Sony Electronics sells Rancho Bernardo headquarters for $67.4M

A big-money investor has reentered the San Diego market with the purchase of a brand-name technology campus.

Tuesday, Sony Electronics Inc. sold its San Diego campus at 16535 Via Esprillo in Rancho Bernardo for $67.4 million to an entity affiliated with Irvine-based real estate investment and management company LBA Properties, property records show. The electronics company spent $150 million to build the property, which was completed in 2009, according to news reports.

A press release issued by CBRE, the seller’s representative, did not identify Sony by name. But the electronics maker is identified by name in a sales brochure and the grant deed. The Sony name is also highly visible, emblazoned on the 11-story tower that stands taller than its neighbors in the North County office enclave.

With the sale, the seller will lease back an undisclosed portion of the building, said Matt Carlson, an executive at CBRE.

“This is a pretty monumental deal in this (real estate) cycle for San Diego, for a couple of reasons,” Carlson said. “The technology company built this building for themselves, and it’s never been on the market. It’s never been available for other tenants to lease. It’s an incredibly well-built, well-amenitized, beautiful asset.”

What’s more, most office towers, particularly in downtown San Diego, are trading at depressed prices to high-net worth buyers, he said.

“This is the first larger size transaction in San Diego where we saw institutional capital come to bid on the deal,” Carlson said, adding that CBRE received 18 bids on the property. “(The prospective buyers were) institutional capital that wanted institutional quality real estate, that believe in the Rancho Bernardo submarket.”

Institutional capital includes pension funds, insurance companies, private equity firms and large investment managers. The large-scale institutions have substantially retreated from the local office market in recent years while high-net worth buyers have picked up underwater high-rises for pennies on the dollars.

Completed in 2009, the Sony Electronics headquarters, referred to as Innovation Centre in marketing materials, includes the 11-story tower with 461,000 square feet of office space on a 7.9-acre site at Via Del Campo and Via Esprillo. The 180-foot-tall building includes an 11th floor terrace offering ocean views and a commercial kitchen. There is also a fitness center with outdoor courts, garden areas and 1,507 parking spaces spread across an underground garage and a six-story structure.

The location is a neighbor to Apple’s 67-acre Rancho Vista Corporate Center campus on West Bernardo Drive, which the iPhone maker acquired for $445 million in 2022.

A subsidiary of Sony Corporation of America and an affiliate of Sony Group Corporation, Sony Electronics moved its headquarters from Park Ridge, N.J., to San Diego in 2004. The division specializes in audio/video electronics and information technology products for consumers and professionals, with operations that span research and development, engineering, sales, marketing, distribution and customer service.

The technology company’s future local plans are unclear. Given the leaseback, it appears as if the electronics maker is, for the time being, staying put but leasing less space. The seller, through its broker, declined to comment for this story.

LBA Properties owns 12 office properties — split between Northern and Southern California — with a total of 7 million square feet of space, according to information on its website.

“They’re a prolific owner, developer and buyer of real estate. They have multiple partners that live here in San Diego,” Carlson said. “If you look historically at them as a buyer, they’ve owned a lot of office in San Diego over the years, but they haven’t owned office (here) in a long time.”

LBA Properties financed the Sony headquarters transaction. The firm took out a loan with a maximum principal sum of $81.5 million from an entity affiliated with Blue Owl Real Estate Capital LLC, according to the property’s deed of trust recorded with the county. The amount implies that the real estate firm is using the loan as a line of credit or reserving a portion of the funds for future investment.

CBRE’s Matt Carlson, Hunter Rowe, Darren Morgan and Erik Bridy advised the seller. CBRE’s Scott Peterson, Dave Milestone and Michael Kolcum arranged the financing.