A multi-family housing developer has purchased an empty office building in one of San Diego’s key employment hubs with the expressed intent of creating hundreds of apartments in an area where there are none currently.
In late December, Dallas-based JPI bought the 3.65-acre site at 9444 Waples St. in Sorrento Mesa for $31 million from a top life science real estate developer, according to property records and regulatory filings.
The transaction paves the way for JPI to next year demolish the existing four-story office building and erect in its place a five- or six-story apartment complex with between 300 and 400 mostly market-rate units, the developer said.
“It’s a little bit pioneering, where we’re bringing multi-family (housing) into an area … where there is not a lot of residential,” said Seth Dorros, a JPI executive in charge of land purchases. “It’s a fantastic location from the standpoint of it being centrally located in San Diego. You’re close to the beaches, but also you’re close to employment.”
The Waples Street property, which faces Mira Mesa Boulevard, is composed of an 88,315-square-foot office building — constructed in 1986 and renovated in 2016 — and is surrounded by ample surface parking.
The property was previously owned by Alexandria Real Estate Equities. The publicly traded firm bought the property in 2021 for $23 million before later selling a 50% interest to a joint-venture partner.
Alexandria also owns and operates several other industrial and research buildings along Waples Street as part of its Pacific Technology Park. Prior to the sale, the prolific life science real estate developer had earmarked the 9444 Waples St. property for redevelopment.
In its most recent earnings call, Alexandria CEO Peter Moglia told investors that the firm was shedding properties that “no longer fit our core strategy.”
The firm prides itself on owning the best assets, co-located within mega campuses, in the best submarkets, and is in the process of selling off locations across the country that don’t match its formula. The company said it completed $1.1 billion of transactions in the last three months of 2024. San Diego’s life science market is also oversaturated, with vacancy rates reaching an all-time high last year.
JPI’s proposed change in use is a marked shift for the Sorrento Mesa market, which is west of Camino Santa Fe in the Mira Mesa Community Plan area, and currently home to tech and biotech giants such as Qualcomm and Dexcom. The area is primarily composed of a mix of lab and office buildings and warehouses, both new and old.
The recently adopted Mira Mesa Community Plan opened the door to housing in portions of Sorrento Mesa that have been newly designated as urban employment villages. The Waples Street land is, for instance, now zoned as employment mixed use, or EMX-1, which allows residential as a secondary use, and has a maximum floor area ratio of 3, meaning the project’s total floor area can be three times the size of the lot. The zone includes a building height limit of 120 feet.
JPI appears to be the first to latch on to the land-use change, testing the prospect of blending apartments into an area surrounded by jobs. The developer is hoping to appeal to well-paid workers who still might be priced out of nearby homes just east of Camino Santa Fe in Mira Mesa.
Other residential developers, Dorros said, are similarly looking at new housing opportunities made possible by the updated community plan.
“You’ve got a lot of multifamily groups, in addition to home builders and the like, that are looking at potentially bringing housing to the entire Mira Mesa community, not just the Sorrento Valley area,” he said.
JPI, which is in the early stages of planning, expects to start construction on the apartment project between April and June of next year, and is estimating between 30 and 36 months for construction. The project, as envisioned, includes an above-ground parking structure with the residential units wrapped around it. The developer declined to provide specifics on parking but said that it typically provides 1.5 spaces per unit in similar projects.
To date, the developer has submitted a preliminary review package to the city and has received comments suggesting the proposed project is in keeping with land-use restrictions and could be approved at the staff level, Dorros said.
Although most of the units will rent at market prices, JPI expects to set aside 10% of units for low-income families, as required by the city.
Founded in 1989, JPI exclusively builds apartment complexes in California and Texas, and typically sells its properties upon completion. In San Diego, the developer built and sold Jefferson Makers Quarter, which opened last year as The Wyatt Makers Quarter, at 1509 Broadway in East Village. It is also currently building the 295-unit Jefferson Oceanside project at 1999 S. Oceanside Blvd.
The firm’s purchase of the Waples Street property includes a provision, memorialized in the Grant Deed, that prevents the developer from building any life science space on the site. The “Life Sciences Restriction” runs with the land, meaning future owners are also subject to the covenant.
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