Description

Jones Lang LaSalle Americas, Inc. (“JLL”) has been exclusively retained to offer the opportunity to acquire the fee simple interest in Rio San Diego Plaza (the “Project”), a 195,125 square foot institutional office property at the geographic center of Mission Valley, the only San Diego submarket where office attendance exceeds pre-pandemic levels.

Built in 2001 on 7.75 acres at Rio San Diego Drive and Rio Bonito Way, the six-story, LEED Gold Project offers immediate access to I-8, I-15, and SR-163, San Diego Trolley connectivity, and proximity to Fashion Valley and The Valley. Amenities include a renovated two-story lobby, a fitness facility with showers and lockers, and on-site management.

Kaiser Permanente (S&P: AA-) has anchored the Project since 2009 and occupies 122,839 square feet which is 62.9% of the building, under a lease through September 2041. ADP (S&P: AA-) and the Trustees of the California State University (S&P: AA-) round out the investment-grade roster, which accounts for 93.7% of leased square footage across a five-tenant rent roll.

Over the past two years, Mission Valley has attracted more than four times the net tenant in-migration of any other major San Diego office submarket with weekday office attendance running 17.2% above its 2019 baseline. The project has averaged 89.5% occupancy over the past decade under institutional ownership, and in Mission Valley no other office properties are under construction and an overall office vacancy rate of 13.0%, Rio San Diego will continue it’s upward leasing trajectory.

At 78.5% leased with a weighted average lease term of 12.5 yearsⁱ, Rio San Diego Plaza offers investors durable, long-dated credit income alongside a near-term lease-up opportunity across the balance of the building, which has generated consistent tenant interest.

ⁱWALT reflects Kaiser’s signed LOI (amendment pending) for a 15-year extension, moving its LXD (~63% of RSF) from 4/30/2030 to 9/30/2041.

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Attributes

Building area gross

195,125 sf

Occupancy

78.5%

Year built

2001

Land area gross

7.75 acres

Media

Investment Highlights

Long-Dated Investment-Grade Credit Anchored by a 2009 Tenant

Rio San Diego Plaza is anchored by Kaiser Permanente (S&P: AA-), one of Mission Valley’s largest employers and a tenant at the Project since 2009, occupying 122,839 square feet under a lease running through September 2041. Together with ADP (S&P: AA-) and the Trustees of the California State University (S&P: AA-), investment-grade credit tenancy accounts for 93.7% of leased square footage. Weighted average lease term across the rent roll is 12.5 years. The Project has averaged 89.5% occupancy over the past decade, with the first lease expiration of May 2028 and only 5.9% of the building rolling before 2031. This asset offers investors durational income that is longer than a conventional hold period and rollover protection to subsequent investors.

Acquiring Below Replacement Cost in a Market Leading the Recovery

The Project offers an entry basis well inside the cost of new construction, a rare advantage in a submarket where replacement economics increasingly favor existing institutional product. Aside from SDSU’s Innovation District, a next generation, premium tier development targeting a distinct segment of demand, Mission Valley has no speculative multi-tenant office in the pipeline, and rising construction costs continue to push replacement further out of reach for competing product. Submarket fundamentals have strengthened materially against this backdrop: three consecutive quarters of positive absorption have driven total vacancy down from 18.2% in 2023 to 13% today, a multi-year low that sits 90 basis points inside the County average. Available space has fallen to its lowest level since Q1 2019, and sublease availability has dropped sharply, from 3.8% in 2024 to 1.6% today.

Near-Term Lease-Up in a Market With No Competing Supply

The remaining square footage of the building provides a value creation opportunity. The submarket is currently tracking more than 180,000 square feet of active tenant requirements including tenant expansions, relocations and in-migration. While the average tenant size in the market is below 10,000 square feet, demand at the Project’s fifth floor has been remarkably steady with multiple groups actively engaged. This 33,691 square foot floor represents one of three vacant full floor spaces in the market.

The Submarket Winning San Diego’s Office Demand

Mission Valley is the only one of ten San Diego office submarkets where employee attendance exceeds pre-pandemic levels, running 17.2% above its 2019 baseline. This feature translates directly into absorption: over the past two years Mission Valley attracted more than four times the net tenant in-migration of any other major San Diego office submarket. The draw is structural, combining a central location at the intersection of I-8, I-15, and SR-163 with Trolley connectivity, the Fashion Valley and The Valley retail base, and more than 14,000 residential units delivered, under construction, or entitled within two miles including notable projects like Civita, Riverwalk, Town & Country, and SDSU’s Innovation Campus.