|Rare Long Term Lease with US Government
|Building Redeveloped in 2014
|5.5% Cap Rate
The National City Social Security Administration (SSA) Branch Office is a new 12,094 square foot office facility that is located in a dense, infill area within the San Diego MSA, presenting a rare opportunity to acquire a newly constructed asset with a long-term lease to an investment grade tenant.
This building was completely redeveloped in 2014 as a renovation-to-suit construction project for SSA, using three walls of an existing structure as part of a comprehensive rebuilding of the entire property that rendered almost every element of this asset brand new. The site was selected by GSA after many years of searching for a new location for the National City SSA branch office, allowing SSA to upgrade to a facility that meets current federal security standards and provides single-tenant occupancy. Relocating this SSA office was exceptionally difficult, as National City is very dense, with small lot sizes and effectively no undeveloped land available, creating high barriers to entry for a space of this size and that meets the required amount of on-site parking that is also within the designated distance from public transportation that the GSA mandates.
The property is leased to the U.S. Federal Government on a long-term basis via the General Services Administration (GSA), which commenced a new, first generation, 15-year lease term for this facility in April 2014, demonstrating the long-term commitment to this location. The lease is guaranteed by the United States of America, which has a credit rating of AAA from Moody’s Investor Services. The GSA has a long-standing reputation as a tenant with one of the highest possible renewal probabilities in the commercial real estate industry. Historical data published by the GSA regarding their portfolio of over 8,000 leases nationwide reflects a retention rate which typically exceeds 95%.
National City is a centrally-located and well-established submarket, situated approximately 5 miles south of downtown San Diego. This site is by the intersection of Highland Avenue and E 24th Street, which experiences strong traffic counts, and is strategically positioned between Interstate 5 to the west, Interstate 805 to the east, and Highway 54 to the south, providing ideal freeway accessibility.