A deal to buy Equity Office Properties Trust’s former Orange County buildings would make Los Angeles-based Maguire Properties Inc. a key player in the market for prime office space here.
The company, which counts more than 3 million square feet in local office buildings and is developing the largest of several towers going up near John Wayne Airport, could end up rivaling OC’s dominant landlord, The Irvine Company.
Maguire is said to lead a short list of buyers eyeing Equity’s former OC buildings, which were bought by New York’s Blackstone Group LP as part of its $39 billion acquisition earlier this month. Blackstone is selling off some buildings to cut debt.
Equity Office has been the second-largest landlord in the county, after the Irvine Co. It owned and managed 29 buildings here totaling about 6 million square feet. It’s been the dominant landlord for high-rises in Anaheim and Orange, which count the lowest vacancy rates in the county.
The company, led by Sam Zell before the buyout, owns about 2.4 million square feet of space around John Wayne Airport in Irvine, and another 3 million square feet of space in Central County, according to brokers.
Combined with Maguire’s existing buildings here, the landlord would rival,if not exceed,the Irvine Co. in high-rise office space at time when owners are betting on rising rents.
Maguire isn’t the only one interested in the former Equity buildings.
Reports also suggest Tishman Speyer Properties LP of New York could be eyeing up some of Equity’s other former California holdings.
Tishman entered OC last year with its buy of two Newport Beach office towers that are home to chipmakers Conexant Systems Inc. and spinoff Mindspeed Technologies Inc.
The Irvine Co., which closed a deal for Equity Office’s former San Diego buildings last week, also is said to be looking at Blackstone’s other recently acquired Southern California buildings.
Along with the OC towers, Blackstone is said to be shopping 17 properties in Los Angeles County, centered in West L.A., Santa Monica and Pasadena.
Maguire is believed to be interested in four West L.A. office towers, according to sources.
A Maguire buy would mark a strategy shift. The company was said to be on the sale block itself recently. Earlier this month, Chief Executive Rob Maguire told analysts in a conference call that the company is “no longer pursuing” a sale (see Real Estate column, page 17).
Maguire, which also owns buildings in Los Angeles and San Diego, made a big push into OC in 2004. It spent close to $626 million to buy Irvine’s 105-acre Park Place complex, along with the 16-acre Washington Mutual campus, also in Irvine.
It is building a 530,000-square-foot tower at Park Place that is set for a late 2007 completion. Maguire also is building a fifth and final office building at its Washington Mutual campus.
Maguire also owns the 826,000-square-foot office campus at Costa Mesa’s Pacific Arts Plaza, where it has zoning for office development and a condominium tower.
Down in San Diego, the Irvine Co.’s buy of Equity’s former buildings marks a major expansion in the Newport Beach company’s second-biggest market.
The acquisition includes 17 high-rise and low-rise office buildings in La Jolla, totaling more than 2 million square feet. Terms of the deal weren’t disclosed.
In San Diego, the Irvine Co. now finds itself as the big landlord in the city’s two key markets, downtown and La Jolla.
The Irvine Co. has bought close to a billion dollars worth of office buildings in San Diego in recent years, including some of the city’s premier downtown towers.
Blackstone, which prevailed in a bidding war with Vornado Realty Trust of New York by paying $3 billion more than first offered for Equity Office, is said to be selling off buildings in other markets, including New York, Chicago and Washington, D.C.
