A Denver-based real estate investor that’s heavy in industrial properties has bought one of the more prominent vacant land sites in the vicinity of John Wayne Airport.
The deal appears to end plans for the Banc Hotel project, one of the most unique mixed-use development proposals on the books for the city of Irvine.
A unit of Black Creek Group, an investment firm with local offices in Newport Beach, recently closed on the purchase of 18582 Teller Ave., a roughly 6.2-acre site near the busy intersection of Jamboree Road and Michelson Drive.
Property records indicate that Black Creek paid about $38.7 million for the land, or roughly $6.2 million an acre.
The vacant parcel, about a mile from the airport, is located between the Boardwalk office development and 2722 Michelson, the creative office that’s currently home to Palmer Luckey’s Anduril Industries and digital marketing and tech firm Viant, and soon to be home of electric bike maker Super73.
The 2722 Michelson building last week was bought by Irvine’s IRA Capital for $103 million.
Property in Default
The empty parcel bought by Black Creek, which had been used the past few years as a staging area for Amazon delivery vans, was sold by an affiliate of Irvine-based HJ Capital Group, which paid a reported $33.3 million for the site two years ago.
The sellers were in default of their loan for the property—with a balance of some $36.9 million—and facing a trustee’s sale scheduled for Nov. 4, according to legal documents posted at the site.
The planned trustee’s sale was canceled a few days prior, according to property records.
Black Creek bought the site in a deal that closed on Nov. 1.
Industrial Plans
City filings indicate that Black Creek is exploring an industrial project on the site.
A project totaling nearly 140,000 square feet is being considered, though a formal application for the project had not been filed with the city of Irvine as of late last month. The building would include 26,000 square feet of offices, but would be primarily industrial space.
There hasn’t been a new industrial building of that size built in Irvine’s airport area in years; the city’s seen its stock of warehouse and distribution space near the airport shrink considerably over the past decade, to make way for new apartments, homes and other uses.
The airport area of Irvine has about 11 million square feet of space, and counts a vacancy rate under 1%, according to the latest data from the local office of commercial brokerage Voit Real Estate Services.
A decade ago, the area had about 16 million square feet of industrial space, according to Voit.
The site was empty and no longer being used as a staging area for delivery vans as of last week.
The buyer could not be reached for comment.
Ambitious Plans
HJ Capital had ambitious plans for the site.
Its proposed nine-story project, the Banc Hotel, at one time included a 258-room hotel, some 166,000 square feet of office and medical offices space, a fitness facility, food hall, a 20,000-square-foot spa and a separate multi-level parking structure with a number of rooftop amenities, among other flourishes.
The hotel, designed by AO of Orange, was billed as a potential five-star hotel, the city’s first.
No construction work or groundwork on the project had been done to date, despite getting city approvals a few years ago. The pandemic put in doubt the viability of many of its proposed uses. Â
A total development cost in the $300 million range was previously cited for the project. Madison Realty Capital was named in 2019 reports as being the lender for the initial land purchase, though legal documents posted at the property indicated that HJ Capital was in default of a loan made in August 2020.
Industrial Return
Black Creek is best known for its industrial work, though it also owns office projects and apartments, along with several million square feet of retail space, according to the company’s website.
It bought the Teller Avenue site under the BTC III Irvine Commerce Center LP name, property records indicate; other entities it has set up under the BTC name in California are all for logistics-focused projects, according to state records.
BTC stands for build-to-core.
If an industrial building goes up at the Teller Avenue site, it would be a return to type.
The site previously held low-rise warehouse space, which was demolished over a decade ago to make way for a different office project headed up by the local office of Hines.
That project too never moved ahead on account of the Great Recession, leaving the 6-acre site vacant for years, under different ownership groups.
High Rise Hiatus
The Banc Hotel site isn’t the only big mixed-use Irvine development site near the airport to have seen changes of late.
The Business Journal last month was first to report on the shelving, at least temporarily, of the two-tower hotel and office development project dubbed Landmark, alongside MacArthur Boulevard. It’s being headed by Irvine’s Camphor Partners.
That site’s existing mid-rise offices, once slated for demolition, have been revamped and rebranded under the CAVU name. They are now available for lease.Â
