Apple Boosts Growing San Diego Footprint with Big Campus Purchase

Lou Hirsh

July 27, 2022

IPhone Maker Buys Eight-Building Property in Deal Topping $400 Million

Computer giant Apple significantly boosted what was already a steadily growing San Diego footprint, acquiring an eight-building office campus in the city’s Rancho Bernardo neighborhood for an estimated price of about $445 million.

“We’ve been part of the community in San Diego for more than two decades and are thrilled to continue investing here as we expand our world-class teams,” Cupertino, California-based Apple said in a statement.

The approximate price for the 67-acre campus, known as Rancho Vista Corporate Center, is based on document tax filings this week with the San Diego County Recorder’s Office and would make it among the region’s largest office transactions of the past year. News of the deal was reported earlier by the San Diego Union-Tribune.

Apple traditionally has had a limited San Diego presence but has been ramping up in the area since 2018 with a series of office leasings in the city’s University Town Center and Rancho Bernardo neighborhoods. Next to Amazon, it has been among the most active of the major global technology firms expanding in San Diego over the past four years.

In this year’s second quarter, Apple signed two office leases totaling almost 150,000 square feet in Rancho Bernardo, including taking more than 95,000 square feet formerly occupied by defense contractor Northrop Grumman, according to CoStar and local brokerage data.

Since 2020, Apple has signed at least five new leases in Rancho Bernardo totaling nearly 600,000 square feet. That’s in addition to at least 750,000 square feet of leases in the city’s University Town Center neighborhood, the first of which was signed in late 2018.

San Diego was among several U.S. cities where Apple announced plans in April 2021 to invest $430 billion nationwide over the next five years in new work facilities. Apple has said it expects to employ more than 5,000 workers in San Diego by 2026. The iPhone maker did not immediately respond to requests from CoStar News for further comment on the recent acquisition.
Access to Workforce

While Apple has not specified the work being done locally, media reports have noted the work is focused largely on the company’s watches and wireless technologies geared to health monitoring. San Diego is home to numerous life science companies and is also the home base of wireless chip giant Qualcomm.
Ron Miller, senior vice president with brokerage Colliers International, said Rancho Bernardo has been on the radar screen of technology tenants, especially companies in the defense and aerospace industries, for several years.

Based on conversations with several tech companies now scouting San Diego, Miller said Apple’s choice of Rancho Bernardo, in northeastern San Diego, is largely focused on reaching workers who already reside in that area near Interstate 15. Housing and other costs in the area are relatively affordable compared with other neighborhoods.

“This is about being close to the workforce,” said Miller, who primarily represents office tenants but was not involved in the Apple deal. “They want to be near where their engineers and their other talent are already located.”

He noted tech tenants also want convenient access to local freeways, and Rancho Bernardo fits the bill on that count with nearby access to freeways connecting companies and their workers to downtown San Diego and local beach regions.

Joshua Ohl, director of market analytics for CoStar Group in San Diego, said Apple’s enlarged presence could spur other big tech companies to cluster in and near Rancho Bernardo, an area of northeastern San Diego where real estate costs are also generally lower than in other high-demand neighborhoods to the west. This is in addition to costing much less than other places where Apple does business, including San Francisco and its home base of Silicon Valley.

“I’m not certain if Apple will keep leasing space, but I would guess that they might use this as a central hub for their San Diego footprint — along with their new construction in UTC,” Ohl said. “The site looks to have developable land that they could build on to firm up their footprint there.”

CoStar data shows Rancho Vista Corporate Center was built in 1976 and served for several years as a regional campus for computer and printer maker Hewlett Packard, which left the site several years ago. The campus was purchased in 2016 by investment firm Swift Real Estate Partners of San Francisco for approximately $69 million and renovated in 2018.

Miller said he’s anticipating Apple to invest significantly in a renovation of the Rancho Bernardo campus, even at a time when many companies are rethinking their on-site work priorities after more than two years of pandemic adjustments for working at home.

And unlike other tech giants that have tended to blend in with the local real estate scenery in past decades, such as Amazon and Google, he expects that Apple will make a San Diego design statement along the lines of its newly built circular headquarters in Cupertino.

“Apple always looks to be cutting edge with their amenities and their building designs,” Miller said. “They will want to design a workspace where their workers won’t ever want to leave."