Office Case Study - San Diego, California:
Challenge Reverse declining image and occupancy levels causing a deteriorating property value at existing Class A office project.
Property Situation
  • Two 12 year old, well located, deteriorating, Class A office buildings
  • Negative momentum to tenant quality causing value deterioration
  • Developer/Owner managed facility
  • Under capitalized—lacking funds for tenant improvements and capital upgrades
  • Short term lease strategy causing decline in rental rates
  • Broker [mis-] perception: Commission payment uncertainty
  • Loss of on-site amenities and weakening market position
Market Condition
  • Market-wide direct vacancy at 15%; Submarket at 20% and climbing
  • No financing available, no private capital available
  • Lack of absorption overall, negative absorption in submarket
  • Newer developments and locations cannibalizing subject market’s tenant base
Strategy Reverse negative value trajectory through re-capitalizing and re-imaging the asset. Change the thinking on-site and the perception off-site.
Actions Maier Siebel Baber emphasizes Ownership’s goals through actions of its Principals. Maier Siebel Baber initiated a major effort to partner with the Brokerage community to re-message property goals away from “Siege” mentality emphasizing capital preservation” to “long term hold - value proposition;” altered lease proposal emphasis to confirm new thinking - total rent vs. total investment; changed brokerage goals to Target higher quality, bellwether tenants; re-imaged asset through lower cost, yet higher visible site improvements while maintaining diligent internal cost controls; subsidized amenity package to attract services necessary to capture quality; retained new on-site teams and empowered them to provide high touch, solution driven, “tenant first” approach at all times; reduced turn around time for inquiries and proposals; maximized in-place assets such as underutilized signage and surplus parking during high vacancy period; conducted principal to principal, one-on-one, and small focus group meetings with market leading brokers and tenants, displaying a genuine value for their perspective; created and implemented a strategic re-investment budget seeking to maximize cost/benefit analysis of planned upgrades with strong reliance on re-use vs. replacement; and studied competitive set’s advantages which generated winning goals and objectives for entire project team.
Result Maier Siebel Baber dramatically improved the overall position of the asset in the market and value increased from the purchase price of $134/SF to the sale value of $196/SF in 54 months.
Current Status Sold