Orange County Business Journal

County Eyes 3 Office Buildings in Santa Ana

REAL ESTATE: Largest tenant at two of the Birtcher properties Mark Mueller Sunday, September 2, 2012
200 W. Santa Ana: largest of three buildings OC is eyeing

200 W. Santa Ana: largest of three buildings OC is eyeing

The County of Orange is eyeing a trio of high-end buildings in downtown Santa Ana for a potential purchase that could be the largest property sale the city’s civic center office market has seen in several years.

The county is in negotiations with Laguna Niguel-based Birtcher Anderson Realty LLC over the purchase of a three-building office portfolio that totals about 384,000 square feet.

The largest of the buildings is Park Tower, a 10-story, 146,000-square-foot office at 200 W. Santa Ana Blvd., across the street from the Old Orange County Courthouse.

Other buildings the county is considering buying include 801 Civic Center Drive—a four-story, 124,500-square-foot office—and Transit Tower, a seven-story, 113,000-square foot office at 405 West Fifth St., across the street from the Ronald Reagan Federal Building.

The three buildings counts a number of county and federal government agencies as their primary tenants.

Terms of any potential sale, or a timeframe for a deal, have not been disclosed.

Negotiations with the county have been ongoing for several months, according to Birtcher Anderson, which paid $58 million for the three-building portfolio in 2004.

Executives at the company declined comment about the possible transaction; calls to county officials were not returned.

The three properties are among the highest-end office buildings in the Santa Ana’s civic center area not owned by local or federal government entities.

The county is the largest tenant in both the Park Tower and Transit Tower buildings, which are both largely full, according to brokerage data.

The Internal Revenue Service is the largest tenant in the four-story 801 Civic Center building, which CoStar records show as being about 60% occupied.

Monthly rents at the three buildings average about $1.75 per square foot, according to CoStar Group Inc. data.

Birtcher Anderson bought the three buildings in 2004 from Caribou Industries’ Mike Harrah, the largest private owner of buildings in Santa Ana.

The deal was seen as a way for Harrah to raise funding for his proposed One Broadway Plaza office tower, which is expected to be Orange County’s tallest building at 37 stories.

That Santa Ana project, which is expected to hold its share of government agencies as tenants, has yet to break ground.

14.7M-SF Market

Santa Ana’s office market runs about 14.7 million square feet, and counts an average monthly rent of about $1.62, according to mid-year data from Newport Beach–based brokerage Voit Real Estate.

Santa Ana has a vacancy rate of 14.2%, the lowest of any office market in Central Orange County, where office space totals 31 million square feet, according to Voit’s data.

A deal to buy the three offices, if completed, would be the second notable real estate transaction that the County of Orange has made in recent months.

The county in July selected Los Angeles-based Lowe Enterprises to help turn a 100-acre parcel of largely vacant land at the former El Toro Marine Corps Air Station in Irvine into a mixed-use project.

Lowe is expected to provide entitlement, pre-development and property management services for the site, which runs just east of the Santa Ana (I-5) Freeway, next to the Orange County Great Park (see related story, page 1).

The county-owned site has the potential for a variety of retail, hotel, office, apartment and other uses. A 15-acre portion off the land will hold the new site for the Wild Rivers Waterpark, which is relocating from the Irvine Spectrum.

Terms of the deal with Lowe Enterprises, including details of the scope of work and a contract with the master developer, still need to be negotiated.

The county is looking to maintain ownership of the land, and officials said earlier this year the county was leaning toward setting up a 99-year ground lease for the site.