Embassy Suites La Jolla Sells for $111M: 48% Discount Signals Shift

Transaction Details: From $215.6M to $111M

BioMed Realty purchased the property from Sunstone Hotel Investors in December 2021 for $215.6 million during post-pandemic optimism. Four years later, it sold for 52% of that price. Built in 1987 and renovated in 2018, the property features 340 all-suite rooms around an open-air atrium, restaurant/lounge, fitness center, indoor pool, 354 parking spaces, and 4,316 square feet of meeting space.

JLL's Hotels & Hospitality Group represented the seller, with Senior Managing Director Tony Muscio noting the property "represents an exceptional opportunity to acquire an institutional-quality, all-suite hotel" in a statement announcing the transaction.

What This Means for San Diego Cash Buyers

The Embassy Suites sale signals broader distressed commercial real estate opportunities. CoStar tracks 14 San Diego hotels with loans maturing by year-end 2026, with eight already in special servicing or on watchlists. Downtown office vacancy sits at 24.6%, with landmark towers selling at one-third of 2005 prices.

Meanwhile, La Jolla residential maintains strength with $2.4 million median prices (up 6.3% year-over-year) and 78% cash transactions. This disconnect creates opportunities for cash buyers to acquire distressed commercial assets below replacement cost for potential residential conversion in supply-constrained UTC/La Jolla submarkets where major employers drive housing demand.

Key Opportunity Indicators

• 14 San Diego hotels face loan maturities by December 2026
• Downtown office vacancy at 24.6% creates conversion candidates
• La Jolla residential median $2.4M, up 6.3% year-over-year
• 78% cash transaction rate in La Jolla luxury market
• UTC employment base from Illumina, Apple, LPL Financial, UC San Diego

The valuation gap between distressed commercial assets (selling 50-75% below replacement cost) and resilient residential values in the same submarkets suggests strategic acquisition opportunities for investors with capital, patience, and expertise navigating adaptive reuse zoning and entitlements.

Frequently Asked Questions

The Broader Commercial Real Estate Picture

The Embassy Suites La Jolla transaction represents more than a single distressed hotel sale—it signals a fundamental repricing of commercial real estate assets across San Diego County. With 14 hotels facing loan maturities, downtown office towers trading at historic discounts, and residential values maintaining strength in supply-constrained submarkets, the stage is set for significant repositioning activity throughout 2026.

For cash buyers with the expertise to navigate adaptive reuse entitlements, the current market presents rare opportunities to acquire institutional-quality commercial assets at 50-75% below replacement cost in locations where residential demand remains robust. The key is identifying properties in submarkets with strong employment bases, limited residential supply, and favorable zoning environments for conversion.

Whether you're selling residential property in La Jolla, UTC, or surrounding areas, understanding these commercial real estate dynamics provides context for the broader market forces shaping San Diego's real estate landscape in 2026. Cash buyers with strategic vision are positioning themselves to capitalize on the valuation disconnect between distressed commercial assets and resilient residential demand.