Buoyed by low vacancy and continued strong demand for commercial space, developers let contracts to add $144.6 million worth of new space in Orange County, according to The McGraw-Hill Cos., a research service that tracks such information. The $144.6 million in July contracts for future construction was up 42% from the $101.5 million in future contracts awarded in July 1999.
Future residential contracts totaled $187.6 million in July, a 5% decline from the $197.4 million recorded in July 1999. Higher interest rates and a shortage of ready-to-build lands are the most prominent reasons for the decline on the residential side.
The increase on the commercial side is somewhat surprising, given that in June the total value of future OC commercial contracts declined 43% year-to-year, to $133 million.
Overall, July OC contracts totaled $332.2 million, an 11% increase from the year-ago figure. Year-to-date, however, the total value of future OC contracts totaled $2.0 billion, a 17% decline from the $2.4 billion recorded through the first seven months of 1999. Non-residential activity totaled $813.9 million, down 27% from the year-ago period. Residential contracts totaled $1.2 billion, off a more moderate 8% from the 1999 pace.
COMMERCIAL
In its second major Inland Empire acquisition in the last two months, Irvine-based CIP Real Estate has purchased the 128,068-square-foot Schaefer Industrial Park in Chino for $5.4 million from a private investment partnership.
Last month, CIP Real Estate, formerly known as California Industrial Properties LLC, purchased the 214,354-square-foot Mountain View Commerce Center.
“We like Chino a lot,” said Chuck McKenna, a principal with CIP Real Estate. “It’s got a very tight existing supply and there’s a very limited amount of land that can be developed. There’s also very good residential demographics so the demand for this kind of product is high.”
The latest acquisition brings CIP Real Estate’s portfolio in the Chino area to about 375,000 square feet in three different projects. Still, CIP Real Estate would not shy away from further acquisitions in the area.
There isn’t much, but if an opportunity came up out there we certainly would (look at acquire it),” McKenna said. “We like this submarket a lot. But since the submarket is so small, I’m not sure what opportunities there will be.”
As a result, CIP Real Estate will expand its search area, looking for opportunities in nearby Inland Empire cities such as Rancho Cucamonga and Ontario.
The push into the Inland Empire comes after the Irvine-based company built up a portfolio of a little more than a million square feet in Orange County, where it has six properties in Costa Mesa, La Habra, Dana Point, Yorba Linda and Fullerton.
Overall, CIP Real Estate’s portfolio now encompasses 1.6 million square feet in Los Angeles and Orange counties as well as the Inland Empire. The company, which uses a variety of funding sources including private equity and “semi-institutional equity,” is conservative by nature, focusing on well-situated value-added opportunities in markets where supply is tight and the opportunities for future development (and new competition) is limited.
Yet the 5-year-old company is slowing expanding its scope of operations. Having initially set a goal of acquiring $50 million worth of property this year, McKenna now estimates that when Dec. 31 rolls around CIP Real Estate will have invested more than $60 million.
“We’ve been doing this for five years and we have gradually been raising our horizons as we developed and expanded the management expertise and the knowledge of the counties we would look at,” McKenna said. “We’re just finding opportunities. We won’t buy unless we really think it’s a value-added opportunity.”
CIP Real Estate also is starting to expand. While in the past value-added meant acquiring a poorly managed or non-performing asset, these days the type of property and risk CIP Real Estate will evaluate is a little broader. Specifically, CIP Real Estate will look at “product that was formerly more industrial but can be teched up and converted to a more of a tech use,” McKenna said.
RESIDENTIAL
Newport Beach-based CT Realty Corp. has purchased the 130-unit Strada Apartments in Orange for $11.6 million from San Diego-based Fairfield Residential Inc.
The complex, at 175 N. Feldner Ave., is composed of four buildings totaling 97,815 square feet of apartment space. The complex also features two large pools, a wading pool and a spa-barbecue area.
Typically, CT Realty acquires a property, renovates or upgrades it and stabilizes the cash flow before selling it. Although there was no indication the company will seek to resell the Strada Apartments property, CT Realty is undertaking interior improvements, construction of a new fitness and community meeting room area and the conversion of tuck-under parking to private garages, among other things.
Dan Naddor, director of multi-family acquisitions for CT Realty, represented the company in the transaction. Fairfield was represented by Mark Fishman of the Century City office of Pinnacle Realty Management.
