SAN DIEGO – A downtown office building, familiar to commuters because of its distinctive mural, has been sold for far less than its owner paid to buy andrenovate it.

Known as the Arte Building, the property sold for $7.85 million, said Nick Totah, senior vice president of investments with Marcus & Millichap in San Diego.

Expansive Gaslamp, a coworking company, sold the six-story building at 1111 Sixth Ave.
to a private investor, Salwan Komo, and will continue to use part of the building under a lease-back arrangement, said Ross Sanchez, a senior associate withMarcus & Millichap in San Diego.
“The coworking space is going to stay there for sure,” Komo said.
Sanchez said that Expansive had spent $14 million to buy and renovate the building.

“It has a lot of history in San Diego because of that mural,” Totah said.
Painted in 1989 by Kathleen King and Paul Naton, the mural resembles the front page of a newspaper with the headline “America’s Finest City” above the face of aman, with a hand holding a chisel on one side and a hand holding a paint brush on another as a way to emphasize the importance of art in a community.
The America’s Finest City slogan was coined when San Diego lost the 1972 Republican National Convention to Miami and Pete Wilson, who was mayor at the time,declared an “America’s Finest City Week” to promote local pride and make up for the loss.
Sanchez said the mural will stay.
Built in 1913, the building drew considerable interest, but its structure made it a bit of a tough sell, Sanchez said.

Tricky Conversion to Mixed-Use
The building has two solid brick walls with no windows and load-bearing columns spaced close together, which Totah said makes the building difficult to convertto apartments or a hotel, which some potential buyers considered.
“You just couldn’t fit enough units in the building because you’d have to start cutting holes in the walls, messing with the structural integrity of the building,”Totah said.

Despite the physical constraints, Komo said that he’s thinking about converting at least part of the vacant second floor of the building to a mix of residential andsmall business suites with a section possibly used for self-storage.
“We can get maybe 10 or 12 apartments,” Komo said. “In the middle where the columns are, maybe we could do a gym.”
Tenants that will remain include the Downtown San Diego Partnership Clean & Safe program and a Subway sandwich shop, and Open Heart Leaders charterschool, Ross said.

Komo is a big fan of downtown.
“It’s a growing downtown,” Komo said. “I see so many improvements downtown.”
While downtown may have a high vacancy rate for office space – 27.1% in the first quarter of 2024 according to Cushman & Wakefield – Komo said that the downturn is temporary.
“In a couple of years, downtown is going to be back to normal. The prices are going up,” Komo said. “San Diego is one of the great cities in the U.S.”

So too, Sanchez said that he and Totah are “big believers in downtown.”
“Downtown is going to be fine long term. It’s just going through kind of an identity crisis right now,” Sanchez said.

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