The owners of a recently renovated, fully leased creative-office project in Tustin are aiming for one of the largest per-square-foot sales prices for a building of its type in Orange County.
Bespoke Tustin, a 40,293-square-foot office building on Franklin Avenue near the Tustin Marketplace, was recently listed for sale by its owners, Long Beach-based Harbor Associates LLC.
The building has a $17 million asking price, or roughly $422 per square foot.
That figure tops every comparable per-square-foot price for a midsized creative-office project sale in OC in recent memory—most of which topped out at under $400 per square foot—according to brokers with the Newport Beach office of CBRE Group Inc. who have the listing for the property.
The only large office buildings in OC consistently cracking the $400 per-square-foot mark in the past few years are high-end office towers near John Wayne Airport, and just-built complexes in the Spectrum area of Irvine.
For OC offices 50,000 square feet and higher, the average sales price last year was $286 per square foot, according to data from the Irvine office of brokerage JLL.
“It’s definitely a high point for a low-rise creative-office space,” said CBRE Senior Vice President Anthony DeLorenzo, one of the brokers who has the listing for the Tustin building. “It’s aggressive pricing.”
The project’s location in the thriving office market around John Wayne Airport is considered a plus for the sellers, as is its proximity to the Tustin Legacy development, which is seeing a host of projects being built. Low-rise buildings in the airport area have vacancy rates of just 6.9%, according to CBRE data.
Part of the sellers’ optimism comes from a stable new tenant: ABM Industries Inc., a New York-based facility management firm and Fortune 500 company. ABM leases the building for its regional headquarters.
It’s in the first year of an 11-year lease at 14201 Franklin. It’s currently paying nearly $1.30 per square foot in rent per month, well under the going area rate. Its rent will soon increase and top $2 per square foot in a few years, according to marketing materials for the building.
The tenant has also put about $1.2 million of its own money into a new central plant and other building systems at the office. That’s on top of the more than $5.5 million that Harbor Associates spent to completely renovate the property—a former research and development building—after buying it in 2015 for about $6.1 million.
The two-story building includes a new high-image lobby and open stairway, and a new roof, windows, and rollup doors, in addition to other creative-office flourishes.
Tustin Collection
Bespoke Tustin is one of several office projects that Harbor Associates owns in the immediate area; the company also owns the three-building Tustin Commons project, a 210,875-square-foot office and flex complex just south of the Santa Ana (I-5) Freeway and about a block from Jamboree Road.
The project, across the street from Bespoke Tustin, is also getting a creative-office makeover to accommodate multiple tenants, and is now called Create Tustin.
Harbor Associates is backed in part by Irvine-based Bascom Group LLC, a private-equity firm and real estate investor best known for its large apartment portfolio. The company’s venture with Bascom largely focuses on converting small and midsized buildings into creative-office projects.
OC has been a large source of Harbor Associates’ deals since its formation in 2015. The company owns seven buildings in OC—five in Tustin—that total nearly 370,000 square feet, according to Paul Miszkowicz, a principal at Harbor.
It also has its eyes on out-of-town deals. Last week it announced a $23 million purchase of a two-building office project in Thousand Oaks.
The former Amgen property, called Conejo Corporate Campus, is nearly 200,000 square feet and will be converted into a multitenant property.
The Thousand Oaks buy is Harbor Associates’ 10th office acquisition; other properties it owns are in Century City and San Diego.
