Harbor Associates and Ascentris have partnered to acquire The Pinnacle, a 110,110-square-foot, five-story, class A office building located in the north San Diego submarket of Rancho Bernardo.
The Pinnacle represents Harbor’s third office acquisition in San Diego, following the acquisition of The Bungalows at Del Mar in May 2018.
Located just 25 miles north of downtown San Diego, Rancho Bernardo is currently experiencing significant tenant demand due in large part to its access and affordability. Completed in 2007 and currently 93 percent leased, The Pinnacle is the submarket’s newest office building.
Harbor and Ascentris will execute a capital improvement plan to enhance the tenant experience, including creating new outdoor covered seating and collaborative workspace with canyon views, modernizing the bike storage and locker room areas, and refreshing the ground floor lobby.
The Pinnacle represents Harbor’s 13th value-add office acquisition in the last three years in Southern California and third in the San Diego market.
Ascentris is currently targeting high-quality office buildings in primary suburban submarkets across the United States. The Pinnacle represents its fifth office acquisition in the past six months.
San Diego’s office market kicked off 2018 on stable footing as vacancy continued to decline while occupancy showed further improvement, according to Cushman & Wakefield. Countywide vacancy shed another 40 bps since year-end 2017 and 150 bps from a year ago to close the first quarter of 2018 at 12.9 percent, its first appearance below 13 percent since the third quarter 2006. Sublease vacancy decreased 40 bps from last quarter and 80 bps from a year ago to 1.7 percent in first quarter 2018 and is currently at the lowest level on record.
Cushman & Wakefield predicts continued economic growth, and resulting job growth in combination with increasing tenant demand should provide continued occupancy and rent growth throughout 2018 and into 2019. Leasing within the 5,000 square feet to 50,000 square feet range will continue to be the main driver of activity, accounting for 60 percent of total square footage in lease obligations set to expire over the next 18 months.
