By Barbra Murray
Six years after acquiring the Inspire Portfolio, a 319,000-square-foot group of office and laboratory buildings in San Diego, Parallel Capital Partners Inc. has sold the properties in a $112 million deal. Longfellow Real Estate Partners snapped up the asset, which boasts a location in the coveted Sorrento Valley submarket.
Parallel had subjected the 12-structure Inspire Portfolio to renovations and a life sciences conversion program, successfully repositioning half of the buildings through a capital investment of $10 million. With a current occupancy level of 95 percent and a tenant roster encompassing life sciences, technology and R&D tenants, the collection attracted a notable amount of attention from the investment community.
“This latest transaction confirms institutional investors are still focused on well-positioned acquisition opportunities with demonstrable value-added upside in key submarkets,” Matt Root, CEO of Parallel Capital Partners Inc., said in a prepared statement.
The portfolio includes two multi-structure campuses, the 128,000-square-foot Sorrento Center 1 at 11535-11585 Sorrento Valley Road and the 85,100-square-foot Sorrento Center 5 at 11558-11588 Sorrento Valley Road. Sorrento Center 2, 3 and 4, carrying the addresses of 11772, 11760 and 11750 Sorrento Valley Road, are also part of the group, as is Sorrento 6 at 11494 Sorrento Valley Road.
Parallel relied on Nick Frasco, Nick Psyllos and Michael Leggett of commercial real estate and capital markets services provider HFF to market the Inspire Portfolio. Longfellow expects to pick up where Parallel left off on the repositioning of the asset.
The life sciences effect
In San Diego County, the third largest biotech hub in the U.S., the life sciences investment sales market is highly competitive. As noted in a third-quarter 2018 report by commercial real estate services firm Cushman & Wakefield, three life sciences landlords—Alexandria, HCP and BioMed Realty, which Blackstone acquired for $8 billion in 2016—own 46 percent of the total lab inventory. Smaller players, however, have not been deterred.
“There is continued interest from non-traditional life science real estate investors to buy and reposition office/R&D buildings for life science use,” according to the Cushman & Wakefield report. Longfellow’s acquisition of the Inspire Portfolio isn’t the only recent transaction that fits the aforementioned profile. Bollert LeBeau acquired the vacant 50,000-square-foot R&D building at 6262 Lusk Blvd. with plans for a conversion.
Images courtesy of Parallel Capital Partners