Centerpointe La Palma, the largest office complex in North Orange County, has traded hands in a $106.1 million deal.
A venture between Greenlaw Partners in Irvine and New York-based Westbrook Partners closed this month on the 10-building business park just north of the Artesia (91) Freeway at the intersection of Orangethorpe Avenue and Valley View Street.
The multitenant complex includes a seven-story office building, two four-story offices, and a collection of single-story office and research and development buildings.
A retail strip center is also part of Centerpointe La Palma, whose square footage is 525,560.
The sale works out to nearly $202 per square foot for the property, which was sold by an affiliate of institutional investor TA Realty.
The complex was nearly 90% leased at the time of the sale, according to Newmark Knight Frank, whose capital markets team brokered the transaction and whose leasing team will be working with the new owners at the site.
Tenants at the office portion of the complex include the State of California, Tesoro, Honeywell, UnitedHealthcare, the University of Phoenix and St. Joseph Health.
A medical office building and a La Quinta Inn & Suites that are part of the complex are owned separately and were not part of the latest transaction.
Creative Office Potential
Centerpointe La Palma is among just four office sales in OC to top the $100 million mark this year and the priciest office deal to close in North OC this year, according to CoStar Group Inc. records.
The size and quality of the complex, plus the potential opportunity for new ownership to redevelop the low-rise office portion into creative-office uses, resulted in Centerpointe getting the most investor interest of any offering in OC this year for Newmark’s capital markets team, according to Paul Jones, senior managing director for the Newport Beach office of the brokerage.
“Sizable institutional-quality Orange County business campuses like Centerpointe La Palma rarely become available to investors,” said Jones, who worked on the deal with colleagues Kevin Shannon and Blake Bokosky.
In addition, “all of the buildings sit on separate parcels, providing the buyer maximum optionality and flexibility” if they want to sell individual buildings, Jones said.
Familiar Partnership
The deal adds to a string of area office investments for privately held Greenlaw Partners, one of the area’s most active commercial real estate buyers in the past few years.
It’s been a partner with Westbrook—which has about $20 billion in its investment portfolio—on a number of its OC-based acquisitions, although the La Palma deal is the first reported partnership for the two real estate firms in a few years.
Greenlaw has been part of several hundred million dollars’ worth of buys in OC since early last year, using other investor partners. Those deals include several airport-area purchases made in partnership with the top two executives of Corona-based Monster Beverage Corp., Rodney Sacks and Hilton Schlosberg.
Sacks and Schlosberg, who partnered with Greenlaw for the estimated $58 million buy of the 4400 MacArthur Blvd. office tower in Newport Beach last month, were not involved in the Centerpointe La Palma deal.
TA Realty, though, sold the 4400 MacArthur building in a deal also brokered by Newmark’s capital markets team.
The Boston-based institutional investor, which has a Newport Beach office, has been shedding a number of OC properties over the past year, including buildings in Irvine, Laguna Hills, Placentia and Santa Ana, in addition to the La Palma and Newport Beach deals.
Those sales have totaled nearly $300 million combined for the company, which invests on behalf of a variety of pension plans, endowments, foundations, family trusts and wealthy individuals.
TA Realty bought most of the buildings in 2006 and 2007—just prior to the last real estate downturn—with an expected 10-year investment hold for them.
JCPenney Proximity
The Centerpointe La Palma offices comprise the bulk of the office space in the city; La Palma’s office market is less than 800,000 square feet, and monthly rents average about $2.20 per square foot, according to area brokerage data.
The complex sits on the west side of Valley View Street. Buildings on the opposite side of the street are in Buena Park, whose office market is 1.1 million square feet.
Across the street from the complex is one of the largest buildings in OC—the 1.1-million-square-foot former distribution facility of retailer J.C. Penney Co.
Chicago-based industrial investor CenterPoint Properties—no relation to the La Palma office complex—bought that property in April for about $130 million in one of the area’s largest property acquisitions of the past year.
