Palo Alto-based real estate investor Menlo Equities LLC has bought an Irvine warehouse and data center building in the priciest industrial deal in the county so far this year, according to brokerage reports.
The company is reported to have recently closed on the acquisition of 17871 Von Karman Ave., a 420,000-square-foot building near Main Street, a few blocks from John Wayne Airport.
It’s the latest area purchase for Menlo Equities, which has made close to $150 million worth of Orange County commercial property acquisitions since mid-2010. Much of that money has been spent on buildings located within a few blocks of each other in Irvine.
The sale was reported as being completed late last month, according to CoStar Group Inc. data.
Executives at Menlo Equities, which is said to have acquired or developed about $1.4 billion of property nationwide since starting up in 1994, could not be reached for comment on the latest transaction.
A sale price was not confirmed, although the Irvine office of brokerage Colliers International last week reported the deal trading at $47 million, or about $113 per square foot.
At that price, the fully leased building would top New York-based drug maker Pfizer Inc.’s $42 million buy of an Anaheim distribution center at 4663 La Palma Ave. earlier this year.
The Irvine sale is the latest in the string of large OC industrial deals to close of late. The top four local industrial sales in the third quarter sold for close to a combined $112 million, according to Colliers International’s data.
Those deals, which included properties in Huntington Beach, La Palma and Santa Ana, totaled about 1.3 million square feet of warehouse and distribution space. They sold at an average price of about $86 per square foot, according to the brokerage’s third-quarter market report.
Menlo Equities has plenty of familiarity with the location of its latest buy.
Quintana Neighbor
The recently acquired Von Karman warehouse is next to Quintana, the largely empty Irvine office campus that once served as the local hub of then-Washington Mutual Inc.
Menlo Equities bought the four-building, 415,000-square-foot Quintana campus late last year for an estimated $69 million.
Quintana was bought out of receivership; a venture including Los Angeles-based MPG Office Trust and Australia’s Macquarie Office Trust went into default on the campus in 2009 after it stopped making payments on a $106 million mortgage.
Menlo Equities hasn’t announced any sizeable leases at Quintana since the acquisition.
That could be by design—brokers say the landlord appears to be waiting until office rents begin to show improvement, or might be holding out for a larger tenant that could lease one or more of the buildings at the campus, before committing to any deals.
Cartwright Center
Menlo Equities also owns the Cartwright Corporate Center, a five-story, 143,165-square-foot building at 2525 Main St., a few blocks from Quintana.
The investor paid about $20 million for the center in August 2010. The property’s about 80% leased, according to CoStar Group data.
“They’ve been pretty aggressive going after buildings (in the area),” said Jeff Chiate, executive director for the Irvine office of Cushman & Wakefield.
With its latest purchase, Menlo Equities finds itself as one of the larger commercial property landlords in the John Wayne Airport area, along with locally based LBA Realty and New York-based Emmes Group of Cos. in New York—not to mention Newport Beach-based Irvine Company, the area’s dominant real estate owner.
Menlo Equities also owns property near the Irvine Spectrum, and earlier this year paid nearly $18 million for a three-building office complex in Aliso Viejo. It’s also said to be eyeing a few additional properties in Aliso Viejo, according to real estate sources.
Prior Price
As in the Quintana purchase, Menlo Equities appears to have gotten itself a deal with its reported $47 million Von Karman industrial purchase, at least when compared to the 21.7-acre property’s last sale price.
A partnership including Voit Development and Buchanan Street Partners, both of Newport Beach, paid $57 million, or about $133 per square foot, for the building in 2007.
That deal was reported to be the largest sale of an individual industrial property in 2007.
The prior owners, under the Irvine Crossings LLC name, initiated plans with the city to convert part of the existing warehouse space at the property into about 174,000 square feet of office space. That project has yet to move ahead.
Another 126,000 square feet of space at the property is leased to Missouri-based Savvis Inc. and is used as an Internet data center.
