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Irvine Concourse Buy Points to Liftoff for Airport Area Offices

A New York City-based real estate investment firm has bought the 2030 Main St. office tower in Irvine, registering Orange County’s largest individual office sale of the year.

The Praedium Group LLC bought the 16-floor building—part of the 48-acre Irvine Concourse Corporate Center near John Wayne Airport—for a little more than $114 million, according to real estate sources.

That price works out to about $320 per square foot for the 355,360-square-foot office, which has Wells Fargo and a number of large law firms as tenants.

It’s the first stand-alone office in OC to sell for more than $100 million in more than a year.

The building was sold by an affiliate of the State Teachers Retirement System of Ohio, which bought it in 1998 for $88.5 million, according to brokerage data.

The purchase is the largest local deal for Praedium Group, a privately held investor formed in 1991 that historically has targeted underperforming and undervalued assets.

The company said it has completed more than 350 transactions, valued at $9.3 billion, since its inception.

The 2030 Main deal is believed to be one of the first for a new fund overseen by Praedium that intends to invest in higher-quality, well-performing assets in stronger markets across the country.

“Core Deal”

The Irvine deal fits the bill for the new fund, according to Kevin Shannon, vice chairman and managing director for Los Angeles-based brokerage CBRE Group Inc.

“This is a core deal for them, in a core submarket,” said Shannon, who marketed the tower for sale along with colleagues Bob Smith, Paul Jones, Sean Sullivan and Ken White.

Several years of improving occupancy rates amid the economic recovery have institutional investors expecting Orange County’s office market to start having a notable uptick in rents in the next few years.

The trend is expected to be particularly strong for better properties in the John Wayne Airport area—and investors are buying accordingly, according to Shannon.

Institutional investors—including AEW Capital Management LP, Cornerstone Real Estate Advisors Inc., Goldman Sachs Asset Management and Praedium—have spent close to $250 million on office projects in Irvine and South Orange County in the past two months.

“They’re forecasting strong rent growth, better than most markets in L.A.,” Shannon said.

Higher-end offices in the airport area now average vacancy rates of about 14%, and monthly rents of about $2.20 per square foot.

The 2030 Main building is about 90% occupied. Wells Fargo leases about 27% of the property and has its name atop the office.


Tenants

Other large tenants include a pair of law firms: Jackson DeMarco Tidus Peckenpaugh, which leases about 45,000 square feet, and Grant, Genovese & Baratta LLP, which occupies another 21,000 square feet. Accounting firm Moss Adams LLP leases nearly 28,000 square feet.

“It’s 16 stories, it has a great tenant roster and is part of the Irvine Concourse—it’s one of the best buildings in all Orange County,” said Jay Carnahan, president of Irvine-based brokerage Orion Property Partners Inc.

Orion partnered with Praedium for the investor’s last two reported purchases in OC—a $15 million office building in the Irvine Spectrum in 2007 and a $22 million purchase of a Laguna Hills office campus in 2005.

The 2030 Main purchase “was a really important deal for them; it was the best available building [in the county],” Carnahan said.

The building is one of four similarly designed towers at the Irvine Concourse office campus, which overlooks the San Diego (405) Freeway between Von Karman Avenue and MacArthur Boulevard.

Each of the buildings, which combine for about 1.2 million square feet of office space, has a different owner.

An affiliate of Parsippany, N.J.-based Prudential Real Estate Investors owns the 2020 Main office, and Knobbe Martens Olson & Bear LLP, OC’s largest law firm by lawyer count, owns the 2040 Main building.

The law firm occupies more than 40% of the 2040 Main building and leases out the remainder of the space.

An affiliate of Boston-based AEW Capital Management LP bought the newest of the four buildings, the 314,027-square-foot 2050 Main office tower, in late 2011 for $108.5 million. That deal was OC’s largest single-building office transaction in 2011.

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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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