Mammoth Equities Big in Storage; Essex, Bascom Buy Apartments
COMMERCIAL
Vacancy rates in South Orange County have risen consistently over the past 12 months according to a third quarter report released by Irvine-based Lee & Associates, climbing from 7.22% during the second quarter 2000 to 15.11% in the third quarter of this year.
A slowing economy and some overbuilding has contributed to the growing vacancy rate, according to Lee analysts.
While the vacancy rate has risen steadily, the negative net absorption the South County has experienced this year began tapering off in the third quarter. The net absorption improved from negative 580,429 square feet during the second quarter to negative 234,723 during the third quarter.
However, Lee & Associates doesn’t see a recovery in the making.
Bart Pitzer, president of Lee & Associates, expects the number to reach a negative 500,000 square feet again in the fourth quarter.
“The Summit in Aliso Viejo will bring 300,000 square feet on the market and four new buildings at Discovery (in the Irvine Spectrum) will total 230,000 square feet,” Pitzer said.
The reasons for the flex space downturn are simple and well-known.
“Many new projects, new construction coming on the market, isn’t leasing as quickly,” said Jessica Cortez, marketing director at the Irvine office of Lee & Associates.
And the glut of new product for a while was accompanied by a rise in asking rates, which peaked during the second quarter.
“But then The Irvine Company did an across-the-board reduction and others followed suit,” Cortez said.
Still, approximately 2 million square feet of flex space remains vacant in South County.
Cortez pointed to Mission Ridge in Mission Viejo as an example. The high-end flex tech building came on the market in early spring and has had a hard time finding tenants. The 232,000-square-foot project still has 203,000 square feet available.
Mammoth Building Storage
Mission Viejo-based Mammoth Equities LLC broke ground on self-storage space in Palm Desert and Irvine.
The Sure-Save Self Storage-Irvine is a four-story, 100,000-square-foot facility at 17392 Murphy Ave. in Irvine. Building multi-story storage spaces in densely populated areas is part of a growing trend, according to Mammoth. The commercial real estate development and investment company purchased the Irvine property in January.
Mammoth also will develop a 160,000-square-foot storage facility in Palm Desert. The building will include spaces for storing RVs and boats. Mammoth acquired that property from Foremost Airport Vegas LLP in April.
Mammoth Equities Construction Group Inc. is the general contractor on both projects.
Other recently completed Mammoth projects include the 52,000-square-foot Mammoth Professional Building-Mission Viejo and the 38,000-square-fooot Mammoth Professional Building-Encinitas. Mammoth also is completing projects in Scottsdale, Ariz., and Santa Clarita.
RESIDENTIAL
Irvine-based Essex Property Trust has added to its apartment portfolio with the acquisition of Capri at Sunny Hills in Fullerton. Essex, which was represented in-house by Jeff Rowerdink, paid $16.5 million for the 100-unit apartment complex. All of the units are three-bedroom, 2.5-bath, 1,300-square-foot town homes.
Scott Davis of the Newport Beach office of Moran and Co. represented both Essex and the sellers, Fairfield Residential and RREEF, in the deal.
Essex specializes in multifamily properties, particularly in San Francisco, Southern California, Seattle and Portland. The acquisition of Capri at Sunny Hills brings the company’s portfolio to 89 properties totaling more than 20,000 units. The company has another 1,600-plus units in various stages of development.
Bascom Buys in Inland Empire
The Irvine-based The Bascom Group LLC has remained active in the multi-family market. The company paid Lin & Tseng Enterprises Inc. $8 million for the 114-unit Arrow Meadows Apartments in Rancho Cucamonga. Larry Andrews of Sperry Van Ness represented both parties in the transaction. Wells Fargo Bank provided the financing.
The Bascom Group will spend approximately $1 million on capital improvements, including upgrades to unit interiors, landscaping, signage and a fitness room. Vista-based MacBeth Apartments Systems Inc. will provide property management and construction services.
Built in 1984, the complex consists of 15 two-story buildings with one- and two-bedroom units with an average size of 795 square feet. Amenities include a swimming pool, spa, clubhouse, carports and tennis courts. Rents range from $700 to $875 per month.
According to recent figures, the Rancho Cucamonga community is among the strongest economic areas within the Inland Empire. Area industries include Mission Foods, Schlosser Forge, Pacer Technology, Plaxicon, Frito Lay and BHP Steel. The apartment market for Rancho Cucamonga stands at 95.7% occupied over the past year.
The acquisition adds to Bascom’s growing portfolio. In the past 36 months, the company has added more than 5,500 units in Los Angeles, Orange, San Bernardino, San Diego and Riverside counties.
Derek Chen, Jerome Fink and David Kim founded the private equity fund in 1996.
