Online retail and technology juggernaut Amazon has doubled its office footprint in the University City submarket with a 123,000 square-foot lease at The Collection at UTC.
The lease, which includes brand-new office space on the second and third floors of two buildings recently erected at the east end of the mall, was confirmed by researchers at real estate tracker CoStar. It is said to be the third largest lease in San Diego in the first three months of the year, behind leases signed by Neurocrine Biosciences and Bristol Myers Squibb.
“My theory is that Amazon is following Apple, because Apple is a big cloud client. Apple has leased over 1 million square feet in (University City). … It makes sense to add space so that they can take care of their client,” said Joshua Ohl, who is the local director of market analytics for CoStar.
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Amazon did not respond to a request for comment on the lease.
In University City, the e-commerce giant already leases around 130,000 square feet of office space at 10300 Campus Point Drive. Amazon also leases 181,000 square feet of office-friendly space at 16550 Via Esprillo in Rancho Bernardo, according to CoStar. It also operates more than 5 million square feet of distribution and warehouse centers in the county, with more facilities in the pipeline.
Amazon is taking up residence at The Collection at UTC, which opened in October of last year but has remained largely vacant. The firm is likely interested in the space for its Amazon Web Services division and could house around 800 workers at the new facility, Ohl said.
The mall space offers workers downtown-style amenities in a suburban environment, and colocates them alongside their high-tech peers.
“There are few places that can offer the same amenities. Just think about the freeway accessibility, the nice high-end apartment communities in the area — not to mention all the restaurants and retail right there,” Ohl said. “And you get the luxury of not being (downtown).”
The Collection at UTC is the phase-one reimagining of the former Sears parcel. The new development is a 226,200- square-foot, mixed-use center with a three-story north building and a two-story south building, separated by an open-air corridor. It is a joint venture from Seritage Growth Properties and Invesco Real Estate, which together own the 12-acre former Sears parcel that includes the new buildings, the surrounding parking lot and the shuttered auto center.
As lead developer, Seritage initially sought to create an eat-work-play environment as an extension of the already enlivened atmosphere at the attached retail center owned by Westfield. The vision continues to hold true to some extent, although it has morphed with Amazon anchoring the two-building development. The owner-developer previously had signed leases with boutique fitness operator Equinox, co-working brand Industrious and bowling-alley-eatery Pinstripes, but those have been scrapped.
Seritage is now moving forward with Amazon and a ground-floor-only retail approach that includes CB2, Blue Bottle Coffee, Pacific Catch and Madison Reed. The change in direction was made possible by a late 2021 amendment to the mall’s master planned development permit, which increased the allowable office square footage at the property.
Seritage did not respond to a request to comment on Amazon’s lease or its plans to redevelop the rest of its holdings at UTC.
A publicly traded real estate investment trust, Seritage was spun out of Sears in 2015 when it bought up the retailer’s stake in more than 250 brick-and-mortar storefronts for $2.7 billion. The firm is currently in the process of converting itself into a C Corporation for tax purposes. The company’s portfolio currently includes 162 properties and 19.2 million square feet of space, as of the end of 2021.
It is eyeing the larger redevelopment potential of the parking lot space it owns alongside The Collection. The firm is working to secure entitlements to turn 8.5 acres of parking-lot space into “potentially millions of additional square feet of life science, office and residential uses,” according to a March press release.
Amazon is paying $5.70 per square foot, plus expenses, according to the Seritage release, which referenced the lease but did not mention Amazon by name. The firm also noted that The Collection is 83 percent leased, with 39,000 square feet of retail space still available.
Sources:
https://www.inferse.com/67597/amazon-doubles-down-on-san-diego-office-space-with-lease-at-the-collection-at-utc-the-san-diego-union-tribune/