Lexmark Joins Ranks at Irvine Tech Center; OC Housing Grows Pricier
COMMERCIAL
Newport Beach-based Burnham USA Equities has added the new Orange Town and Country Mall across from the MainPlace Mall in Santa Ana to its portfolio of OC properties.
Burnham USA paid $26 million to Cincinnati-based North American Properties for the 110,000-square-foot shopping complex, where the tenant list includes Barnes & Noble, Office Max and David’s Bridal.
“We just saw this as being an area that is a target for strong growth in the next 10-year period,” said Scott Burnham, president of Burnham USA. “Plus, the shopping center is occupied by credit tenants.”
The center’s location near MainPlace, the Taco Bell Discovery Science Center and the Bowers Museum of Cultural Art was a major selling point, Burnham said.
“The property represented low risk in light of the tenants and strong growth for the foreseeable future,” he said. “That whole area is extremely strong and only becoming stronger.”
Don McLellan, of Holliday Fenoglio, represented the seller, while David Lee of Faris Lee Investments represented Burnham USA.
Lexmark Fills Irvine Tech Center
Lexmark International Group Inc. has signed a seven-year lease for 10,000 square feet at The Irvine Company’s Irvine Technology Center, bringing that development to 100% occupancy. Terms of the deal were not disclosed.
The Lexington, Ky.-based printer maker, once a division of IBM Corp., moved its sales and marketing offices from Costa Mesa to the Irvine site.
“I like one- or two-story buildings with open spaces, clear sight lines and lots of windows,” said Johnny Wash, Lexmark International’s real estate coordinator for sales and marketing.
In joining Nextel Communications Inc., Nexgenix Inc. and Q Strategies Inc., Lexmark becomes the latest new tenant at the six-building, two-story Irvine Technology Center. The 310,000-square-foot first phase of the tech park was fully leased nine months after the project was completed. The Irvine Co. is constructing six additional buildings totaling 340,000 square feet as part of the second phase at the park, which is at Jamboree Road off of the Santa Ana (I-5) Freeway.
RESIDENTIAL
Western Pacific Housing has purchased 84 lots in the Providence Ranch masterplanned community in the Eastvale area of Riverside County for $2.6 million from Irvine-based Stratham Properties.
The Irvine-based homebuilder plans to build single-family homes that range from 2,000 square feet to 3,600 square feet on the lots, which average 6,000 square feet. Western Pacific joins Rielly Homes and Stratham Homes as the third homebuilder in Providence Ranch.
Plans call for sales of the homes, which will range from $220,000 to $280,000, to begin in November.
Les Whittlesey, of Irvine-based Whittlesey/Doyle Real Estate Advisors, represented both Stratham and Western Pacific in the transaction.
Home Prices Up, Affordability Down
Five years ago, 44% of local households could afford the median-priced home in Orange County. Today, that number is about 25%, and it’s headed downward. In 1989, just before the bottom fell out of the market, affordability stood at a paltry 14%.
Another sign of trouble brewing?
Well, don’t reach for the panic button yet, but the statistics bear close watching, said Walter Hahn, a real estate consultant with E & Y; Kenneth Leventhal and a longtime guru of the local residential real estate scene.
“I think it’s because the previous three years have been so crazy,” Hahn said. “What’s going on is that in Orange County in particular, and in all of the coastal counties, there’s a shortage of (ready-to-build) dirt relative to the demand for single-family homes. That’s why home prices in all the coastal counties have shot up at a terrific rate.”
In certain pockets of South Orange County, Hahn said, home-price appreciation has averaged 20% a year for the past couple of years. Similarly, some coastal areas of Los Angeles County have seen 15% annual price appreciation.
Those numbers, while expected to slow somewhat as demand is tempered by increasing interest rates, could continue to contribute to a declining affordability rate.
“What’s going on right now is a there’s a cooling off of the market in the sense that prices are not increasing this year nearly as much as they did last year and the year before,” Hahn said. “So there’s somewhat of a better balance between supply and demand, although demand still outweighs supply.”
Still, some coastal projects continue to draw an inordinate amount of attention from homebuyers.
“I was talking to some homebuilders this morning and they already have people beating down their doors,” Hahn said. “They haven’t even built the thing yet, but word has gotten around.”
Despite the affordability statistic, there are enough such stories that Hahn believes the local residential market will continue to be strong, at least for the foreseeable future.
“Right now there’s nothing on the horizon and the economy is humming along very nicely and everything is pretty much in balance,” he said.
One consequence: job-growth figures could come under increased pressure as a result of the spiraling home prices. Already, companies are having trouble attracting talent because of the expensive home market.
