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Tuesday, Mar 19, 2024
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Commercial Market Comes Olen’s Way

Newport Beach-based Olen Properties Corp. has snapped up a Santa Ana business park for $24.5 million and has its eyes open for other local deals.

The real estate owner and developer, Orange County’s second-largest commercial property owner, recently closed on the buy of McFadden Centre, an 184,737-square-foot business park just off the Costa Mesa (55) Freeway along McFadden Avenue.

The 11-building complex, which is about 88% leased, sold for about $133 per square foot. It’s one of the larger multi-tenant business parks to trade hands in the area over the past few years.

It’s the second notable local business park acquisition in the past few months for Olen. The company paid a reported $18.8 million for the nine-building Mission Viejo Commerce Park, a 146,000-square-foot property in Mission Viejo, a few months ago. That deal ranked as the county’s priciest industrial sale in the fourth quarter of 2011, according to Washington, D.C.-based market tracker CoStar Group Inc.

7 Million SF

Olen now owns more than 7 million square feet of office and industrial space, much of it in OC, and is believed to be the biggest office landlord here besides Newport Beach-based Irvine Company.

A large portion of its office portfolio is made up of low- and midrise business parks, along with similar to its latest two purchases, along with a few higher-profile towers and office campuses. The Santa Ana and Mission Viejo deals are more a reflection of changes in pricing for area buildings, rather than any changes to Olen’s acquisition strategy, according to Igor Olenicoff, Olen’s president and owner, whose company hasn’t made too many headline-making purchases here the past few years

“[It] is not that we are becoming any more active buyers,” Olenicoff said in an email. “It is just that we are finding that there are more deals around that make sense financially.”

Olenicoff said Olen Properties first tried to buy McFadden Centre almost a year ago but failed to come to terms with the sellers—Laguna Hills-based Muller Co., which had owned the business park since the 1990s.

Eventually the company was “able to come to terms with the seller by coming up some and the seller entity coming down in price,” he said.

McFadden Centre holds 76 flex and industrial units that average a little under 2,000 square feet, with the largest tenants running around 9,000 square feet. Monthly rents at the business park run between 95 cents and $1.15 per square foot, according to Olen’s website.

The complex also has a 21-unit retail building, as well as two buildings that hold fast food restaurants.

The smaller tenant configuration and amount of short-term leases at the complex provide “an exceptional inflation hedge,” said Ryan Gallagher, senior managing director for the Irvine office of brokerage Holliday Fenoglio Fowler L.P., which represented Muller Co. in the sale.

The business park counts a replacement cost of about $200 per square foot, according to HFF’s marketing materials.

Gallagher also helped sell the Saddleback Business Park, a 388,224-square-foot industrial complex in Laguna Hills that traded hands for $62 million in mid-2009. The McFadden Centre sale is among the most expensive business parks in OC to sell since then.

“You don’t see them traded too often,” said Gallagher, who worked with colleague CJ Osbrink on the deal. Steven Hogberg, Matt Hammond, and Tim Muller with the Coreland Cos. were the local leasing representatives on the transaction.

Olen’s hoping for a few more deals— business parks as well as other properties—to hit the market this year and next, according to Olenicoff.

“We feel that there will be more deals coming to the market in the next two years as there [are] a whole lot of [commercial mortgage-backed security] loans in Orange County real estate coming due through 2015,” said Olenicoff, one of OC’s wealthier real estate owners. “Many of the projects will be impossible to refinance at the levels they are currently financed at, so we are hoping that we can take advantage of such opportunities.”

Olen Parkcenter

Olen also is making more noise on the development front these days.

It is ramping up leasing at the recently built Olen Parkcenter Plaza, a roughly 30,000-square-foot multi-tenant office project in Santa Ana.

The company also is in the early stages of seeking city approval for a 27,000-square-foot mixed-use project that could go up in San Clemente, next to the old city hall building there.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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