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Sunday, Oct 1, 2023

Moshayedi Shifts Into New Gear: Used Car Sales

Mark Moshayedi has a new drive.

About three years after launching real estate-focused Space Investment Partners with fellow real estate executive and business partner Ryan Gallagher, the duo last year started to focus on a different venture that’s shown to be increasingly lucrative in the wake of the pandemic: the used car market.

Partly driven by Moshayedi’s passion for collecting cars, the duo along with Ray Ashrafi launched My Car Auction, a website (mycarauction.com) and app that allows users to sell their car from their home.

“The used car market is approaching $1 trillion, but it’s super fragmented, making it ripe for e-commerce and digitization,” Gallagher told the Business Journal.

About two years into its debut, the company is in rapid expansion mode, with 24 local employees and plans to open a new, nearly 50,000-square-foot facility in the Spectrum-area Irvine Auto Center that Space Investment Partners bought last month for $10.6 million.

Car Connoisseur 

Moshayedi, one of Orange County’s better-known and wealthier tech entrepreneurs, has built up a sizeable collection of vintage and sports cars over the years.

A new addition to the collection includes a McLaren Speedtail, one of about 100 in the world.

He paid a reported $3.5 million for the rare car, which can reach speeds of up to 250 mph.

Moshayedi and his family made his first fortune through Santa Ana-based computer storage device-maker STEC Inc., which he co-founded in 1990 with brothers Manouch and Mike.

In addition to holding more than 50 patents to his name, Mark served as the company’s chief executive for a time.

STEC was sold in 2013 to a unit of Western Digital Corp., then based in Irvine, for $340 million.

The proceeds from that sale, plus other investments over the years, vaulted the family into the ranks of the super-wealthy. The Business Journal estimates the Moshayedi family fortune to be in the $720 million range; they’ve been on prior editions of the paper’s OC’s Wealthiest list, though they fall below the $1 billion threshold used for this week’s edition.

Along with cars, the Moshayedi family put much of its earnings from STEC into real estate, with the Mariner’s Mile area of Newport Beach a focus; Mark’s investments have been run under MSM Global Ventures, while Manouch’s investments are largely consolidated under his MX3 Ventures business.

Space’s headquarters are within a 64,000-square-foot industrial building Moshayedi owns on Gillette Avenue in Irvine, with half of the building used to showcase his classic car collection.

My Car Auction 

With My Car Auction, car owners can list their car and get two prices in less than a minute. For the first option, the company provides a cash offer to purchase the car; in the second offer, the company will inspect the vehicle and place it up for auction on its website.

“If the car sells above our estimate, we split the upside,” Gallagher said.

The average sales price is about $36,000, largely due to the area’s pool of higher-end sellers.

“Our business model lends itself to the area’s business executives that don’t have time to go to the dealer, and don’t want to be lowballed on pricing,” said Gallagher, previously a senior managing director and co-head of the Orange County office of commercial brokerage HFF.

The venture has been privately funded thus far, though the company is preparing to take out lines of credit as it expands in new markets.

It currently operates in California and parts of Arizona and is preparing to launch in Texas and Florida.

One mark of the growing interest in the used car business can be seen near the top of this year’s OC’s Wealthiest list.

Ernest Garcia II, with an estimated wealth of $18.5 billion, is the majority shareholder in Tempe, Ariz.-based used car retailer Carvana (NYSE: CVNA), which has a nearly $54 billion valuation. Its shares have more than doubled in price the past year.

Garcia has homes in the area, sources tell the Business Journal.

New Dealership 

My Car Auction, currently based out of Space Investment’s headquarters on Gillette Ave., will soon operate a dealership of sorts out of 11 Auto Center. The Spectrum-area facility has been vacant for nearly a decade, and previously served as a GMC dealership.

In addition to selling its existing inventory of cars, the company is looking to partner with car dealerships looking to get more attractive pricing, and rental car services that can keep their cars in production while listing them for sale.

“We are moving much more volume than a traditional dealer, and in a much more innovative way,” Gallagher said.

The auto company’s not the only web-centric firm that Moshayedi is involved in. He’s also on the board of Irvine vacation rental software company BookingPal.

Multifamily Focus 

While the used car space is a new area of focus, Space Investment’s execs remain active on the real estate front, with a renewed focus on the multifamily sector.

The firm is looking at buying opportunities in California, Arizona and Nevada, with a couple deals in the works in Orange County.

“This was a strategy we had in place last year but ultimately backed off when COVID-19 hit. After seeing the market expand, we put our plan back together, with a goal of acquiring and developing several thousand apartment units in the next few years,” Gallagher said.

The company plans to invest north of $500 million in apartment deals over the next few years.

Space Investment is still bullish on value-add retail centers, most recently announcing plans to invest several million dollars in a redevelopment of Costa Mesa’s Back Bay Center, two years after acquiring it.

The firm is also in the process of redeveloping a Smart & Final store in Corona del Mar into a new Mother’s Market location and CVS Pharmacy.

The project at 3021 E. Coast Highway is slated to deliver by the end of the year. 

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