OC Office Vacancy Rate Hits 11%; Park Place Sells Inland Empire Housing Lots
COMMERCIAL
Retail sales are going strong,real estate sales, that is.
Irvine-based Faris Lee Investments said it set a firm record with the number of transactions it handled in the recently concluded quarter.
The firm, which handles retail property sales, said it closed 15 deals totaling $68 million in the three-month period.
“The third quarter was the best quarter in the history of the company,” said Rich Walter, Faris Lee’s senior marketing director.
Since forming six years ago, Faris Lee said, it has brokered $1.4 billion in deals, with $893 million of sales involving 1031 exchange tax deals,which allow property sellers to defer capital gains taxes by reinvesting in new real estate.
Walter said he sees a “flight to quality” behind the stepped-up activity. Investors are selling more risky real estate holdings in favor of retail, which is seen as more durable, he said.
“The sluggish economy doesn’t affect the retail investor,” Walter said. “It affects the tenant, but not the owner.”
One plus: in most retail leases, utility costs are passed on to the tenant instead of the owner, Walter said.
OC Vacancy Rate Rises
Delta Associates, the research arm of Transwestern Commercial Services, released its third quarter office report with a mix of good and bad for Orange County.
“The LA/Orange County office market is a bright spot on the national landscape,” the report said.
The reason: steady vacancy rates, rising rents and a modestly positive absorption rate.
The report comes with one caveat, though. The results do not include the impact of the Sept. 11 terrorist attacks. Still, Delta Associates said it expects a “modest, positive impact on the LA/Orange County office market from the war on terrorism.”
Increased defense, security and technology spending by the public and private sectors could be a boost for the area, the report said. Negative effects are expected in the insurance, travel, hospitality, airline operations industries and in port activities.
While some of these segments are not “traditional” office areas, it’s believed there will be an indirect and negative effect on the office market.
OC’s net absorption was a negative 403,000 square feet in the third quarter, compared with a positive 564,000 square feet in the second. For the year to date, the OC office market has a positive 63,000 square feet of absorption.
Vacancy rates continue to rise: OC’s vacancy rate climbed to 11.1% in the third quarter, up from 10.3% at mid-year and 8.8% at year-end 2000.
The John Wayne Airport area maintained the strongest rate, at 9.2%. The Irvine Business Complex brought up the rear with a 14.8% vacancy rate.
In the Frozen Foods Section
Buffalo, N.Y.-based Rich Products Inc., a frozen-foods maker, is adding to its Southland holdings.
The company signed a 10-year lease valued at $2.4 million for 39,700 square feet of industrial space in Santa Fe Springs. Rich Products also said it is in talks to add more space to produce ice cream products. The company said it would like to take the additional space when the current tenant’s lease is up in the spring.
The company, which already has space in Santa Fe Springs, is set to move into the additional space, at 12805 Busch Place, in February.
Steve Springer and Lance Parker of Grubb & Ellis’ Anaheim office represented the landlord, Wilson & Geo Myer Co. of San Francisco, while Phil Norton and Steve Calhoun of Colliers Seeley represented Rich Products.
RESIDENTIAL
Irvine-based Park Place Partners Inc., a residential land brokerage and investment firm, said it set a record in the past 90 days, handling 5,250 lot sales worth more than $100 million in the Inland Empire.
Centex Corp., Richmond American, Lennar Corp., Standard Pacific Corp., KB Home and Beazer Homes were among the homebuilders in on the land deals.
The largest transaction involved Pacific Bay Properties, a division of Ford Motor Co., which sold the 1,950-unit Rancho Bella Vista community in Temecula to Paul Garrett, the owner of the Redhawk masterplanned community.
Another 451 lots were sold to Richmond American. Centex Homes purchased nearly 1,000.
