One of the buildings at the Von Karman Towers office complex near John Wayne Airport is the latest local property to be purchased by a large insurance company.
A real estate investment affiliate of New York Life Insurance Co. this month completed the purchase of 18201 Von Karman Ave., an 11-story office at the intersection of Von Karman and Michelson Drive a few blocks from the airport.
The 229,164-squre-foot building sold for about $82 million, or nearly $360 per square foot, according to property records.
It’s the most expensive deal for an airport-area office larger than 175,000 square feet this year on a per-square-foot basis, according to data from market tracker CoStar.
Glendale-based American Realty Advisors sold the property, which it had owned for more than a decade. Brokers Ryan Gallagher, Mike McCann and Derreck Barker with the Newport Beach office of HFF LP worked on the deal.
The office was about 90% leased a few months ago, according to HFF marketing materials.
Cylance Inc., a security software maker that raised $42 million in venture capital this past summer, is headquartered at the building. Its name is atop the office, where it leases about 21,000 square feet.
Other large tenants include Irvine-based Goodman Birtcher, one of the country’s largest industrial developers; Clark Construction Group; and architecture firm SAA.
Irvine-based Greenlaw Partners, which has its offices at another building at Von Karman Towers, will be acting as asset manager for New York Life.
Ups and Downs
The four buildings at the 1.1-million-square-foot campus are separately owned. Office values there have swung widely over the past decade.
Other buildings at Von Karman Towers sold for more than $480 per square foot in 2007, just prior to the last real estate crash. Some traded hands for less than $200 per square foot during the economic downturn.
The last office sold there was the 18301 Von Karman Ave. building, which traded hands in early 2014 for about $300 per square foot. A venture headed by a real estate investment affiliate of Bloomfield, Conn.-based healthcare insurance company Cigna Corp. was the buyer.
Insurance companies recently have become the most active buyers of high-end offices in Orange County, and several notable airport-area deals have taken place in the last half of this year.
The real estate investment arm of John Hancock Life Insurance Co. paid $104.5 million last month for 5000 Birch St., a two-building office complex about a mile from the airport in Newport Beach.
John Hancock and its parent company, Toronto-based Manulife Financial Corp., have invested nearly $475 million in airport-area offices in the past three years. The financial services company paid $277 million in 2012 for the 19-story Michelson tower in the Park Place mixed-use campus in Irvine. Two years later it paid a reported $94.2 million for the nearby 12-story Oracle Tower at 17901 Von Karman Ave.
Other notable recent deals include Prudential Real Estate Investors’ purchase of the 1301 Dove St. building in Newport Beach. An affiliate of the Madison, N.J.-based insurance giant paid nearly $73 million for the 10-story office, which is about half a mile from the airport.
Insurance companies and other institutional investors like the fact that Orange County is one of the few big national office markets where high-quality buildings can be acquired at prices below their replacement costs, according to HFF’s Gallagher, whose team has worked on many of the recent area deals involving insurance company buyers.
Hand in Big Deals
New York Life hasn’t been reported as being directly involved in any other Orange County office purchases of late, but it has helped finance a couple of big deals for other investors.
Its New York Life Real Estate Investors affiliate announced in September that it provided $100 million to finance the purchase and redevelopment of Quintana, a four-building campus a few blocks from the 18201 Von Karman office.
A venture between Houston-based Hines Interests LP and Pacific Investment Management Co. in Newport Beach bought Quintana in August for an estimated $120 million. The largely vacant campus is being rebranded as Intersect and will be redeveloped to emphasize creative-office features.
New York Life Real Estate Investors said in August that it provided a $35 million loan to Laguna Niguel-based Buie Stoddard Group for a 120,000-square-foot portion of the developer’s Center at Rancho Niguel retail property.
New York Life Real Estate Investors had more than $42 billion in assets under management in June, according to the company’s website.
The investor said it is “actively seeking” to buy additional properties throughout the country.
