The purchase of Kawasaki Motors Corp. U.S.A.’s Irvine headquarters is the keystone in a redevelopment plan by Bixby Land Co. that could top $70 million when the costs for a makeover of the existing building and an adjacent parcel of land are considered.
Bixby last week closed on the 262,463-square-foot of home of the distributor of ATVs, motorcycles and personal watercraft.
The Spectrum-area building, at 9950 Jeronimo Road, sold for just under $44.3 million, or roughly $168 per square foot. It’s one of the larger office sales in South Orange County in the past year.
The purchase is Irvine-based Bixby’s largest in Orange County in more than five years. A major redesign of the building, an additional cost estimated at $20 million, is expected to take place in about a year, after Kawasaki vacates the building.
The deal for the building is the fourth and by far largest creative-office redevelopment project that Bixby has announced in OC in the past year and a half.
Redevelopment
It’s also bought older buildings in Irvine, Tustin and Newport Beach that total about 180,000 square feet, with an eye on redeveloping those buildings into more contemporary spaces.
The redevelopment of the Jeronimo Road building is a super-sized version of those projects, and is expected “to meet the growing demand for modern work spaces in Orange County, especially from larger tenants,” Bixby officials said.
“Good, large blocks of space are in short supply,” said Bill Halford, Bixby’s chief executive.
Kawasaki is leasing back the Jeronimo Road property for a little more than a year while the redevelopment plans are finalized.
The company, a unit of Japan-based Kawasaki Heavy Industries Ltd., has not disclosed plans for its Irvine operations once that short-term lease expires.
Kawasaki Motors Corp. U.S.A.’s operations bring in about $1.6 billion in annual sales, according to the company’s website.
It was Orange County’s 29th largest foreign-owned company by employee count last year, with 340 local workers, according to Business Journal data.
The company also has regional sales offices and distribution centers in New Jersey, Georgia, Texas and Michigan.
Land Deal on Tap
Bixby also is under contract to buy a 5-acre site next to the Kawasaki building—a parcel that now holds a dirt track for motorcycles and other vehicles. That land is expected to sell for about $7 million.
Halford said his company is evaluating potential uses for the land, including incorporating the property into the redevelopment of the existing building or selling the land to a third party for a separate development.
The existing building could either be leased to a single user or broken into a multitenant project once the renovations are completed, Halford said.
Current plans center on an interior access corridor with a large glass canopy. Also on the drawing board at this point are a fitness center and an indoor/outdoor cafe, along with other creative-office features, according to the real estate company.
Design work for the project is being handled by Irvine-based architecture firm LPA.
The building, located at the intersection of Jeronimo Road and Bake Parkway, is about half a mile from the land that’s set to hold the new headquarters for Broadcom Corp. (see related story, page 1).
Halford said he thinks his company’s new acquisition could appeal to companies that want to be near the new Broadcom campus, as well as other large companies looking for space in the increasingly tight office market in South Orange County.
South OC “is the strongest submarket” in the county right now, Halford said.
Cypress Facility
Bixby has its eyes open for buildings of all types throughout OC.
The company closed on the $22 million purchase of a nearly 160,000-square-foot industrial facility in Cypress last month.
The facility, which was sold by Irvine-based LBA Realty, is fully leased to Cavotec Dabico, a maker of support equipment for airports, maritime ports and other facilities.
The property—at 5665 Corporate Ave. near the Los Alamitos airfield—was bought as a core investment and isn’t slated for redevelopment, Halford said.
The Cypress purchase—combined with the Jeronimo Road acquisition, the impending land deal, and expected redevelopment—puts Bixby’s new investments in OC at a little more than $93 million over the past month.
“We’re really bullish on Orange County,” said Halford, whose company had focused more on deals in Silicon Valley and Los Angeles from 2009 to 2013 until turning its attention closer to home a little more than a year ago.
“The lack of new supply will really put (OC) landlords in a good spot” in the next few years, Halford said.
“The pent-up demand for highly-amenitized workplaces in Orange County won’t be met in the near term by ground-up development, and we think this (creative-office redevelopment) strategy is the quickest way to bring these projects to market,” he said.
CBRE Group Inc.’s Gregg Haly represented Kawasaki Motors Corp. U.S.A. in the sale of the Irvine office to Bixby.
Cushman & Wakefield’s Jeff Cole, Jeff Chiate, Ed Hernandez and Rick Ellison represented LBA in the sale of the Cypress industrial building to Bixby.
