Walgreen Takes Long Lease Where Offices Once Stood
ADP Renews at La Palma’s Centerpointe; OC a Seller’s Market for Apartments
REAL ESTATE by Daniel D. Williams
In last week’s Business Journal special report on commercial development, we looked at how retailers are keeping construction companies and developers busy,as office projects hibernate and industrial jobs are scarce.
Here’s another case in point, though on a smaller scale: drugstore operator Walgreen Co. signed a 60-year lease for 54,155 square feet of land at 27982 La Paz Road in Laguna Niguel.
The Deerfield, Ill.-based chain plans to build a 12,700-square-foot, drive-through pharmacy on the site. It’s set for completion in the fourth quarter.
What makes the Walgreen’s project interesting is that the drug store is replacing an 11,250-square-foot office building that used to stand on the property. The offices were razed in June.
Just a couple of years ago, a question of office vs. retail would have been a no-brainer. But these days, with South County office vacancies near 20%, the nod goes to retail.
Along with Walgreen, several big retailers are helping to keep developers and builders busy. They include Wal-Mart Stores Inc., Target Corp., Kohl’s Corp., Home Depot Inc. and Lowe’s Cos. The companies are building new stores or revamping existing ones. Along with government projects and occasional build-to-suit industrial work, retail is about the only game in town.
Yacoel Properties Inc. is the developer for the Walgreen’s project. Jim Duke, Carol Schillne and Shannon North of CB Richard Ellis Services Inc. represented Walgreen in the deal. Blake Woodward, also with CB Richard Ellis, represented landlord Carson Real Estate.
ADP Renews in La Palma
When it comes to class A office space in Orange County, little La Palma isn’t exactly top of mind.
But the North County city wedged between Buena Park, Cypress and Cerritos is home to Centerpointe La Palma, a class A oasis amid older office and industrial buildings.
In 1997, Los Angeles-based Arden Realty Inc. bought Centerpointe from Mutual Life Insurance Company of New York for $80 million. Laguna Niguel-based Birtcher Real Estate Group was an earlier owner of the office park.
Arden has kept the property occupied.
“We’re currently 94% leased,” said Mark Jones, a vice president with Arden.
Jones said the biggest competitor to the Centerpointe is the nearby Cerritos Town Centre. Some of the larger tenants at Centerpointe include BP PLC’s Arco and Honeywell Inc.
Recently, Arden hung on to a tenant whose lease was up, Roseland, N.J.-based Automatic Data Processing Inc. The company signed a $2.25 million deal for 37,904 square feet at 18 Centerpointe.
The building is one of four class A structures in the 12-building, 597,000-square-foot Centerpointe complex.
Cushman & Wakefield Inc. broker Vincent E. Pellerito represented ADP. Mark Jones of Arden Realty represented his company.
In a second deal, ADP signed a five-year, $2.6 million lease with Martin-Brattrud Properties for 30,492 square feet at 1400 Montefino Ave. in Diamond Bar. The property is set to serve as extra office space for the tax and financial services division of ADP. Gregory K. Barsamian of CB Richard Ellis Services Inc. represented the landlord.
RESIDENTIAL
Irvine-based Sperry Van Ness has compiled a study of America’s top apartment investment markets for the first half of 2002.
The numbers look good for investors in Orange County apartments,if you’re already a property owner, that is.
Sperry Van Ness based its study on the yields of multimillion dollar sales on an all-cash basis and the price per unit paid for apartment communities so far this year.
According to Sperry Van Ness’ president, investors are wheeling and dealing their portfolios, looking for the strongest markets out there.
“The huge disparity in yields and costs are driving investors to diversify their portfolio by selling in the highest priced markets and exchanging into markets they believe have more upside potential and less downside risk,” said David Frosh, president of Sperry Van Ness. “Many investors from Washington and California are selling at 7% percent yields, for example, and exchanging into Phoenix apartments at 9.5% yields, thus increasing their returns 36% and buying twice as many units at they could get in their own area.”
OC clocked in at No. 6 in the seller’s market with a yield/cap of 7.43% and a price per unit of $91,729.
To put those numbers into perspective, Philadelphia is the nation’s top buyer’s market with a 10.67% yield/cap and a price per unit of $43,382.
