Prime Reposition Owner-User Opportunity€¦ · OFFERING MEMORANDUM. Prime Reposition Owner-User...

OFFERING MEMORANDUM

Prime Reposition Owner-User Opportunity

LEASE RATE

$1.50 psfModified Gross

SALE PRICE

$6,500,000±33,155 sf

ADDRESS

8977 Activity RdSan Diego, CA 92126

SUBMARKET

Mira Mesa/ Miramar

OFFERING MEMORANDUM | 2

8977 Activity Road, San Diego, CA 92126 Mira Mesa /Miramar Submarket

Table of Contents1. Property Overview

• Building Summary

• Floor Plans and Parcel Map

• Location Map

• Aerial Map

2. Market Overview

• San Diego Office Submarket Map

• San Diego Office Market Breakdown

3. Supporting Information

• San Diego Market Information

• Partial List of Competitive Properties and Sales Comparables

• SBA Financing Assumptions

4. Marketing Team

• Individual Broker Bio

• Kidder Mathews OverviewThe information contained in herein is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Kidder Mathews and should not be made available to any other person or entity without the written consent of Kidder Mathews.

The information contained herein is not a substitute for a thorough due diligence investigation. Kidder Mathews has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements

thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property.

The information contained in this Offering Memorandum has been obtained from sources we believe to be reliable; however, Kidder Mathews has not verified, and will not verify, any of the information contained herein, nor has Kidder Mathews conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. References to square footage or age are approximate. Recipients of this report must verify the information and bears all risk for any inaccuracies.

Disclaimer



Property Overview

BUILDING SUMMARY

Location 8977 Activity Road, San Diego, CA 92126

APN 341-220-51

Building Square Feet ±33,155 SF

OccupancyThe second floor is vacant. The ground floor is currently occupied on month-to-month or short term basis. The property could be delivered vacant at or around close of escrow.

Lot Square Feet ±65,340 SF (1.50 AC)

Parking Approx. ±3.50/1,000 SF parking ratio

Stories Two (2) stories

Year Built/Renovated Built 1987 | Renovated 2007

Construction Structural steel interior, wood roof and floors, concrete foundation, fully sprinklered, concrete and glass exterior

Zoning IL-2-1

Elevator One passenger elevator serving all floors

Access 3 stairwells; locations at main entrance to North of property, rear exit to South of property and side exit to West of property

HVAC Multiple packaged commercial HVAC rooftop units

Internet Currently service includes CAT 5 Coax cable, high speed fiber optics available through internet provider

Property Amenity Second floor private patio

Electrical Electrical rooms located on 1st and 2nd floor(s), supplemental HVAC included on second floor.

This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. Consult your attorney, accountant, or other professional advisor.



FLOOR PLANS AND PARCEL MAP

APN 341-220-51



LOCATION MAP

8977 ACTIVITY RD

15

805

Mira Mesa Blvd

Miramar R

d

Clairmont Mesa Blvd

Kea

rny

Vill

a R

d

Pomerado Rd

La Jolla Village Dr

Genesee Dr

La Jolla Village Dr



AERIAL MAP

Miramar R

d

Pomerado Rd

Miramar Way

Activity Rd

Kearny V

illa Rd

Cam

ino Ruiz

Broadway

8977 ACTIVITY RD

15



Market OverviewSAN DIEGO OFFICE MARKET

A diverse employment base combined with a well-educated workforce and tepid development have set the San Diego office market on firm footing. Tightening vacancies, limited sublet space, a lack of wide-scale development, and steady rent growth have contributed to the confidence of investors who continue to find a market with average yields more favorable than in the apartment sector.

The San Diego Office market finished the third quarter with strong leasing activity and increasing rental rates. The total vacancy rate in the overall San Diego market is 10.6%, a decrease from last quarter’s rate of 11% and down 90 basis points year-over-year. The San Diego County unemployment rate sits at 4.7%, below the year-ago estimate of 4.9% and well below the unadjusted unemployment rate of 5.4% for California and slightly higher than the rate of 4.5% for the nation.

Tenants remain focused on value, looking for real estate opportunities to increase employee engagement, provide access to amenities and positively impact employee recruitment. This has led to the growing trend of renovating older buildings and building out creative office upgrades. While the trend toward creative office space is in full swing, leasing hasn’t quite caught up yet. The vacancy rate sits near 20% in this product type, more than twice the metro rate and one reason could be cost. These spaces cost $.20/SF more than typical San Diego office space. Another reason could be location where the most sizable additions in this inventory are located north of Downtown. The former Union-Tribune buildings in Mission Valley are among the latest to begin renovation as they’re converted into creative office use. Space is presently averaging 20 months on the market in this space type before it is leased, compared

with less than 10 months for the balance of office space (which is below the five-year average). Overall office fundamentals are solid, even if creative space is having a more challenging time in finding tenants, further evidence being the amount of available sublet space - almost 10% below the five-year trend.

Data Source: CoStar

ABSORPTION

RENTAL RATE

VACANCY

CONSTRUCTION DELIVERIES

Market Forecast Trends



San DiegoState

University

San DiegoInternational Airport

Qualcomm Stadium

Oceanside

Carlsbad

Vista

San Marcos

Escondido

Poway

Scripps Ranch

Rancho Encantada

Rancho Bernardo

Carmel Mountain

Ranch

Mira Mesa

Carmel Valley

Sorrento Valley

DelmarHeights

Torrey PinesSorrento Mesa

UTC

Pacific Beach

Bay Park MissionGorge

KearnyMesa

Mission Beach

Loma Portal

Miramar

Ramona

Solana Beach

Encinitas

Leucadia

Delmar

La Jolla

Point Loma

Coronado

Mission ValleyMid-City

Encanto

Bay Terraces

Rolando

Jamul

Crest

La Mesa

Spring Valley

Bonita

National City

Chula Vista

Imperial Beach

Tijuana

El Cajon

Santee

Lakeside

San Ysidro

Nestor

Otay Mesa UNITED STATES

MEXICO

San Diego209

PACIFIC OCEAN

Otay County Open Space Preserve

San Diego National Wildlife Refuge

Mission Trails

Regional Park

Cleveland National Forest

Sycamore CanyonCounty

Park

Black Mountain

Open SpacePark

Elfin ForestRecreational

Reserve

El Corazon Park

Blue Sky Ecological Reserve

Torrey PinesState Natural

Reserve

BaronaIndian

Reservation

Oak OasisOpen Space

Preserve

Pacific Gateway

Park

Balboa Park

Tecolote Canyon

Natural Park

San Diego Bay National

Wildlife Refuge

This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. Consult your attorney, accountant, or other professional advisor.

kiddermathews.com

Mike Neil858.369.3069 [email protected] #01271103

SUBMARKET LEGEND

Submarket Zip

Governor Park 92122

UTC 92122

Torrey Pines 92130

Sorrento Valley 92121

Miramar 92145

Mira Mesa 92126

Carmel Valley 92130

Rancho Bernardo 92129

Central County Office Team

9214592122

92130 92126

92129

92130

92121

Governor Park

Mar

SAN DIEGO OFFICE MARKET

Located in San Diego’s submarket of Mira Mesa/Miramar, 8977 Activity Rd provides a great opportunity for a variety of Buyers looking to acquire a facility to conduct its operations.

The subject property is located in the North County San Diego marketplace. This geographic area consists of Mira Mesa, Miramar, Governor Park, UTC, Torrey Pines, Sorrento Valley, Carmel Valley, and Rancho Bernardo.

SAN DIEGO OFFICE SUBMARKET MAP



SAN DIEGO OFFICE MARKET BREAKDOWN

3rd Quarter 2017 | 3kiddermathews.com

FORECAST

Vacancy

2Q171Q174Q163Q162Q161Q164Q153Q15

Availability

4Q17 2Q181Q183Q178%

10%

12%

14%

16%

18%

VACANCY VS AVAILABILITY

Average Sales Price (PSF)

2014

2015

2016

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

3Q17

Cap Rate

$0

$100

$200

$300

$400

2%

4%

6%

10%

8%

AVERAGE SALES PRICE & CAPITALIZATION RATES

1Q17 2Q174Q163Q162Q161Q164Q153Q15

Class B

FORECAST

Class A

3Q17 4Q17 2Q181Q18

Total

$2.00

$2.50

$3.00

$3.50

ASKING LEASE RATE

Vacancy

2014

2015

2016

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

3Q17

Asking Lease Rate (PSF)

5%

10%

15%

20%

$1.50

$20.00

$2.50

$3.00

VACANCY VS ASKING LEASE RATE

Net Absorption (SF)

2014

2015

2016

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

3Q17

-1.5M

-1M

-500K

0

500K

1M

1.5M

2M

2.5M

3M

3.5M

4M

NET ABSORPTION - HISTORICAL

Net Absorption (SF)

2Q16 3Q161Q164Q153Q15 4Q16 1Q17 2Q17 3Q17-800K

-700K

-600K

-500K

-400K

-300K

-200K

-100K

0

100K

200K

300K

400K

500K

600K

NET ABSORPTION - QUARTERLY

4 | San Diego Office Real Estate Market Review

kiddermathews.com

This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. CONSULT YOUR ATTORNEY, ACCOUNTANT, OR OTHER PROFESSIONAL ADVISOR.

Market Breakdown

Q3 2017 Q2 2017 Q3 2016 Annual % Change

Vacancy Rate 10.6% 11.0% 11.5% -7.83%

Availability Rate 14.5% 13.9% 14.4% 0.69%

Asking Lease Rate $2.67 $2.65 $2.57 3.89%

Leased SF 1,569,161 1,904,903 2,485,867 -36.88%

Sold SF 2,457,455 517,215 1,160,782 111.71%

Net Absorption 145 -624,861 436,884 N/A

Offices

Seattle206.296.9600

Bellevue425.454.7040

South Seattle206.248.7300

Tacoma253.722.1400

Olympia360.705.2800

Portland503.221.9900

San Francisco415.229.8888

Redwood Shores650.769.3600

Silicon Valley408.970.9400

Sacramento916.970.9700

Roseville916.751.3600

Los Angeles213.880.5250

Commerce323.727.1144

Long Beach562.472.0071

Orange County949.557.5000

Inland Empire909.764.6500

San Diego858.509.1200

Carlsbad760.430.1000

Reno775.301.1300

Phoenix602.513.5200

HISTORICAL NEW CONSTRUCTION & VACANCY RATE

SF

Vacancy RateNew Deliveries

2014

2015

2016

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

3Q17

%

0

1M

2M

3M

4M

0%

10%

20%

5%

15%

New Deliveries

Vacancy Rate

HISTORICAL SALES ACTIVITY & MEDIAN SALES PRICE

SF

Median Price/Building SFTotal Square Feet of Sales

2014

2015

2016

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

3Q17

$/SF

0

3M

6M

9M

12M

15M

$50

$100

$150

$200

$300

$250

Total Square Feet of Sales

Median Price/Building SF

HISTORICAL LEASING ACTIVITY & ASKING LEASE RATES

SF

Asking Lease RateLeasing Activity

2014

2015

2016

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

3Q17

$/SF

0

4M

8M

12M

$1.00

$1.75

$3.25

$2.50Leasing Activity

Asking Lease RateContactMark ReadExecutive VP, [email protected]

Designated Broker

Mark Read | LIC #00572743

4 | San Diego Office Real Estate Market Review

kiddermathews.com

This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. CONSULT YOUR ATTORNEY, ACCOUNTANT, OR OTHER PROFESSIONAL ADVISOR.

Market Breakdown

Q3 2017 Q2 2017 Q3 2016 Annual % Change

Vacancy Rate 10.6% 11.0% 11.5% -7.83%

Availability Rate 14.5% 13.9% 14.4% 0.69%

Asking Lease Rate $2.67 $2.65 $2.57 3.89%

Leased SF 1,569,161 1,904,903 2,485,867 -36.88%

Sold SF 2,457,455 517,215 1,160,782 111.71%

Net Absorption 145 -624,861 436,884 N/A

Offices

Seattle206.296.9600

Bellevue425.454.7040

South Seattle206.248.7300

Tacoma253.722.1400

Olympia360.705.2800

Portland503.221.9900

San Francisco415.229.8888

Redwood Shores650.769.3600

Silicon Valley408.970.9400

Sacramento916.970.9700

Roseville916.751.3600

Los Angeles213.880.5250

Commerce323.727.1144

Long Beach562.472.0071

Orange County949.557.5000

Inland Empire909.764.6500

San Diego858.509.1200

Carlsbad760.430.1000

Reno775.301.1300

Phoenix602.513.5200

HISTORICAL NEW CONSTRUCTION & VACANCY RATE

SF

Vacancy RateNew Deliveries

2014

2015

2016

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

3Q17

%

0

1M

2M

3M

4M

0%

10%

20%

5%

15%

New Deliveries

Vacancy Rate

HISTORICAL SALES ACTIVITY & MEDIAN SALES PRICE

SF

Median Price/Building SFTotal Square Feet of Sales

2014

2015

2016

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

3Q17

$/SF

0

3M

6M

9M

12M

15M

$50

$100

$150

$200

$300

$250

Total Square Feet of Sales

Median Price/Building SF

HISTORICAL LEASING ACTIVITY & ASKING LEASE RATES

SF

Asking Lease RateLeasing Activity

2014

2015

2016

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

3Q17

$/SF

0

4M

8M

12M

$1.00

$1.75

$3.25

$2.50Leasing Activity

Asking Lease RateContactMark ReadExecutive VP, [email protected]

Designated Broker

Mark Read | LIC #00572743

Office Market Breakdown

San Diego Overall

Miramar/ Mira Mesa Submarket

Vacancy Rate 10.6% 9.1%

Availability Rate 14.5% 12.1%

Asking Lease Rate $2.67 $1.86

Leased SF 1,569,161 44,530

Net Absorption 145 13,299



PARTIAL LIST OF SALES AND LEASE COMPARABLES

8933 ACTIVITY RD

Sale Date 16/30/2016

Sale Price $9,300,000

SF ±36,731

Price/SF $253.19

1 9990 MESA RIM RD



SF ±36,028

Price/SF $209.00

3

10675 SORRENTO VALLEY RD



SF ±25,819

Price/SF $177.88

5

9550-9558 CAMINO RUIZ

Sale Date 1/26/18


SF ±28,570

Price/SF $241.51

9

9999 WILLOW CREEK RD

Sale Date 4/5/2016


SF ±36,100

Price/SF $179.29

7

10180 BARNES CANYON RD

Sale Date 5/25/2016


SF ±37,943

Price/SF $189.47

2 5120 SHOREHAM PL

Sale Date 7/14/2016


SF ±38,060

Price/SF $216.76

4

7340 TRADE ST

Sale Date 5/8/2017


SF ±27,653

Price/SF $179.39

6 10021 WILLOW CREEK RD

Sale Date 12/7/2016


SF ±25,707

Price/SF $202.96

8

19

2 3

4

5

6

7 8

80515

1/10/2018

To: From:

Property:

Prospective Buyer Kidder Mathews Finance

Purchase Amount $6,000,000 Estimated Closing Costs $90,000

TOTAL: $6,090,000

Est. Buyer Down payment: $600,000

1st TD - Option 1 2nd TD SBA - 504

Loan Program

Fixed Period 10 Years 20 Years

Term 25 Years 20 Years

Index and Spread 2.50%

Amortization - Maximum 30 20 Years

1st Trust Deed Loan Amount $2,400,000.00

2nd Trust Deed SBA Loan Amount $3,000,000

Max LTV

Interest Rate 4.87% 4.50%

Monthly Payment $13,848.98 $18,979.48

Min. Debt Service

Rate Lock Option

$32,828.46

Guarantee

Prepayment 10-9-8-7-6-5-4-3-2-1

Lender Fee 1.50% 2.15%

Bridge Loan Fee 1%

SBA Fee

Estimated Lender Processing

Estimated Closing Cost/Title

Interest Reserve

Estimated 3rd Party Cost $5,300.00

Mortgage Loan Broker Fee

Estimated Total Cost

Fees Financed

Fees Paid at Closing

Down Payment - % 10%

Down Payment - $ $600,000.00

TOTAL BUYER DEPOSIT

Business Deposit Relationship

Expected Close Period 4 weeks

Probability of CloseBROKER OPINION OF VALUE | 11

Not a formal approval. Subject to creditworthiness, sufficient collateral, and loan package.

REQUIRED APPLICATION DOCUMENTS:

1. Signed and completed Loan Application and Forms

2. Three years (2014-2016) complete individual federal income tax returns.

3. Three years (2014-2016) complete business federal income tax returns.

4. Interim business Balance Sheet, Profit & Loss, Accounts Receivable and Account Payable Agings (YTD - 2017)

5. Signed Personal Financial Statement.

6. Matching schedule of business debt.

7. Copy of current commercial property lease.

8. Any Additional Tax Returns and Financial documents from all Borrowers & Guarantors.

SBA FINANCING ASSUMPTIONS



Broker Bio

[email protected] LIC #01271103

Mike Neil

CAREER SUMMARY

Michael Neil has been active in the commercial real estate industry since 1999. Michael has been involved in hundreds of leasing transactions on both the tenant side and landlord side, ranging from local private businesses, government agencies, and national publicly traded institutions. Michael has also sold dozens of properties, ranging from neighborhood properties to complex multitenant office building transactions and land-development projects.

EXPERTISE

Michael specializes in the development of commercial property relationships from acquisition all the way through the lease-up process to disposition. While Michael focuses primarily on office and industrial-flex properties, Michael has transacted all commercial property asset classes, including office, industrial, retail, and apartments.

ACCOMPLISHMENTS

Michael has been a consistent producer in the commercial real estate industry. Michael’s proudest business accomplishments are the many trusted and lasting relationships he’s made over the years.

PROFESSIONAL AFFILIATIONS

• American Industrial Real Estate Association • Certified Commercial Investment Member (CCIM) - Candidate • Include Autism - Board of Directors • Sigma Chi Fraternity

EDUCATION

• B.S. in Finance, San Diego State University

MAJOR TRANSACTIONS

• Panorama Portfolio, Los Angeles, CA - Medical Sale - 75,000 SF • 21314 Lassen St, Chatsworth, CA - Industrial Sale - 120,000 SF • 5959 Topanga Canyon Blvd, Woodland Hills, CA - Office Sale - 65,000 SF



Corporate Services

Industrial

Investment

Life Science/Technology

Multifamily

Office

Office/R&D

Retail

Tenant Advisory

Award Winning Services 2015-2017

A Largest Commercial Real Estate Firm in

San Diego

3 times

Top Industrial Commercial Real Estate Sales

in San Diego

2 times

SDBJ Best Places to Work

1 time

Largest Commercial Property Management Firm

in San Diego

3 times

National & International Reach

Kidder Mathews has a global strategic

alliance with Binswanger (in-depth

knowledge of 103 markets in 34

countries) to provide leasing, sales, asset

management, consulting, and corporate

advisory services for industrial, office, retail,

investment, life science, and technology

properties worldwide.

330+

$5.6B

18.6M sf

30.9M sf

Brokers

Annual transaction total

Annual sales

Annual leases

Portfolio 48M+ sf

1,300+

Property Management

Appraisals annually

Valuation Advisory

Commercial Brokerage

SAN DIEGO

ORANGE COUNTYINLAND EMPIRE

PHOENIX

SEATTLE

SOUTH SEATTLETACOMA

OLYMPIA

PORTLAND

SAN FRANCISCO

SACRAMENTO

SILICON VALLEYREDWOOD SHORES

BELLEVUE

RENOROSEVILLE

CARLSBAD

LOS ANGELES COMMERCE

LONG BEACH

COMPANY OVERVIEW

Since 1969, Kidder Mathews has been delivering results that meet, and often

exceed, client expectations. Today, Kidder Mathews is one of the largest

independent full service commercial real estate firms on the West Coast, with over

700 real estate professionals and employees in 20 offices in Washington, Oregon,

California, Nevada and Arizona. We offer a complete range of brokerage, appraisal,

property management, consulting, sustainability, and project and construction

management services.

Nine years ago Kidder Mathews entered the Bay Area and quickly grew to five

offices in the region including downtown San Francisco, Redwood Shores, Silicon

Valley, Sacramento, and San Diego. Now with over 104 brokers in California,

Kidder Mathews has become the fastest growing brokerage firm in the Bay Area.

Kidder Mathews’ agents are seasoned professionals with an average of 18 years in

the industry, and offering expertise in all property types.

Kidder Mathews Overview

Mike NeilFirst Vice President 858.369.3069 | LIC #01271103 [email protected]

kiddermathews.com

Contacts

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