SAN DIEGO – CAST Capital Partners, based in Banker’s Hill, has bought a University City office building for $11 million with plans to convert it into for-sale office condominiums, targeting medical practitioners.
“Our plan is to do professional office suites there and sell them off to individuals,” said Bret Morris, managing partner of CAST.
Managing Partner
CAST Capital Partners
“They can write off the depreciation, the interest. The business owner can pay themselves rent instead of paying a landlord,” Morris said. “They can continue to build net worth as opposed to paying rent, and there’s some really attractive financing for small businesses through the SBA (Small Business Association) and some banks have special programs for well-qualified, medical office owners.”
The 50,000-square-foot building at 5080-5090 Shoreham Place is in a business park, Governor Park, that had been zoned for traditional office use, Morris said.
He said that CAST is hoping to attract a mix of 50% to 75% medical practitioners with the rest going for conventional office users.
“I think there’s really high demand for this, especially in the Governor Park, UTC area,” Morris said.
Office suites that will be converted to for-sale condo units range from 700 square feet to 5,000 square feet, Morris said.
The building is 96% occupied, and Morris said that tenants will have the option to buy their offices when their leases expire.
“We would certainly entertain offers from the same tenants,” Morris said.
CAST plans to spend about $3 million on renovations, most of which will be cosmetic, according to Morris.
“We’ll kind of spruce up the bathrooms and common areas and paint. Nothing structural is going to change.
Strong Demand for Medical
Medical office space is hard to come by in San Diego County because of zoning restrictions, but the Governor Park property was recently rezoned as part of changes to the University City general plan, Morris said.
Prior to the rezoning, Morris said there were few opportunities in University City.
According to JLL, a commercial real estate brokerage, the vacancy rate for medical office space in San Diego County at the end of the second quarter of 2024 was 6.6% – substantially below the 13.7% vacancy that JLL reported for general office space and slightly below what it was in the first quarter of the year.
Healthcare, education and government have been the primary sources of office demand in recent months, according to JLL.
San Diego County’s overall office vacancy rate is one of the lowest in the nation, according to JLL, but the outlook is for demand for conventional office space to remain sluggish with suburban markets performing far better than the urban market, which JLL said had a vacancy rate of 25.1%.
Parking is often a major issue in finding space for medical office tenants, but Morris said there’s ample parking in the office park and on surrounding streets.
Despite the overall weak demand for office space, Morris said he’s confident that demand will pick up.
“I think that people are going to be coming back to the office, and for small offices, it makes a lot of sense to look into buying their office space,” Morris said. “I think you’ll start to see office fill up again.
CAST Capital Partners
HEADQUARTERS: Bankers Hill and Las Vegas
FOUNDED: 2022
MANAGING PARTNER: Bret Morris
BUSINESS: commercial real estate investment
EMPLOYEES: 22
WEBSITE: www.cast-cap.com
CONTACT: 619-308-6680
NOTABLE: CAST has more than 500,000 square feet of commercial property under Management
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