Building in Downtown San Diego Facing Foreclosure

By Elias DaSilva | September 11, 2024.

The 24-story office tower at 600 B Street in downtown San Diego, owned by Rockwood Capital, is heading towards foreclosure as the property has an outstanding debt of over $83 million. This situation reflects a national crisis for downtown office spaces, exacerbated by ongoing closures during the pandemic and the rise of work-from-home or hybrid work models.

In June of this year, First American Title Insurance Company initiated the foreclosure process, which could lead to an auction or the property reverting to its lender, Western Alliance Bank.

Rockwood Capital has been delinquent on loan payments for over a year, and now has only 90 days to meet its obligations before a sale notice is published.

The 359,278-square-foot tower, built in 1974 and renovated in 2007, was purchased by Rockwood Capital in 2017 for $109.5 million. Payment default began on May 5, 2023. The building, which was once nearly 90% leased, now has 225,000 square feet available for lease, reflecting leasing issues.

The foreclosure process, which lasts more than 120 days, could end with the property in the hands of the lender if the auction does not succeed.

The leasing problem of the office tower owned by Rockwood Capital is just a small part of the issue facing the entire B Street in San Diego, as nearly 38% of office space in the area is available for lease. According to some experts, despite this, the suburban office markets in San Diego remain relatively healthy.

The foreclosure of 600 B Street may serve as a critical case study on the long-term impacts of changes in work models on urban office markets.