A San Diego owner-user is testing investor appetite for single-tenant office by offering a fully occupied ±55,196-square-foot building in Mission Valley at $14.96 million, pairing the sale with a decade-long leaseback that hands a buyer a credit tenant and a 7.75 percent initial return.
An institutional-quality office building in San Diego’s Mission Valley has hit the market at $14,956,000, structured as a sale-leaseback that delivers a new owner a fully occupied, net-leased asset backed by a credit tenant and a fresh 10-year commitment. CBRE is marketing the property at 5620-5660 Friars Road, where the seller intends to remain in place under a new long-term lease, converting owned real estate into deployable capital while the buyer secures durable, passive income.
The pricing pencils out to $271 per square foot across the 55,196-square-foot building, with a first-year net operating income of $1,159,116 producing the advertised 7.75 percent going-in cap rate. The asset is offered on a 100 percent net-leased basis, meaning the tenant carries the taxes, insurance and maintenance obligations that erode returns on gross-leased office, and the structure removes the leasing risk that has punished the sector nationally. For a buyer, the appeal is straightforward: a single credit tenant, a new 10-year term and no near-term rollover exposure in a market where re-tenanting vacant office space has become expensive and slow.
That structure matters because the broader office capital markets remain selective. Single-tenant office traded at a 7.23 percent average cap rate in the first quarter of 2026, according to Northmarq and Real Capital Analytics, with the sector logging $2.5 billion in quarterly sales volume, down 21.9 percent from the prior quarter and 20.1 percent year over year. Cap rates for net-leased office held at 7.90 percent in the second quarter of 2026, unchanged from the prior period, according to The Boulder Group’s quarterly net lease research report. Against those benchmarks, the Friars Road offering is priced to move, sitting inside the Boulder Group office reading and slightly wide of the Northmarq national average, a spread that reflects both the depth of buyer scrutiny on office credit and the premium investors now demand for term and tenant quality.
The transaction also underscores why sale-leasebacks have gained traction as a financing tool. With commercial lending still constrained and debt costs elevated, owner-users are increasingly monetizing real estate they occupy rather than borrowing against it. A sale-leaseback can unlock 100 percent of a property’s value at a lower effective cost than conventional debt while keeping the occupier in place, an equation that has made the structure a preferred alternative to commercial loans for operating companies in 2026, according to Commercial Property Executive. For net-lease investors, those deals supply exactly the product the market prizes: existing occupancy, a motivated tenant with operational ties to the location and a lease crafted at closing.
Local fundamentals sharpen the case for a net-leased, single-tenant play over speculative office. San Diego’s office vacancy held at 13.4 percent in the second quarter of 2026, up 40 basis points year over year, while direct net absorption registered negative 171,946 square feet for the quarter, according to Kidder Mathews. Average asking rents stood at $3.15 per square foot on a full-service gross basis, up 1.6 percent from a year earlier, though performance varied widely by submarket, from $1.99 per square foot in Poway to $4.75 in Del Mar Heights and Carmel Valley. In a market still absorbing more space than tenants are taking down, a building that arrives fully leased with a committed occupant sidesteps the lease-up risk weighing on much of the region’s inventory.
Mission Valley itself remains one of San Diego’s most connected office and mixed-use corridors, bisected by Interstate 8 and Interstate 15 and anchored by the retail gravity of Fashion Valley and Mission Valley malls, trolley access and the redevelopment momentum around the former stadium site. That centrality gives a single-tenant asset on Friars Road a locational floor that peripheral submarkets lack, a factor net-lease buyers weigh heavily when underwriting long-term residual value.
The listing is being handled by CBRE’s Matt Pourcho, Anthony DeLorenzo and Nick Williams, with an offering memorandum and financials available through the deal’s document portal. Whether the property clears at its $14.96 million ask will signal how much investors are willing to pay for term and credit in a sector where those two attributes have become the price of entry. In a San Diego office market defined by rising vacancy and cautious capital, a fully leased, net-leased building priced near a 7.75 percent return is precisely the kind of asset positioned to draw the private and institutional buyers still writing checks for office.
