The Irvine Spectrum office complex that holds the headquarters of Taco Bell and the local operations of Ford Motor Co. has traded hands for nearly $159 million, in a strong sign of returning investor optimism for leased offices in Orange County.
A Taiwan-based family office that operates under the Skyline Group International name bought the two-building office complex, which is located alongside the Santa Ana (5) Freeway near Alton Parkway and the Marriott Irvine Spectrum hotel.
The office campus along Glen Bell Way, which runs about 273,000 square feet and also includes a four-level parking structure, sold for about $582 per square foot.
The sale marks the top OC office deal of 2021 by price.
It’s also a big deal by per-square-foot price. Larger high-end offices in OC rarely trade hands for more than $400 per square foot.
It’s the first reported local purchase for the buyers, though Skyline is said to know the area well, according to brokers that worked on the deal.
“The buyer was familiar with the Irvine Spectrum and realized Glen Bell Way offered a rare and unique opportunity to acquire a Class A asset with strong credit tenancy and an attractive weighted average lease term,” said Paul Jones, executive managing director for the local office of brokerage Newmark, who along with colleagues Kevin Shannon, Ken White, Brunson Howard and Brandon White represented the sellers, Irvine’s LBA Realty. Newmark’s Alex Foshay sourced the buyer.
Rising Value
The sale marks a 53% premium over the reported $104 million that an affiliate of LBA Realty paid for the Irvine Spectrum properties in 2018.
The campus is fully leased to Taco Bell, which occupies the nearly 181,500-square-foot 1 Glen Bell Way, and Ford Motor Co., which takes up the 89,600-square-foot building at 3 Glen Bell Way.
Taco Bell, a unit of Louisville, Ky.-based Yum Brands Inc. (NYSE: YUM), is the largest restaurant chain operator based in OC, generating about $6.1 billion in systemwide sales year to date.
It signed its initial 10-year lease at the property in 2009, and renewed its lease last year for an additional 10 years.
Since its move there, the street was renamed in honor of Glen Bell Jr., who founded the company in 1962.
A museum-like display near the entrance of the company’s headquarters showcases the history of Taco Bell and its product evolution.
Digital menu screens are featured prominently in the building, particularly in the company’s art and graphics department.
A “situation room” used by the company’s social media team contains a nearly ceiling-to-floor array of real-time Twitter mentions and other types of Taco Bell references on other social media platforms.
An elaborate test kitchen in the building is used for product shots and advertising work.
“We strive to uphold our great workplace culture while putting our people’s health and safety first,” the company told the Business Journal last week.
“As of now, our Restaurant Support Center is open to a limited number of employees who prefer to work in office or have a specific role that’s best suited to working in the office and have also met our COVID health and safety guidelines.”
Ford also renewed its lease at the campus last year for another five years.
The campus was built in 2000 for Ford Motor Co., and was previously known as One and Three Premier Place after Ford’s former Premier Automotive Group of European brands.
The carmaker uses the site as a design center and an office for local operations.
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Foreign Investment Pool
The new buyer is expected to operate the office campus as is, though there are about 91,000 square feet of remaining entitlements that can be utilized for a potential expansion at 3 Glen Bell Way.
The sale is “yet another example of family office capital stepping up to acquire a trophy Orange County office building,” said Newmark’s Shannon.
“Private capital, both domestic and foreign, have dominated the buyer landscape for Orange County office trades this year.”
A recent example of this renewed foreign investor interest was in July, when China-based Henghou Investment Holding spent $42.8 million for a six-building office complex in Santa Ana.
The 188,714-square-foot low-rise property, called AD/6, sold for almost $227 per square foot.
Newmark also brokered that deal.
Prior to the Irvine Spectrum deal, OC’s top reported office sale of 2021 was the $150.5 million sale for Orange’s City Tower.
That deal, completed about a month ago, works out to about $345 per square foot for the building, which runs some 435,000 square feet and is the largest office tower in Central Orange County.
New York-based investment firm Opal Holdings is the Orange tower’s new owner.Â
