High-net-worth buyer acquires downtown San Diego’s Procopio Tower

The new buyer of the 56-year-old Procopio Tower on B Street fits a pattern of high-net-worth individuals moving into the downtown San Diego market as larger organizations and real estate investment firms continue to exit or avoid the embattled region altogether.

Last week, JAJ Pacific Investment LLC purchased the 22-story office building at 525 B St. for $46 million from a limited liability company linked to LaSalle Investment Management, property records show. JAJ Pacific Investment is a newly formed entity affiliated with businessman Min Xia.

There is little publicly available info on Xia, who owns a home in Rancho Santa Fe. Last year, his limited liability company, Fair Ranch Xia LLC, purchased the downtown Los Angeles office skyscraper at 777 S. Figueroa St., according to public records and data from real estate tracker CoStar.

The buyer, through brokerage firm Newmark, declined to comment for this story.

“Over the last few years, we’ve seen Symphony Towers, 225 Broadway, 101 Broadway, 501 Broadway and soon One America Plaza, all go to high-net-worth individuals, or what we call family offices,” said Richard Gonor, an executive with real estate firm Jones Lang LaSalle who specializes in leasing and sales for downtown office properties. “These are all-cash buyers that are coming in that are attracted to the low basis. We haven’t seen the institutional buyers come back into this market yet.”

Built in 1969 and renovated in 2018, 525 B St. is better known as Procopio Tower, as the law firm is the building’s largest tenant and its name is emblazoned at the top of the building.

The office tower includes 457,434 square feet of rentable space, takes up 1.4 acres of land and has a six-story parking garage that generates $3 million a year in revenue, according to a marketing brochure prepared by the seller’s broker, CBRE. The brochure also touts panoramic bay and downtown views, as well as a contemplation garden on the 22nd floor.

The building was 55% leased at the time of its sale, with Procopio taking up 126,129 square feet of space, or 27.6% of the building, the brochure states.

Other tenants include California Bank & Trust, the federal government’s General Services Administration and Parsons Environment and Infrastructure. The city of San Diego currently leases 25,491 square feet of space, primarily in Suite 400 for its Public Utilities Department, after substantially downsizing its footprint in the building as part of a recent lease extension and amendment.

Procopio Tower’s previous owner, LaSalle, purchased the property in 2016 for $122 million. At the time, the investment management firm took out a $75 million loan from Wells Fargo Bank that was later increased to $95.3 million, property records show.

The deeply discounted sale price, at around $101 per square foot, is in keeping with the depressed values assigned to office buildings in the B Street corridor. The older properties are competing for a limited supply of tenants, which are showing a preference for newer buildings closer to the water.

Irvine Company’s September 2024 sale of Symphony Towers for $45.7 million, or $84 per square foot, and its sale of Wells Fargo Plaza for $40 million, or $80 per square, set the baseline market value for buildings on B Street. The November 2024 sale of 530 B St. for $27.5 million, at $110 per square foot, received a higher value because the buyer intends to convert vacant floors into residential units.

“The (Procopio Tower) sale just continues the string of properties that are turning over on B Street. They’re all pretty underperforming assets in terms of occupancy,” said Joshua Ohl, senior director of market analytics for CoStar. “As more of these properties sell, particularly at a low cost-per-square-foot basis, that provides the new ownership an opportunity to lower strike rents and an opportunity to gain occupancy.”

Currently, 36.2% of all office and lab space in the downtown market is available for rent, Ohl said. The percentage includes the unfinished Campus at Horton, which was foreclosed on in August by the project’s lender.

Gonor, the downtown office broker, said that more distressed office buildings sales are still to come.

“I expect we’ll see this trend continue over the next two to three years, as more properties come to market that are in similar situations,” he said. “For example, the Regent (Properties) portfolio is currently on the market downtown. That’s four office towers that are going through a disposition process.”

Regent Properties owns 1 Columbia Place, 701 B St., 2 Columbia Place, 707 Broadway and the 6th & A Parking Garage. The portfolio, acquired in 2021 for $420 million (at $281 per square foot), includes a combined total of 1.5 million square feet of office space.