Irvine Company sold the 421,661-square-foot office building at 501 W. Broadway for $69 million after paying $150 million in 2006. Downtown office vacancy is about 36%, and newer office projects like The Campus at Horton have struggled to fill space. Residential construction downtown remains robust, Comic-Con drew strong crowds to the Gaslamp, and multiple large projects are still proposed. Some analysts view the sale as evidence of strategic redeployment and a pessimistic outlook for downtown commercial real estate. Economists warn the market may be roughly 30% overbuilt, implying a prolonged correction as excess space is absorbed.
YES: Recent actions by Irvine Company indicate that it has concluded that its resources are better deployed in locations outside of downtown. It continues to invest in other areas such as University City. The high downtown office vacancy rate, the sales price for the property on Broadway the Irvine Company just sold and the struggling Campus at Horton project are all good reasons to have a pessimistic view of downtown commercial real estate.
YES: The downtown San Diego commercial market is in trouble. It is more than 30% overbuilt with bleak prospects for a quick recovery. What we see is part of a correction that could take many years as the market absorbs excess space. As a privately held, well diversified company, the Irvine Company can optimize their portfolio outside of downtown San Diego and into areas they deem more profitable.
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