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Harbor Associates Ramps Up OC Acquisition Push

A startup investment and development group based in Long Beach that focuses on creative-office conversion projects has made its largest investment yet in Orange County, for a three-building property in Tustin.

Harbor Associates LLC, which kicked off operations last year, this month completed the purchase of Tustin Commons, a 210,875-square-foot collection of office and flex buildings just south of the Santa Ana (I-5) Freeway, about a block away from Jamboree Road.

The buildings traded hands for a little more than $30 million, according to Paul Miszkowicz, one of three principals at Harbor Associates, which bought the property in a venture with Stockbridge Capital Group of San Francisco.

An undisclosed institutional investor based in Germany sold the buildings for close to $154 per square foot.

The properties previously held the regional headquarters of aviation electronics maker Rockwell Collins Inc., which used them to make in-flight entertainment, cabin electronics and other electromechanical systems.

Rockwell Collins relocated its local operations to an office complex a few miles away in Irvine earlier this year.

Miszkowicz said his company—which bought another nearby Tustin building last year—approached the sellers about a deal when they saw Rockwell Collins moving out of the facility.

The off-market transaction was brokered by John Collins and Gary McArdell of Lee & Associates Newport Beach, while Greg Brown, John Chun and Jamie Kline of HFF arranged the financing for the deal.

It’s the fifth acquisition in the past 14 months for Harbor Associates and is the fourth in Orange County for the firm, which is backed in part by Irvine-based Bascom Group LLC, a private-equity firm and real estate investor best known for its large apartment portfolio.

Harbor Associates also has bought smaller buildings in Lake Forest and the Irvine Spectrum with an eye on converting them into creative-office projects. Its three prior OC acquisitions totaled about $20 million, according to brokerage data.

A similar renovation plan is in store for the just-acquired Tustin facilities, but on a larger scale, according to Miszkowicz.

Harbor Associates said it is planning “a comprehensive rebranding and renovation program” that will include new building exteriors, upgraded lobbies and restrooms, and new indoor and outdoor amenity spaces for tenants.

An estimated price tag for the renovation project was not disclosed.

The three-building campus is being rebranded as Create Tustin, and its space will be broken up to accommodate multiple tenants, the company said.

Miszkowicz said his company already has found an undisclosed tenant to take about half of the space at one of the buildings, a 50,638-square-foot office at 2642 Michelle Drive.

The other two buildings are at 14101 Myford Road and 14192 Franklin Ave.

The two-story Myford Road property is expected to get strong tenant interest following its makeover, in large part because of its 33,000-square-foot floorplates, which are much larger than those at traditional offices, Miszkowicz said.

Busy Neighborhood

The immediate area surrounding Tustin Commons has seen its share of notable creative-office conversion projects recently.

Harbor Associates also owns a 40,000-square-foot building at 14201 Franklin Ave. that it’s converting into a creative-office project called Bespoke Tustin. The owners are about a month away from finalizing a major lease at that property, Miszkowicz said.

Kelemen Caamano Investments, an Irvine-based creative-office redevelopment firm, this August sold a roughly 41,000-square-foot office it renovated down the street at 2860 Michelle Drive for a reported $15.7 million.

That building, next to an LA Fitness gym on Jamboree Road, was sold to a private investor, according to property records. Kelemen Caamano paid a reported $8.9 million for it a little more than two years ago.

Irvine-based CapRock Partners LLC has the largest creative-office building in the vicinity, a 110,000-square-foot industrial property at 14191 Myford Road.

Work was completed this year at the two-story Radius project and it is in the process of being leased.

Orange County’s development sector has in general been “a little slow to adapt” to the creative-office push, although the tenant demand is there, which is a big reason for the company’s acquisition push in the area, Miszkowicz said.

Ground-up developers appear to be catching up to the trend, according to brokerage data.

Of the 3.5 million square feet of office space under construction in OC, 1.2 million square feet is creative and another 528,200 square feet will have creative aspects, according to the latest quarterly office report from CBRE Group Inc.

“OC is not a market known for having a lot of creative office product, but due to evolving workplace strategies tenants are pursuing the best possible space in order to attract and retain talent,” the CBRE report said.

More to Come

Harbor Associates said its acquisition goal is to spend about $250 million in Southern California properties by the end of next year.

Its goal is to hold onto its properties for between two and four years, seeking returns from its investments in the “middle-to-upper teens,” according to the company’s website.

Miszkowicz’s prior experience includes acquisition roles with Newport Beach-based Bixby Land Co., another big proponent of creative-office redevelopment projects in the area, and the Bascom Group, while his two partners at Harbor—Joon Choi and Justin Loiacono—held roles at New York-based investment management firm BlackRock Inc.

Its only non-OC acquisition announced to date has been for a property in San Diego.

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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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