A nine-story office in the South Coast Metro area of Santa Ana has sold for $54 million, in the highest-priced investment sale in Orange County reported to date.
A venture of New York-based private equity firm Angelo Gordon & Co. and Santa Monica-based Ocean West Capital Partners recently snapped up One MacArthur Place, a roughly 208,000-square-foot office alongside the Costa Mesa (55) Freeway and next to the headquarters campus of title insurer First American Financial Corp. (NYSE: FAF).
The pair paid about $260 per square foot for the office, property records indicate. It was sold by Equity Office Management LLC, a unit of New York-based private equity giant Blackstone Group LP.
Equity Office paid a reported $82.5 million at the end of 2013 for One MacArthur, and a companion tower at Two MacArthur, in a deal that valued each office around $192 per square foot.
There’s been no indication that Equity Office is actively looking to sell the other building at the MacArthur Place complex.
Occupancy Up
One MacArthur was reported to be about 68% leased at the time of the 2013 sale, and Two MacArthur was close to vacant after the departure of MSC Software Corp., whose local offices now are in Newport Beach.
Each of the twin buildings are now largely full. Two vacant offices at One MacArthur have asking monthly rents of $3.15 per square foot, according to marketing material from the Irvine office of Cushman & Wakefield Inc., which is working with the new ownership team.
Large tenants at One MacArthur include Yokohama Tire Corp. and law firm AlvaradoSmith.
Yokohama moved its U.S. headquarters to the office about four years ago, after selling its longtime facility in Fullerton.
One MacArthur marks the largest local property that Ocean West and Angelo Gordon are reported to have bought together.
Ocean West, whose management team includes former executives with office investor Maguire Properties Inc. and brokerage Eastdil Secured, have invested in other area offices in recent years, including Irvine’s 2600 Michelson tower and a handful of buildings in downtown Santa Ana.
Angelo Gordon last September partnered with the local office of Lincoln Property Co. to buy an eight-building portfolio in Newport Beach and Irvine for $160 million, among recent deals.
Those buildings total about 520,000 square feet and sold for about $307 per square foot.
Ups and Downs
The latest sale of One MacArthur represents pricing that’s close to the property’s highest-ever value on a per square foot basis, according to CoStar Group Inc. records.
Santa Ana-based Nexus Cos., which has also built high-rise residential towers and a hotel in the vicinity of the two offices, sold the One and Two MacArthur offices to GLL Real Estate Partners in 2004 and 2005 for a combined $114 million, or about $263 per square foot.
There appears to be room for pricing to go higher.
Over the past dozen or so years, Class A office towers in MacArthur Place and the nearby Hutton Centre office complex—on the opposite side of MacArthur Boulevard—have traded for upwards of $335 per square foot, according to CoStar records.
That high-water mark for the area took place in 2007, just prior to the last real estate crash.
At the nadir of the Great Recession, a few of those South Coast Metro offices traded for under $140 per square foot.
