There are only four office properties in Surf City larger than 100,000 square feet, according to CoStar records. One of those is an eight-story building on Bolsa Chica Street long used by Boeing Corp. It sold along with excess land earlier this year for $72 million and is expected to be knocked down shortly to make way for a new industrial development.
Surf City’s Class A office market totals about 2.5 million square feet and has a vacancy rate of around 7%, a slightly better figure than what’s seen in OC’s overall office market, which is closer to 10%, according to area brokerage data.
The purchase of One Pacific Plaza marks a return home of sorts for Hayes.
Hayes started Pendulum about two and half years ago, after heading the local office of Dallas-based commercial real estate firm Lincoln Property Co.
One of Lincoln’s more profitable deals under his watch was a 2011 purchase of the same campus, which at the time was called Bella Terra Tower.
Lincoln and GEM Realty Capital Inc., a real estate investor based in Chicago, paid about $76 million for the campus, when the offices were under 70% leased and the site was operating out of receivership after prior ownership reportedly fell behind on a $105 million loan tied to the property.
By 2014, occupancy had been stabilized, and Lincoln and GEM sold the campus to PREI for $95 million, a 25% higher price than what was paid in 2011.
Hayes notes that with Orange County businesses now drawing more employees from Los Angeles, than L.A. does from OC, the office complex’s location along the 405 Freeway should draw attention from tenants that have larger bases of employees from across the county line.
Pendulum has one other asset in Huntington Beach: Peter’s Landing Marina, a retail and office property on Pacific Coast Highway overlooking Huntington Harbor.
Last year it paid about $33 million for the roughly 100,000-square-foot property, which is across the street from Sunset Beach, near the iconic PCH water tower house. A rehab of the Peter’s Landing is underway; it recently landed Golden Road Brewery as a new tenant.
Pendulum has now spent close to $400 million this year on acquisitions, with San Diego becoming a new focus.
Also in November, Pendulum made its largest-ever buy, paying nearly $170 million for a portion of the Liberty Station mixed-use project in San Diego.
Other buildings in its portfolio include offices in Irvine and a retail development site in Ontario.
It has spent upwards of $650 million on real estate deals since the company’s founding about two and half years ago.
Hayes, who earned a degree at the University of Colorado in 2002, began his career at Irvine Co. in office leasing and then spent four years in tenant representation at Cresa Partners.
During his eight year tenure at Lincoln Property, he opened its Orange County and San Diego offices and oversaw the third party asset and property management platform adding more than $1.5 billion of property.
Hayes has closed more than $1 billion of commercial real estate property transactions; he said he’s made more deals with Pendulum over its short period than during his Lincoln tenure.