Q1 2026 Case Study: Value-Add Execution at Sorrento Commerce Park

Get an exclusive look into BKM's impressive property transformation at this 35K SF asset in San Diego, CA.

Situated in San Diego’s highly sought-after Sorrento Mesa submarket, Sorrento Commerce Park is a 35,294-square-foot multi-tenant light industrial property located within one of Southern California’s most supply-constrained industrial corridors.
Sorrento Commerce Park benefits from direct access to Mira Mesa Boulevard—one of the area’s primary east–west corridors connecting Interstate 805 and Interstate 15—providing convenient connectivity throughout the greater San Diego region.
Prior ownership operated under a cash-flow strategy that limited reinvestment and modernization. Even so, it demonstrated strong historical performance, reinforcing Sorrento Mesa’s favorable market fundamentals.

Aesthetic Appeal:

Excellent location in the Sorrento Mesa submarket positions the asset at the heart of San Diego’s robust advanced manufacturing and technology-centric industries.
Frontage on Mira Mesa Blvd and proximity to both I-805 and I-15 deliver exceptional visibility across major regional passageways.
Targeted improvements would enhance the asset’s highly functional layout to deliver a top performing asset unique to the submarket.

Financial Appeal:

The purchase increases capital exposure in one of the nation’s top performing industrial markets by over 13%, creating sustained value in BKM’s portfolio.
High historical occupancy provides opportunity to drive high in-place yield and steady on-going cash flow throughout the hold.
The asset presents a mark-to-market increase of 39%, as 64% of NRA was planned to expire over the hold.

The Sorrento Mesa boasts a highly educated workforce and is home to a largely affluent population, supported by major industries such as tech, healthcare, and finance.
San Diego’s proximity to the U.S.–Mexico border, combined with its role as a major tourism destination, supports long-term regional economic activity and cross-border logistics demand.
The submarket has had 0 industrial deliveries under 200K SF in the past 10 years, eliminating supply-side pressures for small- and mid-bay product.
Leasing activity has reignited in the submarket following periods of inactivity, reaching 189,752 SF for the past 12 months—the highest volume seen in two years.
Leases for spaces under 10K SF dominate total leasing in the greater San Diego region, capturing 80% of total leases signed in 2025—the highest share in over five years.

The park provided a diverse array of tenant industries at acquisition, varying across 7 different sectors. Even in a smaller park, no tenant or industry takes up more than 30% of NRA, reducing exposure to credit risk.

Total CapEx: $1.02M improvement program focused on enhancing functionality, tenant experience, and long-term asset performance.
Tenant Improvements: $611K in tenant improvements plus $105K in speculative TIs to modernize suites with polished concrete landings, carpet tiles, accent walls, and exposed hard-duct HVAC.
Building Systems: $143K invested in HVAC replacements and $25K in parking lot improvements to address deferred maintenance and support operational reliability.
Cosmetic Upgrades: $140K allocated to exterior paint, signage, landscaping, and building addressing to enhance visibility along Mira Mesa Boulevard and strengthen the property’s identity.

90% increase in NOI between 2019 when the property became fully operational and at sale in early 2023, exceeding underwriting for the last 8 quarters of operations.
Average occupancy of 91% during the hold period, exiting at 100% occupancy.
30% average annual mark-to-market increases on lease expirations between 2019 and Q1 2023.
94% increase in in-place rents between acquisition and disposition, with average in-place rents of $0.83/ft in 2019, and $1.80/ft in Q1 of 2023.
Mark-to-market potential at disposition was just 8.3%, down from 39% at acquisition, reflecting BKM’s success in bringing leases to market over the hold period.
90% of the total suites at the property were rolled during the hold, representing 10 lease transactions.
Executed 21,627 square feet of rollovers across 7 suites since acquisition, which equates to about 61% of NRA. Total number of units was brought up to 11 from 9 at acquisition.
Realized a 122% increase in value at sale, with a sale price of $14,250,000 in March of 2023.