16950 Via Tazon
San Diego, CA 92127
Single Tenant Medical Office Building · Office Property For Sale

UC San Diego Health (UCSD Health) is a single-tenant medical office building, situated in an excellent location within the San Diego submarket of Rancho Bernardo. Featuring a CUP for medical uses, which is rare in Rancho Bernardo, this asset benefits from barriers to competition within the submarket and enhanced value due to the constrained supply of properties for health care services. Rancho Bernardo is a strategic location for the tenant and provides optimal demographics for health care services, given the central positioning within San Diego, major population counts, and a broad mixture of residents ranging from young families to retirees. This new location for UCSD Health opened in 2018 and expands the tenant’s coverage into the communities of Rancho Bernardo and surrounding areas of Black Mountain Ranch, Poway, Rancho Penasquitos, Carmel Mountain Ranch, 4S Ranch, and Sabre Springs, providing medical and surgical offices, urgent care, medicine, and physical therapy. The subject property has a new lease which commenced in September 2018 with The Regents of the University of California, which maintains an investment-grade credit rating of Aa2 from Moody’s Investors Service. As part of the new lease agreement, extensive capital and tenant improvements were designed and built to accommodate the specific needs of UCSD Health, totaling approximately $4.5 million. The lease provides for annual increases of 3%, providing attractive income growth throughout the term. This facility benefits from a central location in Rancho Bernardo with exceptional access to surrounding areas, with immediate proximity to Interstate 15. The property is surrounded by major national tenants, including Northrop Grumman, General Atomics, Sony, Broadcom, Petco (national headquarters), BAE Systems, Hewlett-Packard, Kaiser Permanente, Teradata, Orbital ATK, and more. The subject property was originally constructed in 2000 as a build-to-suit medical office for Sharp Rees-Stealy, which occupied the location for 17 years before relocating in order to accommodate a major expansion. During the short period of time between Sharp vacating the facility and the new lease being signed by UCSD Health, approvals were obtained to construct an additional 54,848 square foot office building on site with a 497-space parking garage. This development capability provides an opportunity for significant future value enhancement in the event that UCSD Health ever vacates the property. The University of California system also acquired a 7.05 acre parcel of vacant land in August 2018 that is immediately west of Interstate 15 and north of Bernardo Center Drive, approximately 2 miles south of the subject property. UCSD intends to develop a healthcare hub at this location in the future, with an unknown timeframe as to when the potential development would be initiated or completed. It is also unknown how this development would impact UCSD’s future plans and occupancy needs at the subject property.