The upscale office market surrounding Fashion Island in Newport Beach, which has long seen Orange County’s highest rents, has gotten national attention for its prices.
Newport Center Drive ranks as the 9th most-expensive street for office tenants in the U.S., and the 12th most-expensive in North America, according to a report this month from Chicago-based brokerage Jones Lang LaSalle.
Newport Center Drive offices average monthly rents of about $4 per square foot, full-service gross, and some space can run to nearly $4.30 per square foot, according to Jones Lang LaSalle’s data.
At those rates, tenants on Newport Center Drive can expect to pay more than businesses leasing space along San Francisco’s California Street (No. 14), Chicago’s Wacker Drive (No. 17), and Miami’s Brickell Avenue (No. 22), among other prestigious North American locations, according to the report.
Prominent businesses that call Newport Center Drive home include Pacific Investment Management Co., law firm Stradling Yocca Carlson & Rauth and Pacific Life Insurance Co., which owns its headquarters building.
Newport Center Drive is the fourth-priciest street in California, trailing Sand Hill Road in Menlo Park, Silicon Valley’s University Avenue and Avenue of the Stars in Los Angeles.
Sand Hill Road is the most expensive street in North America, with monthly rents averaging close to $9.50 per square foot, and some topping $16 per square foot.
Monthly office rents in Orange County average about $1.92 per square foot, meaning Newport Center Drive tenants can expect to pay rents of about 108% more than your typical OC office renter.
Newport Center Drive is only one of four of the 40 high-end streets listed by Jones Lang LaSalle whose difference in rents from the market average exceeds 100%.
A bulk of the offices along Newport Center Drive is owned by Irvine Company, which also has its headquarters on the street.
Irvine Co. owns 12 office properties in Newport Center, and is in the early stages of building a new office tower that will be leased by mutual fund manager Pimco as its new headquarters.
Market watchers expect Pimco to pay rents that exceed, perhaps by a wide margin, the current $4.30 per-square-foot rate listed by Jones Lang LaSalle as the current high-water mark for Newport Center Drive.
Irvine Co. also has properties on two other streets listed in the report. It owns Fox Plaza, a 34-story tower on Avenue of the Stars, where monthly rents average about $4.90 per square foot. It’s the sixth most-expensive street in North America.
It also owns one skyscraper and reportedly is in talks to buy a stake in a second, on Chicago’s Wacker Drive, where monthly rents can run as high as $4.60 per square foot.
Shopping Center Sale
An affiliate of Irvine-based Thompson National Properties LLC is paying $21.8 million for a shopping center near Orlando, Fla.
The company’s TNP Strategic Retail Trust Inc. this month entered into a contract to buy Osceola Village, a 116,645-square-foot shopping center built three years ago in Kissimmee, Fla.
The deal works out to about $187 per square foot. The sale is expected to close this month.
Osceola Village is on a 23.7-acre site, and the shopping center is about 77% leased. Its main tenant is a Publix supermarket.
The capitalization rate for the deal was 6.2%, according to filings made by TNP Strategic Retail with the Securities and Exchange Commission.
Thompson National launched the nontraded fund in 2009. The fund invests in grocery- and drugstore-anchored shopping centers, and has raised more $40 million from investors since 2009.
Online Auction
Auction.com in Irvine, a commercial and residential real estate auctioneer, is kicking off a large online sale of distressed commercial properties and loans this week.
The company previously operated under the name of Real Estate Disposition LLC, or REDC.
This week’s sale will include more than 325 non-performing loans and bank-owned commercial properties in an auction scheduled to run through Oct. 6.
The sale includes apartments, mobile home parks, retail properties and more. The properties are largely located in Florida, Georgia and other parts of the Southeast, and once had a combined value of $2 billion, according to the company.
Starting bids range from $500 to $10.5 million. More information can be found on the company’s website.
