San Diego Building Goes From Vaults to Vets
- Mar 28, 2019
Voit Real Estate Services has arranged a new 20-year, $148 million lease at an approximately 100,000-square-foot former Bank of America vault facility in San Diego, which will undergo a transformation into a Veterans Administration outpatient clinic.
The deal is reportedly one of the largest medical-related leases in San Diego history. Senior Vice Presidents Brandon Keith and Kipp Gstettenbauer brokered the lease on behalf of the owner, Protea Properties.
At its peak operation under Bank of America, the facility situated on 7.7 acres at 8875 Aero Drive guarded up to $1 billion in cash at a time. The site is adjacent to Montgomery-Gibbs Executive Airport and across a parking lot from a 36,000-square-foot office building also owned by Protea.
“The property is built like a bunker, complete with bulletproof guard tower, bulletproof interior holding rooms—which were once used to unload cash from armored trucks—and of course, highly secure money vaults,” Keith said in a prepared statement.
The new outpatient clinic will let the VA increase its primary care, mental health and specialty care services to veterans. The property will be expanded by about 40,000 square feet, with significant interior and exterior upgrades as well as a new multi-level parking structure. Information from Protea indicates that this will be about a $70 million project.
The building’s exterior walls are unusually thick and the foundation is strong enough to support the addition of the extra space, a Voit spokesperson told Commercial Property Executive. The adaptive reuse of the facility will require substantial demolition because of the interior concrete vaults, holding pens and secure rooms, she added.
The facility has a rather complex history. Voit was retained to manage the property’s sale or lease while it was in receivership in early 2015, several years after Bank of America had vacated the property. As a master servicer on behalf of CMBS debt, CW Capital Asset Management acquired the property in 2016.
Meanwhile, in May 2015, Voit had learned of a requirement by the VA for an outpatient clinic. Protea, which reportedly was willing to buy the property without any guarantee that the VA lease would materialize, acquired the facility in 2017 for $18.5 million.
Active medical market
The property is in the city’s Kearny Mesa submarket, which currently is home to Sharp Memorial Hospital, Rady Children’s Hospital and the new $900 million Kaiser Permanente hospital at Clairemont Mesa Boulevard and Ruffin Road.
In addition, a new Kaiser medical office broke ground in January adjacent to an existing Kaiser facility on Convoy Court. Last August, Vista Investment Group acquired Seville Plaza, a three-building medical office campus also in Kearny Mesa, for $27.5 million in an off-market sale brokered by HFF.
Countywide, medical office vacancy in San Diego is being strengthened by a proliferation of urgent care facilities and similar clinics, according to a 2018 report from JLL. Direct vacancy is 6.9 percent, with asking rents climbing slightly.
Image courtesy of Voit Real Estate Services