The Irvine headquarters of motocross apparel company Fox Head Inc. has traded hands for about $27.3 million in the most prominent sale yet of a local building recently developed to emphasize creative-office space.
An affiliate of El Segundo-based Griffin Capital Corp. last week closed on the Fox Head building, an 81,600-square-foot office at 16752 Armstrong Ave.
The distinctive-looking building—with a black-clad exterior surrounded by a motocross track and an interior that resembles a design studio as much as a traditional office—is about a block from The District shopping center.
Griffin Capital, a privately held investment and management company, paid about $334 per square foot for the recently redeveloped building. It’s fully leased to Fox Head through 2027.
The closely watched sale is a sign of strong investor interest in the emerging market for creative office space in Orange County, according to Kevin Shannon, vice chairman and managing director for Los Angeles-based brokerage CBRE Group Inc.
The move toward creative offices “is here to stay,” said Shannon, who worked on the sale with CBRE colleagues Paul Jones, Robert Smith and Ken White, as well as Newmark Grubb Knight Frank Executive Managing Director Scott Read.
Collaborative Space
Creative office space emphasizes open-air work settings with fewer individual offices and lots of collaborative space.
The trend of redesigning buildings to meet the demands of creative trend uses has become relatively common in tech- and media-heavy markets such as Silicon Valley, San Francisco and Santa Monica, as well as parts of the Westside in Los Angeles.
The trend has had limited traction in OC, mostly confined to a few design, architecture and development companies.
That’s likely to change, said Bill Halford, chief executive of Bixby Land Co., the Irvine-based real estate investor and developer.
“It’s not a fad,” said Halford, whose company has creative-office space projects under way in Los Angeles and Silicon Valley and is nearing a deal for a similar project in Orange County.
“There’s clearly increasing demand—and a lack of supply—for space that’s more creative, contemporary and interesting,” Halford said.
The price for the recently redeveloped Fox Head office should make other developers and investors eyeing creative offices in OC take note, according to Shannon.
The per-square-foot price of the Fox Head building topped another high-end Irvine office that recently set the mark for highest overall price for a stand-alone office deal in OC this year. The 16-story 2030 Main St. office sold last month to New York-based investor Praedium Group LLC for $114 million—or $320 per square foot.
Griffin Capital beat out a number of other private investors and real estate investment trusts to purchase the building, according to Shannon.
The new owner currently manages a portfolio of more than 13.4 million square feet in 28 states, representing about $2.2 billion in asset value, according to its website.
Griffin Capital also oversees a pair of nontraded real estate investment trusts; its broker-dealer unit that raises money for those two investment funds is based in Irvine.
The sale to Griffin Capital marks a significant markup for the Fox Head property, which last traded hands near the start of 2012.
A venture between Shubin Nadal Associates LLC of Newport Beach and Hartford, Conn.-based Penwood Real Estate Investment Management LLC paid $7.5 million for the building in that transaction, which was brokered by Newmark Grubb Knight Frank.
The two owners then signed Fox Head, an apparel designer and sponsor of motocross and other action sports, to a lease of the entire building in a 15-year deal.
Fox Head is paying about $1.8 million in rent annually for the property.
Last year the property got more than $10 million makeover in preparation for Fox Head’s arrival, a change that transformed the previously vacant, nondescript industrial building into one of the more eye-catching offices in Irvine.
Move
Fox Head, whose annual revenue is estimated at $200 million, moved its headquarters from Morgan Hill in Santa Clara County to Irvine following the building’s renovation.
Its office space features an open-air layout intended to cater to Fox Head’s design and sales operations, as well as to executive staff.
The lobby of the Armstrong Avenue building has a Fox Head store for employees and friends, who can pick up branded racing gear, apparel, accessories and shoes. Bleachers at one end of the office are for town hall-style meetings.
There’s also a staff library, showroom space for buyers, and open meeting and kitchen space on the ground floor.
CBRE marketing materials call the Fox Head property “only one of a few stand-alone creative office buildings in Orange County.”
