Beleaguered Law School Downsizing, Relocating to Downtown San Diego Tower
Denver Firm Acquired Current Thomas Jefferson School Building for $75M
The financially troubled Thomas Jefferson School of Law is looking for a fresh start as it moves later this year into leased space at the 701 B St. office tower in downtown San Diego.
The pending transition comes after lenders took possession of the cutting-edge, $90 million East Village campus building (pictured, above) that the law school developed and occupied back in 2011. That building was acquired last month by a Denver-based firm for $75 million.
Since debuting in its much-heralded, eight-story campus building at 1155 Island Ave., the independent law school has faced rough waters, including losing the building to its lenders in 2014 amid financial difficulties spurred by plunging enrollments.
In November 2017, the law school was placed on probation by the American Bar Association, which contended that the school lacked sufficient financial resources to comply with ABA standards and was enrolling students not capable of eventually being certified for Bar admittance.
While not disclosing financial or other terms, Thomas Jefferson School of Law and its brokers at Cushman & Wakefield announced that the school would be moving this fall into 56,338 square feet of leased space on two full floors of the downtown office tower at 701 B St. That square footage represents about one-third of its current East Village footprint.
CoStar Group data indicates that the law school’s current 178,000-square-foot office building on Island Avenue was purchased in late May of this year for $75 million, by Denver-based Miller Global Properties LLC.
Miller Global acquired the East Village building from New York-based special services firm Solus Alternative Asset Management, after Thomas Jefferson School of Law agreed to turn the building over to its lenders in exchange for forgiveness of $63.8 million in unpaid loan debt.
To meet rising enrollment, which peaked at around 1,000 students by 2011, the law school had taken out approximately $127 million in bonds in 2008 to build the new East Village campus. Unable to meet debt payments as enrollment dropped in recent years, the school turned over ownership of the building among other moves to reduce its debt by a total of $87 million, including leasing the building back from the bond holders.
Miller Global officials could not immediately be reached for comment on potential future tenants, but the company has indicated it plans to convert the property into general office space.
The building also has a vacant ground-floor restaurant space, which formerly housed a food hall concept known as Bottega Americano, which closed in February after less than four years in business.
In a statement, the law school said its move to B Street is part of plans announced earlier this year, as the school seeks to right-size operations and re-allocate more resources to educational services, rather than debt or rent payments.
|Tenant: Thomas Jefferson School of Law|
Size: 56,338 SF
Address: 701 B. St.
Landlord: EMMES Realty Services of CA
Landlord Rep: Derek Hulse and Philip Roberts - Cushman & Wakefield
Tenant Rep: Tom van Betten and Casey Sterk - Cushman & Wakefield
As it seeks to emerge from ABA probation and boost educational offerings, the school will be re-allocating funds to provide new scholarship programs, and instituting smaller class sizes to provide more one-on-one interaction between students and faculty.
The 24-story B Street tower, built in 1982 and subsequently renovated several times, has been owned since 2014 by Emmes Group of Cos., with current large tenants including Merrill Lynch and the law firm Lewis Brisbois Bisgaard & Smith.