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Wednesday, Jun 19, 2024

Big Mike Builds Downtown Deals

Well-known Santa Ana property owner Mike Harrah has been active on the selling front as of late, trading two of his larger and longer-term holdings in the city for more than $117 million.

One of the two deals serves as another sign of growth in Orange County for e-commerce giant Amazon, which shelled out $63.2 million for the former OC Register’s printing press facility along Grand Ave, with plans to build a last-mile distribution center.

Harrah, who runs Santa Ana-based Caribou Industries, has also traded the 888 Main property in Santa Ana, a 10-story office building that’s being converted into a 148-unit apartment complex, for $54 million.

Funds from the two deals, both closed in October, will go toward ongoing projects of Harrah’s in the city, most notably the long-planned One Broadway Plaza, he said.

The proposed 37-story tower that’s been decades in the making could see some construction activity as soon as next April, Harrah now estimates.

“We have a lot going on despite the pandemic,” Harrah told the Business Journal last week.

Amazon Hub

Harrah acquired the Register printing press along with the former headquarters, a six-story office next door, in a series of transactions in 2014 and 2015 for nearly $60 million.

Amazon is acquiring just the printing press facility, which will join the company’s fast-growing pool of local distribution centers.

It’s the second planned ground-up industrial project built specifically for Amazon in Orange County. It also has plans to build a distribution facility on the back side of the former headquarters campus of Mitsubishi Motors North America Inc. in Cypress.

Indianapolis-based industrial developer Duke Realty Corp. (NYSE: DRE), which has local operations in Irvine, is heading that development project.

Specifics for the size and a proposed timeline of the Cypress facility haven’t been disclosed.

Amazon has rapidly built its base of industrial facilities in OC to over 1.2 million square feet, not including the in-development sites. Much of that growth has taken place over the past two years.

888 Main

L.A.-based Alliant Strategic Investments, a residential developer with a focus on Opportunity Zones and affordable housing, is behind the purchase of 888 Main.

It paid $54 million and nearly $365,000 per unit for the under-construction project, which is expected to receive its certificate of occupancy by the end of the year.

Harrah estimates the cost to convert the office into residences to be around $40 million.

The building is the first major adaptive reuse apartment in Downtown Santa Ana, and will hold 148 rental units.

The 114,000-square-foot building is more than 50 years old and was last used by Orange County Social Services, which vacated a few years ago.

The new mixed-use building—which will include several dining tenants on the ground floor—has been touted as a housing option for families of students attending the nearby Orange County School of the Arts, which Harrah gives to.

Numerous families with students at OCSA live outside the county, noted Harrah, who has included a 3,500-square-foot art exhibition center for artwork and performances on the ground floor.

Harrah said he expects a kick off for pre-rental agreements by the end of the month.

Alliant will be a long-term holder of the property under the Opportunity Zone program created by the 2017 Tax Cuts and Jobs Act, which is designed to revitalize economically distressed communities through private investment, allowing investors to defer and avoid capital gains taxes on funds invested in designated communities.

“The buyer liked that this project is a transit-oriented development, with several attractive nearby amenities including the light rail, the new civic center across the street and OCSA,” said Harrah.

888 N. Main: office to residential

In the Works

One Broadway has long stood as a work in progress, and in flux, but Harrah is hopeful that could change by next April. Current plans call for his company to start the buildout of the foundation at the site at that point.

The development site has already seen some groundwork done in recent years, but no vertical construction.

“We expect to reach street level development in June, with a 28-month timeline for construction after that,” said Harrah.

Plans for the tower have fluctuated over the years, and have incorporated residential uses in addition to office space. Harrah said last week that current plans call for 250,000 to 350,000 square feet of commercial space including eight restaurants, 415 apartments, a recreation center, a 2,004-space parking structure and a heliport.

Harrah also hopes the new Amazon hub in Santa Ana isn’t the only partnership between the two companies.

He said he is working on bringing on Amazon Fresh as a potential tenant for One Broadway. The tech-focused grocer opened its first Orange County location last month at The Market Place in Irvine, where customers can use the Amazon Dash Cart to track their items and bypass the usual checkout line.

Other ongoing projects for Harrah include the conversion of Santa Ana’s old YMCA building into a boutique hotel and wellness center.

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