COMMERCIAL
Orange County offices that target doctors and other medical tenants have been relatively unfazed by the recent credit crunch, according to local brokers. And their buildings continue to command some of the best sales prices in the area.
The latest deal was in San Clemente, where a five-story, 30,777-square-foot building down the street from Saddleback Memorial Medical Center traded hands for just less than $12.4 million.
At $401 per square foot, the price sets a record for commercial buildings 20,000 square feet or larger in South County, according to Nick Brighton, president of Newport Beach’s Velocity Investment Sales.
A venture of San Mateo-based Glenborough Realty Trust and Henderson Global Investors of Chicago was the buyer. The buyers represented themselves in the purchase of the building at 675 Camino de los Mares, which is one of the tallest offices in the city.
PRES-Medical Plaza LP, a venture led by Newport Beach’s Professional Real Estate Services Inc. was the seller. Velocity Investment represented the sellers and also was an investor in the building.
Professional Real Estate Services purchased the building in 2004, when the building was about 50% full with medical and other tenants, according to Brighton. The company spent about $1.5 million on upgrades, and worked on switching the tenants to all medical.
The building’s now full, with tenants running from 1,000 square feet to 4,000 square feet. Monthly rents now are nearly $1 per square per month higher than when the building was last bought.
PRES-Medical Plaza made about $5 million on the deal, according to Brighton.
Medical office space “seems to be mostly unaffected by the mortgage market,” said Garth Hogan, president of Medical Realty Advisors of Laguna Beach. “Banks seem to be chasing more healthcare professionals.”
Big prices are being seen for medical offices elsewhere in the county. For smaller-sized deals in Irvine, sale prices can run as high as $600 to $700 per square foot.
“I think we’ll see $800 (per square foot) in the next 18 months,” Hogan said.
Buchanan’s D.C. Buy
Buchanan Street Partners of Newport Beach ended a busy 2007 by partnering in the acquisition of a distribution center in Washington, D.C., where a big redevelopment is planned.
The real estate investment bank went in with Wayne, Pa.-based developer Patriot Equities in the buy of a 770,000-square-foot warehouse that the Smithsonian has cited as one of the most significant art deco buildings in the world.
Buchanan Street invested $32.8 million and negotiated $66.6 million of bridge financing for the acquisition.
The space now is vacant. Hecht’s, a division of Federated Co., previously had occupied the space, which served as its East Coast distribution center.
Patriot Equities and Buchanan Street said they plan to preserve and upgrade the six-story building, possibly keeping the site for industrial use. A plan for building more than 500,000 square feet of urban, big-box retail development also is in the works for the site.
According to area reports, the property was put under contract in June, but its closing had been delayed by about a month because of the tightened lending environment.
REIT Board Adds Gilchrist
Rick Gilchrist, president of The Irvine Company’s Investment Properties Group, has joined the board of directors for San Diego-based BioMed Realty Trust Inc.
BioMed’s portfolio totals 8.5 million square feet, spread across the country. The real estate investment trust’s primary tenants include biotechnology and drug companies, and other businesses involved in medical technology.
It says it plans to buy and build selectively, which Gilchrist should be able to help with. Gilchrist oversees the Irvine Co.’s office, retail, resort and apartment properties.
BioMed’s Southern California holdings are focused around San Diego, which has become the Irvine Co’s second-largest market, after OC.
RESIDENTIAL
Hoffman Co., an Irvine-based land brokerage, says land prices in parts of Riverside, San Bernardino and Los Angeles counties have fallen as much as 50%.
Land prices in some areas now are at levels not seen since 2002, the company said in a report released last month.
“In the past two years we’ve lost five years of appreciation,” said Norm Scheel, a principal with Hoffman.
Scheel predicts prices may drop a few more percentage points in the first half of 2008, although the region probably has seen the worst in terms of price declines.
Among nearby areas, Corona has seen its average lot prices drop 40% from $300,000 to $180,000 in the past two years.
