Firm is one of the most active players in the Carlsbad market
Carlsbad CA— RAF Pacifica Group (RPG), a San Diego-based owner, operator, and developer of high-quality commercial real estate, has added to its portfolio of creative and value-add assets in Northern San Diego County with the acquisition of five properties totaling six buildings in the Carlsbad, California, market. RPG purchased the properties, comprising one two-building creative-office campus, three creative-industrial buildings, and one value-add industrial building, for a total consideration of $59.6 million.
“As these five acquisitions demonstrate, we have been extremely active in the Carlsbad market,” says Adam Robinson, President of RPG. “The properties align perfectly with our firm’s strategy of owning well-located, modern, creative and value-add assets in North County. Carlsbad attracts a tenant mix consisting largely of biotech, cleantech, communications, and action-sports companies, and we are in an ideal position to meet their real estate needs with these properties.”
6305 El Camino Real
RPG acquired a 67,528 square-foot, value-add single-tenant industrial property at 6305 El Camino Real in Carlsbad, California, from an institutional owner for $10.5 million.
According to Robinson the transaction closed in less than a week.
“We entered escrow on Tuesday and were able to close the following Monday,” explains Robinson. “Because of our niche focus on the San Diego market and quick access to capital, we are able to move incredibly quickly and close deals fast.”
ViaSat, a communications company that is consolidating its corporate campus to a collection of newly developed facilities three blocks north of the property, will be vacating the building.
“We plan to add value to this well-positioned building through strategic lease-up of the existing vacancy,” says Robinson. “RPG recognized in this asset the opportunity to purchase a partially improved property in a high-barrier-to-entry market on a main North County thoroughfare, a highly trafficked roadway along which no remaining parcels suited for industrial development exist.”
The remaining parcels adjacent to the site were purchased by ViaSat in 2015 for approximately $40 per square foot. Robinson notes that rising construction costs and limited land availability are making industrial product of this type and location more difficult to develop.
The property offers 20-foot clear height, seven dock-high doors, and 195 parking stalls (including tandem) and includes approximately 28,941 square feet of office space, 28,940 square feet of R&D space, and 9,647 square feet of warehouse space.
Existing improvements to the facility, which was constructed in 1980, also added to its appeal and value for RPG.
“Enhancements to 6305 El Camino Real, including R&D lab space, VCT flooring, a full locker room, modern kitchen, and open office space, are exactly what today’s industrial tenants are seeking,” says Robinson. “The building is also 100% HVAC improved, and the existing six glassed-in dock-high loading doors and warehouse allow for flexible lease-up strategies. The docks also provide excellent light into the existing R&D space and, if restored to original working order, will provide above-standard loading capabilities to the project. This flexibility ensures minimum absorption time and maximum exposure.”
The property also benefits from street-front signage, excellent curb appeal, and two points of ingress and egress from El Camino Real. Centrally located in Carlsbad, the project enjoys ease of access to I-5, I-15, and the 78 Freeway, as well as direct access to nearby executive neighborhoods.
Aric Starck of Cushman & Wakefield represented both RPG and the seller in the transaction.
2320 & 2330 Faraday Avenue; 1905 Aston Avenue
RPG purchased three properties in the Carlsbad Research Center in Carlsbad, California, from A&M CapRE Aston, LLC: 2320 Faraday Avenue, 2320 Faraday Avenue, and 1905 Aston Avenue. All three properties are located steps from the beach, within walking distance of commuter trains, and adjacent to numerous retail amenities.
2320 Faraday Avenue, a 23,375 square-foot building, and 2330 Faraday Avenue, a 17,451 square-foot building, are adjacent, fully occupied, creative industrial assets, acquired for a total consideration of $12.8 million. Each building offers 16-foot to 18-foot clear heights, two grade-level loading doors, 1,000 amps of 277-480 volts, and a parking ratio of 3.5/1,000 square feet.
“The assets’ adaptability to single- or dual-tenant floorplans—with 2330 Faraday also adaptable to a spec-suite floor plan—was very appealing to our firm,” Robinson comments. “We noted that each of these buildings is suitable for interior creative-office improvements such as open floor plans, modern-designed conference rooms, indoor kitchens and gathering areas, and exterior tenant improvements that would enhance their value include glass roll-up doors, wood/concrete outdoor benches, wood cladding over existing concrete panels, an outdoor kitchen, bocce-ball court, and drought-resistant landscaping.”
Robinson adds that both buildings are located in the heart of the Carlsbad Research Center amongst some of the nation’s most prominent manufacturing and technology companies, increasing their tenant appeal. They are situated just minutes from Palomar Airport, Interstate 5 Freeway, and the Pacific Ocean; within 30 minutes of Highway 78 and Interstate 15 Freeway; 35 minutes from Orange County; 40 minutes from Downtown San Diego; and less than an hour from the U.S./Mexico border. The properties are also in close proximity to a wide variety of national-credit supermarkets, restaurants, home-improvement stores, and drug stores.
RPG already owns two other properties within the immediate business park.
Aric Starck of Cushman & Wakefield represented both RPG and the seller in the transaction.
1905 Aston Avenue is a 48,818 square-foot creative industrial R&D and corporate-headquarters facility, which RPG acquired for $12.4 million.
“Creative tenants continue to seek well-appointed office and industrial space along the San Diego coastline—particularly in Carlsbad, where they can go surfing or enjoy a walk along the beach at lunchtime,” says Robinson. “The quality of life in this market is high, and it’s a major factor for these companies in recruiting and retaining talent.”
Aric Starck represented both RPG and the seller in the transaction.
RPG has acquired another fully leased property in Carlsbad, California: Avenida Crossing, a newly renovated, two-building, 68,392 square-foot, multi-tenant contemporary creative office campus at 5993 and 5999 Avenida Encinas. The property, which was purchased from Avenida Encinas, LP for $23.9 million, is near the Carlsbad Research Center, in close proximity to the beach, trains, and retail amenities.
Robinson says RPG is planning to add value to the property through a series of renovations and upgrades.
“This building is in an excellent location and was partially improved by the previous owner,” says Robinson. “We will be able to further expand upon these improvements to elevate the property to new levels, bringing it up to the RPG standard.”
Aric Starck, Rick Reeder, and Dennis Visser of Cushman & Wakefield represented both RPG and the seller in the transaction.
About the Carlsbad R&D and Creative Office Markets
Home to many of San Diego’s most distinguished companies and a highly educated workforce, Carlsbad is one of the most active R&D markets in San Diego County, with nearly 12 patents issued per 1,000 workers. Half of Carlsbad’s inventory (more than 7.4 million square feet) is allocated to R&D product.
Additionally, R&D leasing activity has been historically robust in Carlsbad: over the past three years, 64 percent of all leases over 50,000 square feet have been apportioned to R&D facilities. The Carlsbad R&D market has experienced positive net absorption each year since 2012, totaling 706,483 square feet, and during 2017, Carlsbad’s R&D sector absorbed 92,506 square feet. R&D product in this market accounted for 44% of the countywide R&D absorption total from 2013 to 2017, amounting to 579,879 square feet.
Comprising 12.6 million square feet of office and R&D product in 343 buildings, Carlsbad has also been the North County hub for corporate headquarters location, including regional occupiers such as ViaSat, TaylorMade, Callaway, Nordson, Thermo Fisher, and Ionis Pharmaceuticals—all with footprints exceeding 200,000 square feet.
Out of a market inventory of 15 million square feet, Carlsbad is one of the region’s most sought-after business locations for companies of all sizes. With an industrial vacancy rate of 8.3% as of Q3 2018, slightly above the two-decade low of 6.5% in 2016, the market has seen decreasing direct vacancy each year since 2011 and direct vacancy has remained in the single digits since 2014. While vacancy ticked upward with the delivery of 1 million square feet of new inventory during 2017/2018, vacancy is predicted to decline slowly as construction slows and product is absorbed.
The focus of new industrial development in North County, Carlsbad now has approximately 785,911 square feet of new product under construction. One of the last San Diego markets with large developable plots of industrial land, Carlsbad is feeling the push of tenants seeking newer functional industrial product and is expected to continue to perform other submarkets for some time.
About RAF Pacifica Group (RPG)
RPG is a privately held, full-service commercial real estate investment firm that acquires, owns, and develops industrial, office, residential and mixed-use properties throughout Southern CA. The firm is spearheaded by Adam Robinson, has directed the firm’s acquisition and development of almost 4mm SF and over $700 million in commercial properties.
With Adam Robinson at the helm, RPG oversees a portfolio of over 3 million square feet of real estate, with a focus in multi-family, mixed-use, office and industrial product. The firm continues to actively seek value-add investment and ground-up development opportunities in Southern California.