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OFFERING MEMORANDUM
Prime Reposition Owner-User Opportunity
LEASE RATE
$1.50 psfModified Gross
SALE PRICE
$6,500,000±33,155 sf
ADDRESS
8977 Activity RdSan Diego, CA 92126
SUBMARKET
Mira Mesa/ Miramar
OFFERING MEMORANDUM | 2
8977 Activity Road, San Diego, CA 92126 Mira Mesa /Miramar Submarket
Table of Contents1. Property Overview
• Building Summary
• Floor Plans and Parcel Map
• Location Map
• Aerial Map
2. Market Overview
• San Diego Office Submarket Map
• San Diego Office Market Breakdown
3. Supporting Information
• San Diego Market Information
• Partial List of Competitive Properties and Sales Comparables
• SBA Financing Assumptions
4. Marketing Team
• Individual Broker Bio
• Kidder Mathews OverviewThe information contained in herein is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Kidder Mathews and should not be made available to any other person or entity without the written consent of Kidder Mathews.
The information contained herein is not a substitute for a thorough due diligence investigation. Kidder Mathews has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB’s or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements
thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property.
The information contained in this Offering Memorandum has been obtained from sources we believe to be reliable; however, Kidder Mathews has not verified, and will not verify, any of the information contained herein, nor has Kidder Mathews conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. References to square footage or age are approximate. Recipients of this report must verify the information and bears all risk for any inaccuracies.
Disclaimer
OFFERING MEMORANDUM | 3
8977 Activity Road, San Diego, CA 92126 Mira Mesa /Miramar Submarket
Property Overview
BUILDING SUMMARY
Location 8977 Activity Road, San Diego, CA 92126
APN 341-220-51
Building Square Feet ±33,155 SF
OccupancyThe second floor is vacant. The ground floor is currently occupied on month-to-month or short term basis. The property could be delivered vacant at or around close of escrow.
Lot Square Feet ±65,340 SF (1.50 AC)
Parking Approx. ±3.50/1,000 SF parking ratio
Stories Two (2) stories
Year Built/Renovated Built 1987 | Renovated 2007
Construction Structural steel interior, wood roof and floors, concrete foundation, fully sprinklered, concrete and glass exterior
Zoning IL-2-1
Elevator One passenger elevator serving all floors
Access 3 stairwells; locations at main entrance to North of property, rear exit to South of property and side exit to West of property
HVAC Multiple packaged commercial HVAC rooftop units
Internet Currently service includes CAT 5 Coax cable, high speed fiber optics available through internet provider
Property Amenity Second floor private patio
Electrical Electrical rooms located on 1st and 2nd floor(s), supplemental HVAC included on second floor.
This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. Consult your attorney, accountant, or other professional advisor.
OFFERING MEMORANDUM | 4
8977 Activity Road, San Diego, CA 92126 Mira Mesa /Miramar Submarket
FLOOR PLANS AND PARCEL MAP
APN 341-220-51
OFFERING MEMORANDUM | 5
8977 Activity Road, San Diego, CA 92126 Mira Mesa /Miramar Submarket
LOCATION MAP
8977 ACTIVITY RD
15
805
Mira Mesa Blvd
Miramar R
d
Clairmont Mesa Blvd
Kea
rny
Vill
a R
d
Pomerado Rd
La Jolla Village Dr
Genesee Dr
La Jolla Village Dr
OFFERING MEMORANDUM | 6
8977 Activity Road, San Diego, CA 92126 Mira Mesa /Miramar Submarket
AERIAL MAP
Miramar R
d
Pomerado Rd
Miramar Way
Activity Rd
Kearny V
illa Rd
Cam
ino Ruiz
Broadway
8977 ACTIVITY RD
15
OFFERING MEMORANDUM | 7
8977 Activity Road, San Diego, CA 92126 Mira Mesa /Miramar Submarket
Market OverviewSAN DIEGO OFFICE MARKET
A diverse employment base combined with a well-educated workforce and tepid development have set the San Diego office market on firm footing. Tightening vacancies, limited sublet space, a lack of wide-scale development, and steady rent growth have contributed to the confidence of investors who continue to find a market with average yields more favorable than in the apartment sector.
The San Diego Office market finished the third quarter with strong leasing activity and increasing rental rates. The total vacancy rate in the overall San Diego market is 10.6%, a decrease from last quarter’s rate of 11% and down 90 basis points year-over-year. The San Diego County unemployment rate sits at 4.7%, below the year-ago estimate of 4.9% and well below the unadjusted unemployment rate of 5.4% for California and slightly higher than the rate of 4.5% for the nation.
Tenants remain focused on value, looking for real estate opportunities to increase employee engagement, provide access to amenities and positively impact employee recruitment. This has led to the growing trend of renovating older buildings and building out creative office upgrades. While the trend toward creative office space is in full swing, leasing hasn’t quite caught up yet. The vacancy rate sits near 20% in this product type, more than twice the metro rate and one reason could be cost. These spaces cost $.20/SF more than typical San Diego office space. Another reason could be location where the most sizable additions in this inventory are located north of Downtown. The former Union-Tribune buildings in Mission Valley are among the latest to begin renovation as they’re converted into creative office use. Space is presently averaging 20 months on the market in this space type before it is leased, compared
with less than 10 months for the balance of office space (which is below the five-year average). Overall office fundamentals are solid, even if creative space is having a more challenging time in finding tenants, further evidence being the amount of available sublet space - almost 10% below the five-year trend.
Data Source: CoStar
ABSORPTION
RENTAL RATE
VACANCY
CONSTRUCTION DELIVERIES
Market Forecast Trends
OFFERING MEMORANDUM | 8
8977 Activity Road, San Diego, CA 92126 Mira Mesa /Miramar Submarket
San DiegoState
University
San DiegoInternational Airport
Qualcomm Stadium
Oceanside
Carlsbad
Vista
San Marcos
Escondido
Poway
Scripps Ranch
Rancho Encantada
Rancho Bernardo
Carmel Mountain
Ranch
Mira Mesa
Carmel Valley
Sorrento Valley
DelmarHeights
Torrey PinesSorrento Mesa
UTC
Pacific Beach
Bay Park MissionGorge
KearnyMesa
Mission Beach
Loma Portal
Miramar
Ramona
Solana Beach
Encinitas
Leucadia
Delmar
La Jolla
Point Loma
Coronado
Mission ValleyMid-City
Encanto
Bay Terraces
Rolando
Jamul
Crest
La Mesa
Spring Valley
Bonita
National City
Chula Vista
Imperial Beach
Tijuana
El Cajon
Santee
Lakeside
San Ysidro
Nestor
Otay Mesa UNITED STATES
MEXICO
San Diego209
PACIFIC OCEAN
Otay County Open Space Preserve
San Diego National Wildlife Refuge
Mission Trails
Regional Park
Cleveland National Forest
Sycamore CanyonCounty
Park
Black Mountain
Open SpacePark
Elfin ForestRecreational
Reserve
El Corazon Park
Blue Sky Ecological Reserve
Torrey PinesState Natural
Reserve
BaronaIndian
Reservation
Oak OasisOpen Space
Preserve
Pacific Gateway
Park
Balboa Park
Tecolote Canyon
Natural Park
San Diego Bay National
Wildlife Refuge
This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. Consult your attorney, accountant, or other professional advisor.
kiddermathews.com
Mike Neil858.369.3069 mneil@kiddermathews.comLIC #01271103
SUBMARKET LEGEND
Submarket Zip
Governor Park 92122
UTC 92122
Torrey Pines 92130
Sorrento Valley 92121
Miramar 92145
Mira Mesa 92126
Carmel Valley 92130
Rancho Bernardo 92129
Central County Office Team
9214592122
92130 92126
92129
92130
92121
Governor Park
Mar
SAN DIEGO OFFICE MARKET
Located in San Diego’s submarket of Mira Mesa/Miramar, 8977 Activity Rd provides a great opportunity for a variety of Buyers looking to acquire a facility to conduct its operations.
The subject property is located in the North County San Diego marketplace. This geographic area consists of Mira Mesa, Miramar, Governor Park, UTC, Torrey Pines, Sorrento Valley, Carmel Valley, and Rancho Bernardo.
SAN DIEGO OFFICE SUBMARKET MAP
OFFERING MEMORANDUM | 9
8977 Activity Road, San Diego, CA 92126 Mira Mesa /Miramar Submarket
SAN DIEGO OFFICE MARKET BREAKDOWN
3rd Quarter 2017 | 3kiddermathews.com
FORECAST
Vacancy
2Q171Q174Q163Q162Q161Q164Q153Q15
Availability
4Q17 2Q181Q183Q178%
10%
12%
14%
16%
18%
VACANCY VS AVAILABILITY
Average Sales Price (PSF)
2014
2015
2016
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
3Q17
Cap Rate
$0
$100
$200
$300
$400
2%
4%
6%
10%
8%
AVERAGE SALES PRICE & CAPITALIZATION RATES
1Q17 2Q174Q163Q162Q161Q164Q153Q15
Class B
FORECAST
Class A
3Q17 4Q17 2Q181Q18
Total
$2.00
$2.50
$3.00
$3.50
ASKING LEASE RATE
Vacancy
2014
2015
2016
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
3Q17
Asking Lease Rate (PSF)
5%
10%
15%
20%
$1.50
$20.00
$2.50
$3.00
VACANCY VS ASKING LEASE RATE
Net Absorption (SF)
2014
2015
2016
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
3Q17
-1.5M
-1M
-500K
0
500K
1M
1.5M
2M
2.5M
3M
3.5M
4M
NET ABSORPTION - HISTORICAL
Net Absorption (SF)
2Q16 3Q161Q164Q153Q15 4Q16 1Q17 2Q17 3Q17-800K
-700K
-600K
-500K
-400K
-300K
-200K
-100K
0
100K
200K
300K
400K
500K
600K
NET ABSORPTION - QUARTERLY
4 | San Diego Office Real Estate Market Review
kiddermathews.com
This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. CONSULT YOUR ATTORNEY, ACCOUNTANT, OR OTHER PROFESSIONAL ADVISOR.
Market Breakdown
Q3 2017 Q2 2017 Q3 2016 Annual % Change
Vacancy Rate 10.6% 11.0% 11.5% -7.83%
Availability Rate 14.5% 13.9% 14.4% 0.69%
Asking Lease Rate $2.67 $2.65 $2.57 3.89%
Leased SF 1,569,161 1,904,903 2,485,867 -36.88%
Sold SF 2,457,455 517,215 1,160,782 111.71%
Net Absorption 145 -624,861 436,884 N/A
Offices
Seattle206.296.9600
Bellevue425.454.7040
South Seattle206.248.7300
Tacoma253.722.1400
Olympia360.705.2800
Portland503.221.9900
San Francisco415.229.8888
Redwood Shores650.769.3600
Silicon Valley408.970.9400
Sacramento916.970.9700
Roseville916.751.3600
Los Angeles213.880.5250
Commerce323.727.1144
Long Beach562.472.0071
Orange County949.557.5000
Inland Empire909.764.6500
San Diego858.509.1200
Carlsbad760.430.1000
Reno775.301.1300
Phoenix602.513.5200
HISTORICAL NEW CONSTRUCTION & VACANCY RATE
SF
Vacancy RateNew Deliveries
2014
2015
2016
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
3Q17
%
0
1M
2M
3M
4M
0%
10%
20%
5%
15%
New Deliveries
Vacancy Rate
HISTORICAL SALES ACTIVITY & MEDIAN SALES PRICE
SF
Median Price/Building SFTotal Square Feet of Sales
2014
2015
2016
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
3Q17
$/SF
0
3M
6M
9M
12M
15M
$50
$100
$150
$200
$300
$250
Total Square Feet of Sales
Median Price/Building SF
HISTORICAL LEASING ACTIVITY & ASKING LEASE RATES
SF
Asking Lease RateLeasing Activity
2014
2015
2016
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
3Q17
$/SF
0
4M
8M
12M
$1.00
$1.75
$3.25
$2.50Leasing Activity
Asking Lease RateContactMark ReadExecutive VP, BrokerageSouthwest949.557.5000mread@kiddermathews.com
Designated Broker
Mark Read | LIC #00572743
4 | San Diego Office Real Estate Market Review
kiddermathews.com
This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. CONSULT YOUR ATTORNEY, ACCOUNTANT, OR OTHER PROFESSIONAL ADVISOR.
Market Breakdown
Q3 2017 Q2 2017 Q3 2016 Annual % Change
Vacancy Rate 10.6% 11.0% 11.5% -7.83%
Availability Rate 14.5% 13.9% 14.4% 0.69%
Asking Lease Rate $2.67 $2.65 $2.57 3.89%
Leased SF 1,569,161 1,904,903 2,485,867 -36.88%
Sold SF 2,457,455 517,215 1,160,782 111.71%
Net Absorption 145 -624,861 436,884 N/A
Offices
Seattle206.296.9600
Bellevue425.454.7040
South Seattle206.248.7300
Tacoma253.722.1400
Olympia360.705.2800
Portland503.221.9900
San Francisco415.229.8888
Redwood Shores650.769.3600
Silicon Valley408.970.9400
Sacramento916.970.9700
Roseville916.751.3600
Los Angeles213.880.5250
Commerce323.727.1144
Long Beach562.472.0071
Orange County949.557.5000
Inland Empire909.764.6500
San Diego858.509.1200
Carlsbad760.430.1000
Reno775.301.1300
Phoenix602.513.5200
HISTORICAL NEW CONSTRUCTION & VACANCY RATE
SF
Vacancy RateNew Deliveries
2014
2015
2016
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
3Q17
%
0
1M
2M
3M
4M
0%
10%
20%
5%
15%
New Deliveries
Vacancy Rate
HISTORICAL SALES ACTIVITY & MEDIAN SALES PRICE
SF
Median Price/Building SFTotal Square Feet of Sales
2014
2015
2016
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
3Q17
$/SF
0
3M
6M
9M
12M
15M
$50
$100
$150
$200
$300
$250
Total Square Feet of Sales
Median Price/Building SF
HISTORICAL LEASING ACTIVITY & ASKING LEASE RATES
SF
Asking Lease RateLeasing Activity
2014
2015
2016
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
3Q17
$/SF
0
4M
8M
12M
$1.00
$1.75
$3.25
$2.50Leasing Activity
Asking Lease RateContactMark ReadExecutive VP, BrokerageSouthwest949.557.5000mread@kiddermathews.com
Designated Broker
Mark Read | LIC #00572743
Office Market Breakdown
San Diego Overall
Miramar/ Mira Mesa Submarket
Vacancy Rate 10.6% 9.1%
Availability Rate 14.5% 12.1%
Asking Lease Rate $2.67 $1.86
Leased SF 1,569,161 44,530
Net Absorption 145 13,299
OFFERING MEMORANDUM | 10
8977 Activity Road, San Diego, CA 92126 Mira Mesa /Miramar Submarket
PARTIAL LIST OF SALES AND LEASE COMPARABLES
8933 ACTIVITY RD
Sale Date 16/30/2016
Sale Price $9,300,000
SF ±36,731
Price/SF $253.19
1 9990 MESA RIM RD
Sale Date 10/18/2017
Sale Price $7,530,000
SF ±36,028
Price/SF $209.00
3
10675 SORRENTO VALLEY RD
Sale Date 12/30/2016
Sale Price $4,592,656
SF ±25,819
Price/SF $177.88
5
9550-9558 CAMINO RUIZ
Sale Date 1/26/18
Sale Price $6,900,000
SF ±28,570
Price/SF $241.51
9
9999 WILLOW CREEK RD
Sale Date 4/5/2016
Sale Price $6,472,500
SF ±36,100
Price/SF $179.29
7
10180 BARNES CANYON RD
Sale Date 5/25/2016
Sale Price $7,189,238
SF ±37,943
Price/SF $189.47
2 5120 SHOREHAM PL
Sale Date 7/14/2016
Sale Price $8,250,000
SF ±38,060
Price/SF $216.76
4
7340 TRADE ST
Sale Date 5/8/2017
Sale Price $4,960,671
SF ±27,653
Price/SF $179.39
6 10021 WILLOW CREEK RD
Sale Date 12/7/2016
Sale Price $5,217,471
SF ±25,707
Price/SF $202.96
8
19
2 3
4
5
6
7 8
80515
1/10/2018
To: From:
Property:
Prospective Buyer Kidder Mathews Finance
Purchase Amount $6,000,000 Estimated Closing Costs $90,000
TOTAL: $6,090,000
Est. Buyer Down payment: $600,000
1st TD - Option 1 2nd TD SBA - 504
Loan Program
Fixed Period 10 Years 20 Years
Term 25 Years 20 Years
Index and Spread 2.50%
Amortization - Maximum 30 20 Years
1st Trust Deed Loan Amount $2,400,000.00
2nd Trust Deed SBA Loan Amount $3,000,000
Max LTV
Interest Rate 4.87% 4.50%
Monthly Payment $13,848.98 $18,979.48
Min. Debt Service
Rate Lock Option
$32,828.46
Guarantee
Prepayment 10-9-8-7-6-5-4-3-2-1
Lender Fee 1.50% 2.15%
Bridge Loan Fee 1%
SBA Fee
Estimated Lender Processing
Estimated Closing Cost/Title
Interest Reserve
Estimated 3rd Party Cost $5,300.00
Mortgage Loan Broker Fee
Estimated Total Cost
Fees Financed
Fees Paid at Closing
Down Payment - % 10%
Down Payment - $ $600,000.00
TOTAL BUYER DEPOSIT
Business Deposit Relationship
Expected Close Period 4 weeks
Probability of CloseBROKER OPINION OF VALUE | 11
Not a formal approval. Subject to creditworthiness, sufficient collateral, and loan package.
REQUIRED APPLICATION DOCUMENTS:
1. Signed and completed Loan Application and Forms
2. Three years (2014-2016) complete individual federal income tax returns.
3. Three years (2014-2016) complete business federal income tax returns.
4. Interim business Balance Sheet, Profit & Loss, Accounts Receivable and Account Payable Agings (YTD - 2017)
5. Signed Personal Financial Statement.
6. Matching schedule of business debt.
7. Copy of current commercial property lease.
8. Any Additional Tax Returns and Financial documents from all Borrowers & Guarantors.
SBA FINANCING ASSUMPTIONS
OFFERING MEMORANDUM | 12
8977 Activity Road, San Diego, CA 92126 Mira Mesa /Miramar Submarket
Broker Bio
858.369.3069mneil@kiddermathews.com LIC #01271103
Mike Neil
CAREER SUMMARY
Michael Neil has been active in the commercial real estate industry since 1999. Michael has been involved in hundreds of leasing transactions on both the tenant side and landlord side, ranging from local private businesses, government agencies, and national publicly traded institutions. Michael has also sold dozens of properties, ranging from neighborhood properties to complex multitenant office building transactions and land-development projects.
EXPERTISE
Michael specializes in the development of commercial property relationships from acquisition all the way through the lease-up process to disposition. While Michael focuses primarily on office and industrial-flex properties, Michael has transacted all commercial property asset classes, including office, industrial, retail, and apartments.
ACCOMPLISHMENTS
Michael has been a consistent producer in the commercial real estate industry. Michael’s proudest business accomplishments are the many trusted and lasting relationships he’s made over the years.
PROFESSIONAL AFFILIATIONS
• American Industrial Real Estate Association • Certified Commercial Investment Member (CCIM) - Candidate • Include Autism - Board of Directors • Sigma Chi Fraternity
EDUCATION
• B.S. in Finance, San Diego State University
MAJOR TRANSACTIONS
• Panorama Portfolio, Los Angeles, CA - Medical Sale - 75,000 SF • 21314 Lassen St, Chatsworth, CA - Industrial Sale - 120,000 SF • 5959 Topanga Canyon Blvd, Woodland Hills, CA - Office Sale - 65,000 SF
OFFERING MEMORANDUM | 13
8977 Activity Road, San Diego, CA 92126 Mira Mesa /Miramar Submarket
Corporate Services
Industrial
Investment
Life Science/Technology
Multifamily
Office
Office/R&D
Retail
Tenant Advisory
Award Winning Services 2015-2017
A Largest Commercial Real Estate Firm in
San Diego
3 times
Top Industrial Commercial Real Estate Sales
in San Diego
2 times
SDBJ Best Places to Work
1 time
Largest Commercial Property Management Firm
in San Diego
3 times
National & International Reach
Kidder Mathews has a global strategic
alliance with Binswanger (in-depth
knowledge of 103 markets in 34
countries) to provide leasing, sales, asset
management, consulting, and corporate
advisory services for industrial, office, retail,
investment, life science, and technology
properties worldwide.
330+
$5.6B
18.6M sf
30.9M sf
Brokers
Annual transaction total
Annual sales
Annual leases
Portfolio 48M+ sf
1,300+
Property Management
Appraisals annually
Valuation Advisory
Commercial Brokerage
SAN DIEGO
ORANGE COUNTYINLAND EMPIRE
PHOENIX
SEATTLE
SOUTH SEATTLETACOMA
OLYMPIA
PORTLAND
SAN FRANCISCO
SACRAMENTO
SILICON VALLEYREDWOOD SHORES
BELLEVUE
RENOROSEVILLE
CARLSBAD
LOS ANGELES COMMERCE
LONG BEACH
COMPANY OVERVIEW
Since 1969, Kidder Mathews has been delivering results that meet, and often
exceed, client expectations. Today, Kidder Mathews is one of the largest
independent full service commercial real estate firms on the West Coast, with over
700 real estate professionals and employees in 20 offices in Washington, Oregon,
California, Nevada and Arizona. We offer a complete range of brokerage, appraisal,
property management, consulting, sustainability, and project and construction
management services.
Nine years ago Kidder Mathews entered the Bay Area and quickly grew to five
offices in the region including downtown San Francisco, Redwood Shores, Silicon
Valley, Sacramento, and San Diego. Now with over 104 brokers in California,
Kidder Mathews has become the fastest growing brokerage firm in the Bay Area.
Kidder Mathews’ agents are seasoned professionals with an average of 18 years in
the industry, and offering expertise in all property types.
Kidder Mathews Overview
Mike NeilFirst Vice President 858.369.3069 | LIC #01271103 mneil@kiddermathews.com
kiddermathews.com
Contacts
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