With eyes on University City, Irvine Company ready to offload 2 more downtown buildings

A Southern California real estate behemoth wants to offload two more of its downtown San Diego office buildings as it focuses its attention on development opportunities farther north in University City.

On Thursday, Irvine Company listed for sale its 40- and 50-year-old towers near Horton Plaza at 101 W. Broadway and 225 Broadway, the firm’s broker, Eastdil Secure, said.

“These are two of downtown San Diego’s most iconic office towers along Broadway and we anticipate significant interest in this opportunity to acquire these signature Class A buildings,” said Adam Edwards, Eastdil’s managing director.

The listings come a month after Irvine Company sold Symphony Towers for cheap, setting a new market comparable sales price of $84 per square foot. The potential trades also highlight a big shift in strategy for an esteemed landlord with a reputation for holding on to its properties long term.

Orange County-based Irvine Company is a privately owned real estate company with a substantial portfolio of office, apartment and retail assets in the Southern California market.

The firm is the largest office landlord in San Diego with 70 office properties spread across University City, Del Mar, Sorrento Mesa, Mission Valley and downtown. Irvine Company’s San Diego portfolio also includes 15 apartment communities.

Irvine Company purchased the up-for-sale Broadway buildings in 2005 for $265 million — or around $325 per square foot — as part of a two-building portfolio transaction.

Built in 1984, the 20-story office tower at 101 W. Broadway, which is just west of the historic Spreckels Building, includes 452,436 square feet of office space and ground-floor retail space, according to real estate tracker CoStar. The building is 76.6 percent leased and its largest tenant is Morgan Stanley, which occupies around 30,000 square feet of space, or one full floor and one half floor. Chipotle is on the ground floor.

A block away, the 22-story office tower at 225 Broadway, which was built in 1974 and overlooks Horton Plaza, has 363,102 square feet of space, according to CoStar. The building is 85.1 percent leased and its largest tenants include Federal Defenders of San Diego, a federal public defense organization, and the law firm Manning & Kass, Ellrod, Ramirez, Trester LLP. Both entities lease around 16,000 square feet of space, or one full floor. Panera Bread and Dunkin are located on the ground floor.

“These properties have better occupancy than a lot of the other towers downtown, which speaks to the strength of Irvine Company’s management and also the quality of the buildings versus their peer set,” said Joshua Ohl, who is the senior director of market analytics for CoStar.

Nearly 32 percent of office space in the existing stock of downtown office towers is vacant, Ohl said.

Richard Gonor, an executive with Jones Lange LaSalle who specializes in office leasing, said Irvine Company’s Broadway buildings will remain popular with law firms and legal services companies given their proximity to courthouses. But office tenants are gravitating to newer buildings in the market, he said.

“The downtown San Diego office leasing market continues to see its challenges with new inventory coming online and limited inbound tenant migration,” Gonor said.

Irvine Company, meanwhile, has turned its attention to University City, where the city’s newly approved community plan has laid the regulatory foundation for more than 30,000 additional residential units.

“We own and operate a number of Class A properties in this growing and economically vibrant area,” Ryan Lilyengren, Irvine Company’s vice president of communications, wrote last month. “Guided by the city’s vision and our experience creating world-class mixed-use districts, we are beginning our master planning to create quality housing connected to office campuses, retail, transit and open spaces.”

The University Community Plan Update goes into effect on Dec. 1.

In downtown San Diego, Irvine Company owns the two for-sale buildings on Broadway, Wells Fargo Plaza at 401 B St., One America Plaza at 600 W. Broadway and 501 W. Broadway.