their multi-functional experiences bring a unique blend of human resources, sales, marketing and scientific expertise to the search process.

For almost three decades Caliber Associates has helped to build the Management Teams of many of the leading life science companies. Caliber Associates has focused on conducting Board searches, CEO searches, C level searches and other key strategic leaders at the Senior Vice President and Vice President levels. Caliber is one of the top executive search firms exclusively serving the life sciences sector.

www.caliberassociates.com

Lyons Accountancy Group, a local full-service accounting firm, provides accounting, tax, and consulting

services to a wide variety of businesses, not for profit organizations, and individuals. Scott M. Lyons, is the founder of the business and leads the team of professionals at Lyons Accountancy Group.

Scott M. Lyons holds a degree in accounting, a Juris Doctorate, a Master of Laws in Taxation and is a graduate of the University of Arizona and the University of San Diego. A member of both the California Society and the American Institute of Certified Public Accountants, Scott is a licensed certified public accountant in California and Arizona. He has over twenty-five years of accounting experience.

www.lyonscpagroup.com

http://www.edwardjones.com

http://www.gorea.com

http://www.caliberassociates.com

http://www.lyonscpagroup.com

31FINANCIALS

UNION BANK SBA LENDING

Lease Assumptions

17,533 Size (Square Feet) 7,985$5,750,000 Lease rate per sq ft/mth NNN $1.50

Monthly Lease $11,978

Start-Up Costs

$1,150,000 Prepaid Rent $11,978

Purchase Assumptions

Size (Square Feet)

Total Project Cost

Start-Up Costs:

20% Down Payment Loan Fee/Costs $69,000 Security Deposit $11,978Total Start-Up Costs $1,219,000 Total Start-Up Costs $23,955

Monthly Costs Per Sq. ft. Monthly Costs Per Sq. ft.

Mortgage Payment (P&I) $1.49 $26,122 Lease Payment $1.50 $11,978Operating Expenses $0.50 $8,723 Operating Expense $0.50 $3,993Property Taxes $0.33 $5,750 Property Taxes $0.33 $2,635

$40,595 Total Monthly Costs $18,606

Monthly Lease Benefits (Estimated)

Tax Benefits

$7,986 Depreciation Benefit n/a

$3,973 Operating Expense Deduction $3,993$2,645 Lease Deduction $11,978$7,924 Interest Deduction n/a

Other Benefits

$15,445 Rental Income $0

Total Monthly Costs

Monthly Ownership Benefits (Estimated)

Tax Benefits

Depreciation Benefit (65%)Operating Expense Deduction

Property Tax Deduction

Interest Deduction (7 yr Avg.)

Other Benefits

Rental Income

Avg. Appreciation 2.0% $9,583 Avg. Appreciation n/a

Total Ownership Benefits $36,614 Total Lease Benefits $15,971

TOTAL EFFECTIVE MONTHLY COST: $3,981 TOTAL EFFECTIVE MONTHLY COST: $2,635

Ownership Analysis SummaryAnnual Effective Cost Difference -$16,152 Average Annual Principal Pay down $95,000Annual Wealth Creation

Quick Response (48 Hour Pre-Qualification Available)Long Term Fixed Rates

For more information contact : Union Bank

Ray Weamer(858) 552-6611

Prepared exclusively for: Colliers International

Jay Arnett(858) 677-5354

This document is for discussion purposes only and is not meant to be, nor shall it be construed as a commitment by Bank or of its affiliates to extend credit. It is intended to serve only as

a basis for discussion of a potential transaction. It does not attempt to describe all the terms and conditions that would pertain to an SBA 504 loan or commercial property purchase. Instead, it is intended

to outline certain basic points of a property purchase using an SBA 504 product and general estimated values and fees.

LENDER AND BORROWER UNDERSTAND AND AGREE THAT THIS DOCUMENT IS BASED ON ESTIMATED VALUES. In addition, the specific elements of this discussion document may be

revised or otherwise altered as the result of further discussions or information gathered during the due diligence process. Therefore, this document shall not be deemed a legally binding agreement

between the parties for any purpose whatsoever. Borrower should seek advice from their Legal and Accounting professional for their own analyses.

OWN LEASE

Why lease when you can own?Property Address: Tristaff Building- Greenwich Drive

15 Year AppreciationTotal 15 Year Wealth Creation

$78,848 x 15 years =$1,183,000$1,725,000 2% Flat Appreciation $2,986,848

$2.32 $2.33

$2.09

35%

$0.50 NNN

Every business owner’s tax situation is unique, please consult your accountant.

RENT VS. OWN ANALYSIS

TOM WILCOXSenior Vice PresidentLic. No. 00872520+1 858 677 [email protected]

JAY ARNETT, SIORSenior Vice PresidentLic. No. 00482177+1 858 677 [email protected]

4350 La Jolla Village Dr., Ste. 500San Diego, CA 92122

Lic. No. 01908588+1 858 455 1515 MAINcolliers.com/sandiego

owner/user office investment opportunity | san …...fast and easy interstate 805 freeway access...

Documents