Hines Expands San Diego Presence With Purchase of Four Office Buildings in Historic Complex

Lou Hirsh

January 7, 2022

Global Investor Buys Properties at Liberty Station Mixed-Use Development, a Former Navy Training Base

An investment fund of prominent developer Hines has expanded the company’s San Diego footprint with the purchase of four office buildings at the historic mixed-use Liberty Station complex.

Houston-based Hines announced that its Global Income Trust investment fund acquired four buildings totaling 187,000 square feet in San Diego’s high-traffic Point Loma neighborhood for an undisclosed price.

The buildings are part of a larger, 360-acre mixed-use campus that served as a U.S. Navy training base from the 1920s through the 1990s and now includes commercial offices, hotels, stores, restaurants, a skating rink and other public spaces. Several elements make use of repurposed barracks and offices dating to the former military property’s early days.

A Hines spokeswoman said the purchase involved only the four office buildings, which were constructed between 2003 and 2006 at 2280, 2468 and 2488 Historic Decatur Road and 2750 Womble Road. CoStar and public data show the sellers were investors Lionstone Partners of Houston and IDS Real Estate Group of Los Angeles, which purchased the buildings in January 2019 for $76.8 million, or approximately $418 per square foot.

The Navy turned the property over to the city in the late 1990s, and the city reached an agreement in the early 2000s for local developer McMillin Cos. to master-plan future commercial development of the campus. Several developers have since built hotels, offices, a public marketplace and other retail spaces at the campus, where tenants include Stone Brewing Co. and grocers Vons and Trader Joe's.

Hines managing director Eric Hepfer said in a statement the company was attracted to “this niche office product in an urban, mixed-use community” within walking distance of eateries, stores and entertainment. The office buildings are 93% leased in a complex near downtown San Diego and San Diego International Airport.

Omar Thowfeek, Hines’ global managing director of investments, said the regional presence of government contractors and tech companies makes the offices “a strong long-term investment” for Hines’ global portfolio.

The investment comes as Point Loma, a peninsula north of downtown, has significant redevelopment projects in the works, involving properties including the San Diego Sports Arena in the Midway District and a U.S. Navy tech research campus in Old Town.

Point Loma has generally older office buildings with rents that are lower than other areas of central San Diego. The neighborhood’s office investments in the past year totaled $20.5 million, more than doubling the prior-year figure, according to CoStar data as of Jan. 27. “Investment activity tends to be relatively modest, with a typical year posting around $10 million in volume, and primarily involves private local parties,” according to a report from CoStar Market Analytics.

Hines is among the nation’s largest commercial real estate owners, with office, industrial and mixed-use holdings spanning more than 150 million square feet worldwide and another 39 million square feet of offices in various development stages in multiple U.S. cities. Its major San Diego projects include a $3 billion mixed-use redevelopment of the former Riverwalk golf course in Mission Valley, currently under construction.