What part of Orange County is seeing the most sales? The answer varies, depending on what type of space you’re talking about, according to a recent breakdown of 2006 transactions by Sperry Van Ness’ Irvine office.
Travis Thair, an office and industrial adviser for Sperry Van Ness, passed along an interesting compilation of 2006 CoStar Group Inc. sales data his company put together for apartment complexes, office and industrial buildings and retail properties.
Broken down by building type and city, the data gives the impression of a more diverse local sales scene than you might first assume.
And when factoring smaller deals alongside blockbuster buys, it shows 2006 was a much slower market than in 2005, based on total transactions.
Not surprisingly, Irvine and Anaheim took the top two spots for both office and industrial deals last year. Those two cities, plus Newport Beach, Orange and Santa Ana, were behind about half of the county’s 233 office sales last year.
Meanwhile, more than half of the 301 industrial deals reported last year were in Irvine, Anaheim, Costa Mesa and Santa Ana.
It’s a different game for buyers of apartments and condominiums. Nearly half of the 89 sizable apartment transactions in the county last year were done in Anaheim and Santa Ana. South County saw barely any deals.
The number of retail deals last year was not as top-heavy as the other building types. The top seven cities (led by Santa Ana and Garden Grove) were responsible for about half of the sales in 2006.
Other than Newport Beach’s 12 sales, retail deals were few and far between in South County last year. That was particularly true in Irvine, which only had two sales, according to the data.
Apartment transactions included buildings with five units or more, while office, industrial and retail transactions were those of $1 million and greater, according to Thair.
Sales prices for all building types have been rising steadily the past few years, but the pool of potential investors in OC properties appeared to be chasing fewer opportunities in 2006.
Overall, the total number of county sales for all markets was down 33% year over year, to 836 deals. Apartment sales were down 53%, industrial sales dropped 43% and office transactions fell 28%.
Only retail sales were up, with an 8% increase from a year ago, according to Sperry Van Ness.
Irvine Co. Finds Lenders
The Irvine Company found a pair of lenders to help it fund its latest big office buys in San Diego County.
The Newport Beach-based company lined up deals with Wachovia Corp. and Banc of America Securities to fund about $850 million of mortgage debt for its purchase of 17 Equity Office Properties Trust buildings in and around La Jolla, according to industry trade publication Commercial Mortgage Alert.
Wachovia is providing about $430 million of fixed-rate loans on 10 of the buildings. Banc of America is funding about the same amount for the remaining seven buildings in the 2.1-million-square-foot portfolio, according to the report.
The Irvine Co. had reportedly been shopping the deal around to companies and securitization programs. The company was likely able to get a top-notch deal. Chairman Donald Bren noted in his January interview with the Business Journal that his company is one of only three real estate companies with an A credit rating, in large part because of the company’s low debt.
The Equity Office buys, announced in February, make the Irvine Co. the major landlord for high-end office space in the La Jolla submarket.
Newport Beach’s Pacific Life Insurance Co. is getting a taste of office development, as steel is going up for its new nine-story, 246,000-square-foot tower in Aliso Viejo.
About 1,000 of its employees will be moving into the building when it is completed next year.
Pacific Life, the county’s largest private company, is moving further into the apartment development sector as well.
It recently formed a venture with real estate developer Fifield Cos. to build and buy apartments in markets including California, Chicago, southeast Florida, Phoenix and Washington, D.C.
Fifield is based in Chicago and has been making a big push into Southern California as of late.
The company’s Irvine office is slated to start construction for the first two high-rise towers in Costa Mesa’s arts district later this year.
The Pacific Life-Fifield venture plans to fund up to $400 million in higher-end apartment projects, both developments and conversion opportunities, during the next two years. The first deal will be in Chicago.
After building and leasing the projects, they plan to sell them to institutional or private buyers, according to Fifield officials.
It’s not Pacific Life’s first exposure to the apartment market. It’s already a prominent national institutional lender in the sector.
