With almost three-decades of experience wheeling-and-dealing across the globe, H. Gordon MacKenzie last summer decided to take a big leap.
In late August, the former president of Toronto-based Brookfield Development Properties jumped to take over as chief executive of Polygon Development LP, a small Costa Mesa firm with a growing portfolio.
But this week, the company is expected to announce that it will sell off most of its holdings and suspend more than $400 million in local development plans.
“This is certainly not what I anticipated after coming here,” said MacKenzie. “But being in the real estate business, I’m very familiar with change.”
The 53-year-old chief executive, who was picked as the Business Journal’s person to watch in commercial real estate for 2000 (see Dec. 20, 1999, edition), says he is committed to helping Polygon owner Werner Paulus shift the development company’s focus to managing properties.
The Bow, Wash.-based real estate entrepreneur has been diagnosed with a debilitating illness, according to MacKenzie. The situation is not life-threatening, he said, but is serious enough to cause Paulus to change his lifestyle and business plans.
“We haven’t been given a definite time frame for winding things down,” said MacKenzie. “But we have an understanding with all of our employees that there will be a logical process taking place, starting right away.”
Operating through the Washington-based Polygon Group, which is parent to its Costa Mesa commercial development arm, Paulus had been primarily known as a regional residential developer.
But in August, Polygon recruited MacKenzie to head up its commercial development subsidiary in Costa Mesa. He replaced well-known local developer C. Lynn Burnett, who left to devote more time to his own projects.
“The decision to pull back is a surprise to everyone, because Polygon has been making such a hard press in the marketplace,” said Tim Joyce, senior vice president of The Seeley Co. in Irvine. “But they own some excellent pieces of real estate. I’m sure there will be plenty of people interested in their properties, both locally and nationally.”
Polygon, which has a payroll of 15 workers, will keep just one of its commercial projects,the 14.5-acre Town Centre in Laguna Woods.
“That could be a property that would fit with the owner’s plan to retain some income-producing properties for the future,” said MacKenzie.
Construction of two buildings at the site has begun. Another parcel has been sold to hotel developer Ayres Hotel Group of Costa Mesa, and adjacent acreage for a 40,000-square-foot medical building also has been claimed.
Polygon will continue with an ongoing residential project in Ventura, called River Bend Ranch. The project, which is under way, will include 147 houses priced from $325,000 apiece.
River Bend was the lone housing development kept by Paulus after he sold his other Southern California residential interests to Lennar Homes in 1998.
Properties Polygon is actively putting on the market now include:
n Arena Corporate Centre in Anaheim, which is entitled for 982,000 square feet of office, hotel and daycare space. The 23-acre mixed-use site is next to the Arrowhead Pond and structural steel has been purchased for the project’s first building, a six-story 180,000- square-foot office complex.
n Canyon Business Centre, a 16.3-acre office park at La Palma Avenue and Yorba Linda Boulevard in Anaheim. The site is entitled for 188,000 square feet of office and R & D; space, a 120-room hotel and 7,000 square feet of restaurant space.
n Main Street Concourse in Santa Ana. The 18.6 acres of raw land across the street from the MainPlace Mall in Santa Ana is entitled for 1.9 million square feet of office, retail, hotel and residential space. Original plans for the site included a 30-story tower, which MacKenzie doubts would be built in today’s market, with its emphasis on lower-rise buildings.
n The company’s 40,000-square-foot headquarters in Costa Mesa, which has two other tenants besides Polygon. The building is at 200 E. Baker St.
n Plaza de Cafes, a food court at Birch Street and Von Karman Avenue in Irvine. Polygon bought the plaza and its 2.65 acres late last year from Carol Tsai of Honolulu for $3.1 million. MacKenzie said an agreement to sell the site to a hotel developer is pending and should be closed sometime this spring.
“It’s a real shame they have to put all of this up for sale,Polygon is such a major developer and it owns such prime properties,” said Jeff Osborn, senior vice president and managing director for Cushman Realty in Irvine. “It just shows how much our industry is subject to change.” n
