Iconic San Diego Office Tower Trades at 70% Discount
When it opened in 1989, Symphony Towers was the tallest building in San Diego. Now, the iconic 34-story tower has set a benchmark for plummeting office values.
The Irvine Company this week sold the 546K SF tower at 750 B Street for $45.7M. The deal, valued at about $84 per SF, is nearly 70% less than the $134M the company paid when it bought the property in 2003, the San Diego Union-Tribune reported.
At the time of the sale, Symphony Towers was 75% leased, according to CoStar data. The downtown landmark, which also is the home of the San Diego Symphony, was purchased by Formosa, Ltd., a Taiwan-based international conglomerate.
"This acquisition provides an extraordinary opportunity for us to establish a foothold in one of San Diego's premier office locations," Formosa CEO Joe C. Wen said, in a statement. "This is one of the most dynamic buildings in the market and is poised for continued success with the much-anticipated reopening of the San Diego Symphony later this year."
The symphony recently completed a $125M renovation of Copley Symphony Hall within Symphony Towers.
Formosa has acquired several SoCal office properties in the past year, including One Pacific Plaza, a 401K SF office campus in Huntington Beach and 4 Hutton Centre, a 217K SF office tower in Santa Ana.
Newport Beach-based Irvine Company tapped Eastdil Secured in April to market Symphony Towers. In April, Irvine Co. said in a statement that it is "actively planning to reinvest in the greater San Diego metropolitan area and anticipates growth for the foreseeable future."
Irvine Company is the largest office landlord in San Diego, owning 62 office properties encompassing 8.1M SF, according to CoStar data. The company's office portfolio in San Diego includes Wells Fargo Plaza on B Street, 101 West Broadway and 225 Broadway.
The overall office vacancy rate in San Diego increased 70 bps quarter-over-quarter to 14.7% in Q2 2024, with negative net absorption of minus 156K SF, according to Cushman & Wakefield's latest market report.
Office deliveries totaling nearly 400K SF in the Downtown submarket contributed to 60 bps of vacancy in the second quarter, the report said. An additional 243K SF is slated for delivery in the submarket later this year.
"Without additional leasing, it is expected that Downtown office vacancy will increase by 200 bps," C&W said.
Office investment sales in San Diego totaled $132M in the second quarter, a 46% drop from the Q1 total. The average Q2 sales price was $243 per SF, which is 62% lower than the five-year quarterly average.
Source: GlobeSt/ALM