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Armstrong-Butcher is developing four small South County office buildings for sale



Duo Looks to Lure Buyers with Aliso Viejo Complex

In their 60 years of combined experience in Orange County commercial real estate, Blair Armstrong and Greg Butcher crossed paths often.

Along the way, the two developed a 30-year friendship. But the industry hands never worked on a project together,until last year, that is, when they formed Costa Mesa-based Armstrong-Butcher Properties LLC.

According to Armstrong, he and Butcher saw undeveloped niches in the market and decided to join forces. Armstrong’s background is in defining markets and financing; Butcher’s talents lay in architecture and design. Their current project is Aliso Creek Office Park, four two-story buildings totaling 54,365 square feet in Aliso Viejo.

But tenants need not apply. The duo is looking to sell the Aliso Creek buildings. The goal: lure companies that otherwise would be leasing in high-rises and bigger complexes.

“Rents can only escalate over a period of time,” Armstrong said. “We believe we found a niche in Aliso Viejo, where we have a lot of office users who want to own their own building.”

With construction just under way, brokers Larry Schuler and Rich Pincott of CB Richard Ellis’ Newport Beach office say they have commitments on two of the four buildings. Names weren’t disclosed, though a source said prospective buyers include insurance companies, investment brokerages and legal firms.

The short list reflects the buyers Armstrong and Butcher had in mind when they conceived the project,small professional users looking to own. The four buildings range in size from 12,000 to 14,000 square feet.

“All of the buildings are concrete tilt-up, with steel reinforcements,” Butcher said. “We tried to emphasize large glass space with two-story lobbies. The buildings are smaller, but we wanted to take what bigger buildings often do and bring that to a smaller, for-sale building.”

The $11 million project on three acres in the heart of Aliso Viejo faces competition from leased space but has few rivals in the way of for-sale buildings, according to Shuler.

“It’s one of only three projects of its kind currently available in South Orange County,” Shuler said.

Other small for-sale office projects are on the market in Rancho Santa Margarita and in the Irvine Spectrum.

“Our intent is to find small office users and show them that the cost of occupancy is better in a small building to own, rather than in a larger building, where you rent and incur ancillary costs such as parking,” Armstrong said.

Another factor being pushed by South County developers: both occupant and guest parking at Aliso Creek are free, unlike in the John Wayne Airport area.

Armstrong was a broker with Grubb & Ellis in the 1970s. In the early 1980s, he began O’Donnell, Armstrong & Partners, which developed more than 3 million square feet of projects for The Irvine Company. In the early 1990s, he sold the company to Insignia Commercial Group and promptly retired.

During his time away from real estate, Armstrong founded A Better Way of Learning, now called Games2Learn Inc. The Costa Mesa-based educational company develops games to build reading skills. The company’s flagship product is The Phonics Game, a competitor of Hooked On Phonics.

For Butcher, the focus remained on real estate. He’s had a long association with the Segerstrom family and was involved with multiple phases of developing South Coast Plaza.

Conversations between the two old hands brought Armstrong out of retirement and laid the groundwork for Aliso Creek.

Armstrong-Butcher isn’t looking just to build and sell. Last year, the partnership began development of their first project, Corona Corporate II, located in Corona. The for-lease project includes two three-story office buildings totaling 120,000 square feet. Sixty percent of the project is pre-leased, with Irvine-based Standard Pacific Homes among the early tenants.

“What we’re trying to do is find projects that make sense,” Butcher said.

With a slowing economy and space opening up as a result of the dot-com bust and corporate restructuring, the partners say they’re taking things as they come.

“We formed a real estate equity fund with a group of investors,” Armstrong said. “If we do three to four deals a year, that works. If we do one, that works, too. For us, it’s all about identifying the market.” n

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