Arden Realty Inc.’s Dick Ziman is cashing out of the office market, selling his 19 million-square-foot portfolio,including 19 buildings in Orange County,to the real estate arm of GE Commercial Finance and Trizec Properties Inc. for nearly $5 billion.
That’s not an indication that Ziman, Los Angeles-based Arden’s chief executive, believes we’re reaching the end of the line for the current surge in office prices.
“I don’t think we’re at the top,” Ziman said. “We may have sold out, but not at the top. We may be several years before the market starts trending down.”
Ziman spoke in Irvine earlier this month to the local commercial real estate and construction division of the Jewish Federation.
“In 1989 and 1990, I sold everything I could when I saw the signs on the wall,” Ziman said.
It’s not like that now, he said.
“The money going into the market now is unprecedented,” he said.
Ziman’s words echo those of another heavy hitter in the real estate world.
Sam Zell, chairman of Equity Office Properties Trust, told a real estate conference in Los Angeles earlier this month that the strong flow of money into commercial real estate should continue for at least another five years.
Zell presented Ziman a lifetime achievement award at the conference.
The GE-Trizec deal was too good to pass up, Ziman said. The capitalization rate for the Arden deal is 5% to 6%, he said.
“GE had been after us for several years,” he said. “They want to use this as a platform. They want to expand” in Southern California.
The sale includes 3.4 million square feet of office space in OC.
The average tenant size for Arden is about 6,000 square feet,small compared to other office real estate investment trusts. That fits in well with what Ziman said he sees as the strength of the Southern California market.
Southern California “is the center of small business,” he said.
While other REITs target larger tenants, Arden has shied away from them. Leasing to big tenants is like juggling bowling balls. Eventually you drop one and it breaks your foot, Ziman said.
Ziman plans to stay active once the GE deal is finalized, likely in May. He’s involved in a couple private investment firms, including one that rehabs industrial properties. He’s also active in a number of charities, which already take up about a quarter of his time.
b>Class B Selling High, Too
It isn’t just the best office space that’s trading hands at premium prices.
In Irvine, JB Aslan Cos. bought a two-story, class B property at 17305 Von Karman Ave. The price for the 40,692 square foot property: $11 million, or $270 per square foot.
That is the highest price per square foot paid in Irvine for a class B office building in this size range, parties involved in the deal said. It’s about $100 per square foot less than the asking price of some of the more glamorous class A properties in the John Wayne Airport area.
There’s about 276 buildings totaling 14 million square feet that fall in the class B category in the airport area, compared to about 130 class A buildings, which total 21 million square feet.
Monthly class B rents in the area typically fall around $2.20 per square foot, compared to $2.84 per square foot for class A buildings.
JB Aslan intends to convert the building into medical condominiums for sale.
Brian Garbutt of Lee & Associates Commercial Real Estate Services represented the seller, MJB Associates of Fullerton. John Marchiorlatti and Chris Bates of CB Richard Ellis Group Inc. represented the buyer.
Lennar Corp.’s Emile Haddad, one of the Business Journal’s Businesspersons of the Year for 2005, has gotten a promotion.
Haddad now is chief investment officer for the Miami-based homebuilder, which has local operations in Aliso Viejo.
His previous title was president of Lennar’s Western region. He’s still handling those duties from Aliso Viejo following the change.
The change in Haddad’s title suggests that the company isn’t close to slowing down its aggressive growth plans, either in OC or nationally.
The company this month closed on a roughly $55 million deal for 15 more acres of industrial land in Anaheim’s Platinum Triangle, where homes and retail development is planned.
b>Lofty Rides
CWI Development of Newport Beach is set to begin work on a redevelopment project in south Brea.
The company is working with the city’s redevelopment agency to build 47 lofts, on a 2.8-acre parcel of land on South Brea Boulevard. A groundbreaking ceremony was held on March 15. Models should be built by late summer.
The project mirrors other big CWI efforts in OC. The developer was behind Cannery Lofts, a 22-unit loft project in the Cannery Village area of Newport Beach. Those properties, built about two years ago, were priced from $1.5 million to $3.5 million. The Brea project should have some similar pricey units, but also will have 10 affordable properties, subsidized by the city’s redevelopment agency.
One uncommon perk for the residents of the South Brea lofts: They each will get Neighborhood Electric Vehicles. The environmentally friendly vehicles, which list for about $8,000, are from Global Electric Motorcars LLC, a unit of DaimlerChrylser AG.
