Aliso Viejo’s One Enterprise building has traded hands for $59 million, in the largest single-building office sale seen in South Orange County this year.
In a sign of still-strong interest in the area’s top buildings, the new home of Ambry Genetics sold for close to $530 per square foot—one of the higher per-square-foot prices seen for a large office outside of Newport Beach in recent years.
A Pacific Northwest firm identified as BDC Real Estate Investments was the buyer of the 111,391-square-foot property, which sits at the top of the Summit Office Campus, next to the San Joaquin (73) Toll Road.
BDC bought the building as part of a 1031 exchange deal, according to officials with the Newport Beach office of Newmark Knight Frank, which brokered the deal on behalf of the seller.
AEW Capital Management of Boston had put the four-story office on the market earlier this year, initially shopping it for about $500 per square foot.
Strong tenancy and ongoing upgrades at the building secured the higher-than-expected price tag, according to Paul Jones, executive managing director at Newmark Knight Frank.
“Since being developed, One Enterprise has always been occupied by one or two users and has never experienced [much] vacancy,” said Jones, who worked on the deal with colleagues Kevin Shannon, Brunson Howard, Blake Bokosky, and Brandon White.
The buyer was represented by NKF Vice Chairman Nick Kucha.
Microsemi to Ambry Genetics
The office was previously home to chipmaker Microsemi Corp., which downsized local operations after its $10.3 billion sale last year to Chandler, Ariz.-based competitor Microchip Technology Inc.
Microsemi’s loss has been Ambry Genetics’ gain.
Ambry, best known for its hereditary cancer testing services, earlier this year leased the entire building to serve as its headquarters. It’s among the largest office leases of the year to date in South Orange County.
It is moving into the building in phases, as Microsemi vacates space there.
Ambry will take over the entire office by early 2021, brokers previously told the Business Journal.
The company has about 500 local employees, and more than 700 companywide. It has been expanding its portfolio of test services for a variety of inherited and non-inherited diseases; its products are offered to universities, hospitals, and pharmaceutical companies.
The privately held firm was estimated to have sales in the $500 million range as of a few years ago.
Ambry Genetics’ new 13-year lease to take up the entire building was a strong selling point for BDC, said Jones.
Ambry signed its lease in April, according to brokerage data. It has been consolidating its several locations into the building, about half a mile from Aliso Viejo Town Center.
Hotel Interests
The buyer, BDC, is a “high net worth investor” that has other assets, specifically hospitality, in Orange County, according to Newmark’s Jones.
The company’s affiliated with Portland, Ore.-based hotel developer BPM Real Estate, whose founder and chief executive, Walter Bowen, is known as one of that city’s top real estate investors and developers.
In Anaheim, BPM is working with Irvine’s Greenlaw Partners on a 12-story, 326-room Radisson Blu hotel.
The four-star hotel is going up along the Santa Ana (5) Freeway, about a mile from Disneyland.
Tenant Turnover
Despite having served as more of a transient office home for several companies, One Enterprise has managed to stay close to fully occupied since opening in 1999.
It first served as the headquarters of Fluor Corp., an engineering and construction company. Fluor vacated the building when it moved its headquarters to Irving, Texas, a few years later.
Fluor sold the building to RREEF Funds LLC for a reported $27.5 million in 2005, according to data from real estate market tracker CoStar Group Inc. records.
Drugmaker Valeant Pharmaceuticals International signed a 10-year lease there in 2006. Within a year of striking the deal, the company was acquired by Canada’s Biovail Corp., which took the Valeant name and began cutting local staff.
Valeant began putting chunks of its new office back on the market for sublease starting in 2008.
Microsemi took over the Aliso Viejo office in 2011, and two years later, the building sold.
RREEF sold the office to AEW Capital for $38.8 million, or about $348 per square foot, records indicate.
Good Shape
The new buyer is not expected to make immediate changes to the building as it recently underwent a full renovation, and has been experiencing tenant improvement changes over the years.
“The asset will generate long-term cash flow for the buyer,” Jones said.
There’s been no other single-building offices in OC larger than 100,000 square feet in size that have topped $500 per square foot in a sale in more than two years, according to CoStar Group.
