A 71,597-square-foot industrial property at 5965 and 5975 Santa Fe St. in San Diego has sold for $26.5 million, changing hands after being fully renovated and leased to a pair of defense-technology tenants. The buyer, Sukut Real Properties, picked up the fully occupied 5&52 Business Park from its prior owners in a deal brokered by commercial real estate giant CBRE.
San Diego-based Parallel Capital Partners and Boston-based Long Wharf Capital were the sellers, according to Connect CRE. CBRE's Hunter Rowe, Matt Carlson, Mike Longo and Matt Pourcho represented the sellers in the transaction. Parallel Capital acquired the property completely vacant in November 2024 before it underwent a full renovation.
That renovation included new roofs, skylights, LED lighting, HVAC systems, modern office buildouts, warehouse upgrades, exterior improvements, and electrical and plumbing work, per the same outlet's reporting. Once the upgrades were complete, the park was fully leased to two tenants: autonomous boat maker Seasats and software firm Applied Intuition.
Defense Tenants Driving Investor Interest
Hunter Rowe, a CBRE senior vice president, said the sale reflected an opportunity to acquire a fully leased and repositioned coastal industrial asset. He pointed to a broader shift reshaping San Diego's industrial market: investors increasingly chasing properties tied to the region's defense sector. “Investors are focused on assets where next-generation defense technology tenants are driving innovation and growth,” Rowe said, according to Connect CRE's report.
That framing lines up with what a San Diego Regional Economic Development Corporation report found last month. The region ranks 10th nationally in overall defense contract spending but first in autonomous systems, according to KPBS. The Pentagon spends roughly $1.5 billion on autonomous and unmanned systems contracts in San Diego, and the defense industry as a whole makes up about 20% of the region's economy, the outlet reported.
One of the park's own tenants illustrates that pipeline. Seasats opened a new San Diego headquarters last month to ramp up production of autonomous boats ordered by the Pentagon, according to The San Diego Union-Tribune. The company received $2.5 million for a program called Operation River Wall, with the potential to be awarded up to $15.5 million, and the Pentagon has announced plans to expand the Lightfish fleet of test vessels from 10 to 50, the Union-Tribune reported.
A Quick Turnaround Since 2024
The sale caps a fast transformation for the property. Parallel Capital paid the San Diego Association of Governments $14.5 million for the two-building, roughly 72,000-square-foot site in November 2024, according to Commercial Observer. Exactly two years later, the fully renovated and leased park sold for nearly double that price.
Mixed Signals in San Diego's Industrial Market
Kidder Mathews reported that San Diego industrial direct net absorption turned positive at 205,737 square feet in the third quarter, reversing a negative 272,100-square-foot showing the prior quarter, according to the firm's San Diego Industrial Market Report. That same report put total vacancy at 7.2%, down 20 basis points quarter over quarter, with availability at 11.1% and average direct asking rent holding steady at $1.47 per square foot per month on a triple-net basis.
Cushman & Wakefield's numbers tell a somewhat different story. The firm's MarketBeat San Diego Industrial report put vacancy, including sublease space, at 7.6% in the third quarter, up 40 basis points quarter over quarter and 20 basis points year over year, with leasing activity down 22% from the prior quarter to 1.6 million square feet — still above the five-year quarterly average of 1.3 million square feet. The firm also reported average asking rent across all product types at $1.45 per square foot per month, up slightly from the prior quarter but down 2.3% year over year.
The two firms also diverge sharply on investment volume for the quarter. Kidder Mathews reported $430.7 million in industrial investment sales across 51 transactions totaling 1.8 million square feet, citing the $45 million sale of Carlsbad Research Center and the $31 million sale of 901 Bay Marina Drive in National City as notable deals. Cushman & Wakefield, meanwhile, reported total investment volume of just $241 million, down 34% quarter over quarter and 9% year over year, with average sale prices falling to $234 per square foot. The two reports do not reconcile the gap between their figures.
